NCPO keeps energy price pledge

Petrol, gasohol down but diesel increases

The military government has fulfilled one of its promises by moving quickly to restructure energy prices, resulting in a sharp reduction in the retail prices of gasohol and petrol. 

The new rates took effect at the pumps at midnight today after the National Council for Peace and Order (NCPO) adjusted the tax levy on fuel and contributions to the state Oil Fund.

The new structure of energy prices aims to bring about fairness for all types of consumers and motorists.

The Excise Department's burden in subsidising diesel prices for a long time is also addressed and the department will earn higher tax revenue in line with the far higher use of diesel than other fuels.

The new policy was introduced by the National Energy Policy Council board chaired by NCPO deputy chief ACM Prajin Juntong

The board will also continue to keep the diesel price below 30 baht a litre in Bangkok and surrounding provinces to help keep down the cost of living.

The change in contributions to the Oil Fund will result in a per-litre decrease of 3.89 baht for normal petrol, 2.13 baht for gasohol 95, 1.70 baht for gasohol 91 and one baht for E20 gasohol. 

However, the price of diesel will effectively increase by 14 satang a litre after the regime raised excise and municipal taxes on the fuel.

The new per-litre pump prices of standard petrol will be 44.86 baht, gasohol 95 37.80 baht, gasohol 91 35.78 baht, E20 gasohol 33.98 baht, E85 gasohol 24.52 baht and diesel 29.99 baht.

The Oil Fund's monthly revenue will be cut to 2.44 billion baht from 3.55 billion.

Chavalit Pichalai, director general of the Energy Policy and Planning Office, said it is expected the fund's accumulated deficit of more than 8 billion baht due to various types of fuel subsidies will be wiped out within three months.

Despite the cut in some fuel prices, the fund will gain a higher levy collection from diesel.

"Diesel consumption is 60 million litres a day, three times larger than the combined petrol and gasohol consumption at 20 million litres a day. A rise of only 14 satang in the levy is large enough to narrow down our fund deficit," said Mr Chavalit.

An across-the-board cut in excise tax on gasoline but a hike in diesel tax will generate about 5 billion baht in revenue to the government's coffers as diesel consumption is far higher, a Finance Ministry source said.

The increase in diesel excise tax to 75 satang a litre from 0.5 satang will not add more burden to people and push up product prices, as its new retail price at 29.99 baht per litre is still just below the 30-baht ceiling.

Manoon Siriwan, an energy expert, also welcomed the new tax structure, saying it is fair for all energy consumers because it ends cross-subsidies between different types of fuel. He suggested further cutting the diesel subsidy by raising the excise tax to one to three baht per litre. 

"They should return the excise tax revenue to the government. Instead of subsidising a particular group, they can use that money for country development that benefits everyone," said Mr Manoon.

He also suggested the regime gradually withdraw its subsidies of cooking gas and compressed natural gas (CNG) to reflect actual costs. CNG users do not pay any tax.

A source in the energy industry said the new structure would lead the country to a free energy market but it would be a challenge for the government to restructure the prices of cooking gas and CNG after they had been heavily subsidised for a long time.

Last year, cooking gas was subsidised by the Oil Fund at 40 billion baht and CNG was subsidised by PTT Plc, the national oil and gas firm, at 10 billion baht.

This year, the subsidies for cooking gas and CNG are expected to be more than 50 billion baht.

Chen Namchaisiri, vice-chairman of the Federation of Thai Industries, said the junta should monitor the cost of remaining subsidies.

"Someone has to pay for it, so I wonder who is going to pay it. How will the military find the money to pay that cost?" said Mr Chen.

"The NPCO should disclose information thoroughly and clearly to people on this energy issue. It is complicated and it is in the public spotlight." 

Meanwhile, power users will enjoy another four months of the fuel tariff being maintained at lower than actual fuel prices.

The electricity regulator requested on Thursday that the Electricity Generating Authority of Thailand (Egat) to help shoulder the higher cost of 2.66 satang per kilowatt-hour of electricity bills for power users for the last four months of this year. 

The fuel tariff is added to power bills but is reviewed three times a year by the Energy Regulatory Commission (ERC).

Also Thursday, the ERC reviewed the tariff for the last time this year. It found that the tariff should rise by 2.66 satang to 71.66 satang per unit.

However, ERC member Viraphol Jirapraditkul said in view of the rising cost of living and general economic conditions, it had decided to maintain the current rate at 69 satang per unit of electricity to help ease power users' burden.

The gap between the actual tariff cost and the power bill will be subsidised by Egat.

Egat estimated the subsidy cost would be around 1.42 billion baht for the period. It has also shouldered electricity bill subsidies accrued from May to August of 2.94 billion baht.

However, Egat hopes to see its subsidy costs decline early next year when demand for power is expected to decline in the winter season.

In a related development, the Energy Ministry took responsibility for checking fuel volumes before the new excise tax rates came into effect to prevent petrol stations from reaping a windfall from the rise in the retail diesel price.

Source: Bangkok Post