Pheu Thai To Go For Revamp Of Energy Policy

[webfact]

ENERGY POLICY

Pheu Thai to go for revamp of energy policy

By WATCHARAPONG THONGRUNG

THE NATION

Election winner 'to control ministry', end levies on three fuel products

The end to Oil Fund levies on three fuel products marks the beginning of the Pheu Thai government's revamping of energy pricing, including ex-refinery prices, and possible exploitation of petroleum royalties, Energy Ministry and Government House sources said.

"The party made it clear that it will control the Energy Ministry. The minister is someone proficient in energy affairs and he will overhaul the energy price structure, particularly gasoline prices, for fairness to consumers particularly the grassroots who contributed massive votes to the party," said the Energy Ministry source who asked not to be named.

Ending contributions from fuel product sales to the Oil Fund could be implemented immediately, with the endorsement of the National Energy Council chaired by the prime minister, he said.

The Oil Fund levies are Bt7.50 per litre for 95-octane petrol, Bt6.70 for 91-octane petrol and Bt1.27 for diesel.

The levy for gasohol 95 with 10-per-cent ethanol content is Bt2.40 and for gasohol 91 with similar ethanol content is Bt0.10. The fund subsidises Bt1.30 and Bt13.50 per litre for gasohol 95 with ethanol blends of 20 and 85 per cent.

The decision to scrap contributions from the two petrol products will not hurt the Oil Fund much. Based on daily consumption of 7 million to 8 million litres of 91-octane, and 100,000 litres of 95-octane, the fund would lose only about Bt60 million a day from the decision.

It would also be giving up Bt67.3 million by scrapping the diesel contribution, based on a daily consumption of 53 million litres.

The government's decision will leave intact the levies on gasohol 95 and gasohol 91 with combined daily consumption of 10 million to 12 million litres. The Oil Fund - due to the stiff subsidies for diesel and gas - is saddled with Bt1.13 billion debts.

"The party originally wanted to please motorcyclists with the campaign to end the Oil Fund. However, that would require a new mechanism as the Oil Fund is still needed to subsidise cooking gas and other products like gasohol E85," the source said.

Over 10 million motorcycles nationwide are running on regular or premium petrol.

Part of the overhaul would be a change in the ex-refinery price, which now references the Singapore price. To attract investment in refineries, the government allows refineries to add to the Singapore price the cost of transporting oil from Singapore, even though there was no such transaction. Without the extra cost, the ex-refinery prices would be lower and so would pump prices.

Besides the new pricing formulas, an oil stock is part of the plan for energy security, which is in line with the International Energy Agency's recommendations. Such stocks are used in countries without a mechanism like the Oil Fund to stabilise prices. For instance, the IEA earlier this month released 60 million barrels of its stock to ease global demand, and this effectively reduced global oil prices.

The oil reserve depots would be part of the Land Bridge project in the South, which was part of Pheu Thai's election platform, the source added.

Krairit Nilkuha, director-general of the Alternative Energy Development and Efficiency Department, said the loss could be addressed by the Energy Conservation Fund, which accumulates Bt4 billion to Bt5 billion annually through the contribution of 25 satang per litre from various fuel products.

Royalty income from petroleum concessions, worth nearly Bt50 billion per year, could be used to cover the Oil Fund's support of alternative fuels like gasohol E20, E85 and liquefied petroleum gas, which is much lower.

"I'm convinced that the promotion under the 15-year alternative energy development plan [2008-2022] would remain and this requires further subsidies," he said.

In the US, petroleum concession holders are required to remit 10 per cent of output to the government. The government then resorts to the stock at times of high global prices, or sells it to make profits.

The Government House source said no legal amendment is needed if royalties would be used for this purpose. Under the Fiscal Reserve Act, that could be done only with the approval of the finance minister, with a clear set of spending plans.

