Home > Opinion > A Russian fairytale

  • Print
  • Email
TALK OF THE TOWN

A Russian fairytale

Matichon's entire economic page was devoted to criticising Prime Minister Samak Sundaravej's decision to bring in 300,000 tonnes of Russian diesel a year, which would account for 25 per cent of domestic diesel consumption.



The Nation's editorial page also criticised the decision to import the low quality diesel from Russia last week. But our concerns had to do with the environmental threat posed by the Russian oil, which is high in sulphur.

Matichon, however, focused on alleged irregularities in the process to import the diesel. The Cabinet has granted Cyrus Petroleum the concession to import the diesel from Russia. According to the paper, Cyrus Petroleum outlined in a proposal to Samak six criteria that the imported Russian diesel would be required to meet. Russian oil requires special approval because its quality fails to meet the standard set by the Energy Ministry.

Nonetheless, the fifth item on the proposal the company submitted to Samak states, "If the project receives approval from the government, especially from Prime Minister Samak himself, then there should be no problem". The paper was dated July 11, only two days before Samak announced his plans to import the diesel.

The prime minister's signature is on the bottom of the same document and is dated July 14, along with a hand-written note suggesting that the document be forwarded for Cabinet approval on July 15.

Therefore, the entire process to consider whether to import Russian diesel took only four days. Matichon said the government rushed the process without consulting relevant agencies. Energy Minister Poonpirom Liptapanlop was not informed of the matter beforehand.

Besides, Samak made the proposal directly to Cabinet, without going through the relevant agencies, a departure from Cabinet protocol. Samak's speedy approval has led many to ask why he is so confident in Cyrus Petroleum.

Matichon said that people in oil-trading circles had never heard of the company. Cyrus Petroleum was only registered on December 7 of last year, and its registered capital was only Bt1 million. Company headquarters is a four-storey townhouse.

In fact, the idea of importing Russian oil is not new. But Russian oil has its limitations because of its low quality. Besides, the distance between Thailand and Russia would result in high transportation costs. Thai and Russian traders have tried to import Russian oil in the past but to no avail. And there are jokes in relevant circles calling attempts to import Russian diesel a "Russian joke" or a "Russian fairytale".

Thus, Cyrus Petroleum's project faces some scepticism from people in the industry because it is not widely known.  Besides - people don't believe that Russian oil would be Bt8 per litre cheaper than the Singaporean market price because of increased transportation costs. Besides - the sulphur-diesel price on the Singaporean market is only Bt6 cheaper than the price of the regular diesel sold in Thailand. Once import costs are taken into consideration, the difference between the two prices is only Bt3 to Bt4 per litre.

Therefore, importing Russian oil may not be worthwhile. First, the process may have violated proper Cabinet protocol. Second, Prime Minister Samak would have to guarantee  the public would benefit from the project. Third, if the government allows low-quality imports, how can it can assure that diesel imports would not end up contaminating the diesel on the market.

Besides, the paper said, the decision was dubious due to the fact that local refiners had earlier sought the government's permission to lower the quality of diesel so they could lower the diesel price, but the government refused the proposal, citing environmental concerns.

If the government allows Cyrus to bring in low-quality diesel, the move could be seen as the government employing a double standard, the paper summed up.


Advertisement {literal} {/literal}

Search Search

Privacy Policy (c) 2007 NMG News Co., Ltd.
1854 Bangna-Trat Road, Bangna, Bangkok 10260 Thailand.
Tel 66-2-338-3000(Call Center), 66-2-338-3333, Fax 66-2-338-3334
Contact us: Nation Internet
File attachment not accepted!