Govt warned to be fair over biofuel

While farmers will enjoy higher prices for tapioca and sugar - the main raw materials for ethanol and biodiesel production - the government should ensure participation by refineries and come up with measures to prepare the appropriate infrastructure.

"Thailand could become the biofuel trade hub in Asia, with a clear tax structure. This must be done soon now that some Singapore traders have approached Thai companies for the trading of ethanol and biodiesel in Singapore," he said in his speech to an audience of 500 at the National Economic and Social Advisory Council's recent annual meeting in Pattaya.

While fuel crop output must be raised mainly through higher yield - not additional plantation areas - refineries must be encouraged to promote biofuel. According to Anusorn, though biofuel would enjoy higher consumption, the volume of oil consumption would remain high and refineries would operate as usual only when their financial gains are not excessively hurt by biofuel.

Former energy minister Piyasvasti Amranand expected that in 2020, 29 per cent of gasoline and diesel would be substituted by biofuels and natural gas.

Anusorn foresees that in the next eight years, biofuel would substitute petrol and diesel by 15 per cent, when ethanol output is 6 million litres and biodiesel is 5 million litres per day. Then, gasohol with ethanol content, E10, E20 and E85, would account for 60, 20 and 20 per cent of petrol consumption respectively. He noted that if the consumption ratio was higher than that, refineries' profits would be further squeezed.

"The policy will not be successful without refineries' cooperation. Refineries now suffer from lower oil consumption. All refineries are expected to spend over Bt50 billion in meeting the Euro IV standards and the opening of new refineries in Asia with capacity of 8 million barrels per day will lead to lower refining margins," he said.

To become a key player, the Thai government also needs to promote biofuel manufacturing and related industries as well as focus on research and development and personnel.

Meanwhile, a central committee where all parties involved are represented must be in place to ensure the sustainable success of the policy. Slow expansion would also ensure continued investment by oil retailers in their service stations, where equipment must be upgraded.