Then the royalty income now parked at the Mineral Fuels Department would be exploited. However, such a change would give the spending mandate to the department's chief or the related ministry's permanent secretary, and the off-balance spending would not be subject to parliamentary scrutiny. For the sake of transparency, a new committee may be set up to manage the fund.

-- The Nation 2011-07-08

[OzMick]

To quote Pooh Bear "Ooooh, a honey pot!"

[animatic]

Based on daily consumption of 7 million to 8 million litres of 91-octane, and 100,000 litres of 95-octane, the fund would lose only about Bt60 million a day from the decision.

21,900,000,000 or almost 22 BILLION baht a year lost.

This equivalent of NOT putting 22 bil. a year

into the safety fund for gas price fluctuations.

God forbid that the Arab League decides to

up the cost by shorting supply...

Besides the new pricing formulas, an oil stock is part of the plan for energy security, which is in line with the International Energy Agency's recommendations. Such stocks are used in countries without a mechanism like the Oil Fund to stabilise prices.

I guess this is less politically expedient at the moment.

Edited July 8, 2011 by animatic

[Crushdepth]

I don't think the new government has looked into the financial implications of all this. Their first budget should be good for a laugh.

[AleG]

"The party made it clear that it will control the Energy Ministry. The minister is someone proficient in energy affairs and he will overhaul the energy price structure, particularly gasoline prices, for fairness to consumers particularly the grassroots who contributed massive votes to the party,"

There goes Abhisit's "I work for all Thai people" government ideals.

Goodies for those that voted us the rest can go and pound sand.

[animatic]

"The party made it clear that it will control the Energy Ministry. The minister is someone proficient in energy affairs and he will overhaul the energy price structure, particularly gasoline prices, for fairness to consumers particularly the grassroots who contributed massive votes to the party,"

There goes Abhisit's "I work for all Thai people" government ideals.

Goodies for those that voted us the rest can go and pound sand.

Instant sop for their backers,

no thought towards the future of the policies knock on affects.

Like bankrupting the Hospital systems with the 30 baht health care.

Which incidentally under the Dems became FREE HEALTH CARE

throwing out the 30 baht, because it didn't even pay for the cost of accounting it.

Edited July 8, 2011 by animatic

[WinnieTheKhwai]

Like bankrupting the Hospital systems with the 30 baht health care.

Which incidentally under the Dems became FREE HEALTH CARE

throwing out the 30 baht, because it didn't even pay for the cost of accounting it.

This is just complaining for the sake of complaining, isn't it.. Yet anther argument that tries to have it both ways, slamming PTP (TRT at the time) for making health care cheap, and then praising the Democrats for making it even cheaper, while complaining that it causes the hospital system to go bankrupt. (Which hospitals went bankrupt by the way?)

Again: Pick a position, don't just complain no matter what PTP does. It's getting predictable.

[animatic]

Like bankrupting the Hospital systems with the 30 baht health care.

Which incidentally under the Dems became FREE HEALTH CARE

throwing out the 30 baht, because it didn't even pay for the cost of accounting it.

This is just complaining for the sake of complaining, isn't it.. Yet anther argument that tries to have it both ways, slamming PTP (TRT at the time) for making health care cheap, and then praising the Democrats for making it even cheaper, while complaining that it causes the hospital system to go bankrupt. (Which hospitals went bankrupt by the way?)

Again: Pick a position, don't just complain no matter what PTP does. It's getting predictable.

Slamming their past record is fair play.

The Dems made it cheaper because charging NOTHING meant less accounting costs. It was a practical decision. Public knowledge, try and keep up.

PS. it wasn't TRT's idea for 30 baht or low cost healthcare.

Their problem was implementation in a stupid way lacking forethought.

Edited July 8, 2011 by animatic

[rubl]

Like bankrupting the Hospital systems with the 30 baht health care.

Which incidentally under the Dems became FREE HEALTH CARE

throwing out the 30 baht, because it didn't even pay for the cost of accounting it.

This is just complaining for the sake of complaining, isn't it.. Yet anther argument that tries to have it both ways, slamming PTP (TRT at the time) for making health care cheap, and then praising the Democrats for making it even cheaper, while complaining that it causes the hospital system to go bankrupt. (Which hospitals went bankrupt by the way?)

Again: Pick a position, don't just complain no matter what PTP does. It's getting predictable.

Slamming their past record is fair play.

The Dems made it cheaper because charging NOTHING meant less accounting costs. It was a practical decision. Public knowledge, try and keep up.

PS. it wasn't TRT's idea for 30 baht or low cost healthcare.

Their problem was implementation in a stupid way lacking forethought.

The Dem's had 'free healthcare' in their recent program, Pheu Thai vowed to bring back the 30B scheme. Ms. Yingluck listed it as no.4 of economical priorities two/three days ago. Further details lacking. Probably too early to say

Can we now go back to 'PT goes for revamp of energy policy' ?

Edited July 8, 2011 by rubl

[OzMick]

Like bankrupting the Hospital systems with the 30 baht health care.

Which incidentally under the Dems became FREE HEALTH CARE

throwing out the 30 baht, because it didn't even pay for the cost of accounting it.

This is just complaining for the sake of complaining, isn't it.. Yet anther argument that tries to have it both ways, slamming PTP (TRT at the time) for making health care cheap, and then praising the Democrats for making it even cheaper, while complaining that it causes the hospital system to go bankrupt. (Which hospitals went bankrupt by the way?)

Again: Pick a position, don't just complain no matter what PTP does. It's getting predictable.

Your lack of comprehension skills are showing (again) - there is no contradiction in the post. TRT implemented an earlier scheme, but didn't allocate funding to cover the costs incurred, causing a financial crisis for the hospitals. The Dems reduced the cost to the public AND supplied funding to make it work.

The B30 was abandoned because it was revenue negative. This is why most countries don't charge import duty below a set amount, doing so actually loses money.

BTW it is common "knowledge" in Isaan that the improvements to the medical scheme are all the work of Thaksin and PTP (some even believe that he paid for it personally) as is the old age pension scheme. Never underestimate the power of propaganda on a populace with limited information sources.

[wolfmanjack]

Like bankrupting the Hospital systems with the 30 baht health care.

Which incidentally under the Dems became FREE HEALTH CARE

throwing out the 30 baht, because it didn't even pay for the cost of accounting it.

This is just complaining for the sake of complaining, isn't it.. Yet anther argument that tries to have it both ways, slamming PTP (TRT at the time) for making health care cheap, and then praising the Democrats for making it even cheaper, while complaining that it causes the hospital system to go bankrupt. (Which hospitals went bankrupt by the way?)

Again: Pick a position, don't just complain no matter what PTP does. It's getting predictable.

Slamming their past record is fair play.

The Dems made it cheaper because charging NOTHING meant less accounting costs. It was a practical decision. Public knowledge, try and keep up.

PS. it wasn't TRT's idea for 30 baht or low cost healthcare.

Their problem was implementation in a stupid way lacking forethought.

Actually the 1997 constitution had a provisions for health care for all but no one could figure out how to pay for it. At the time 20% of the population was not covered by any health care scheme. Thaksin implemented a program that not only covered the 20% without coverage but also most of the people that already had health care on another scheme. He also did not implement any way to pay for it or i should say to completly pay for it. The amount allocated was not enough to cover the hospitals cost. If they are not careful the same will be happening with the fuel costs. They have to have low cooking fuel costs which are already subsidized now they want low fuel for motorcycles to reward the people that voted for them. To keep the people that own pickup trucks and to keep transportation costs down diesel needs to be kept low. Where is all of the money to come from ?

[otherstuff1957]

Diesel also powers most farm equipment and most trucks that transport food from the farms to food processing plants & warehouses and then to the stores. If diesel prices go up, food will become more expensive. Floating the price of diesel could have a disastrous effect on the Thai standard of living!

[wolfmanjack]

Diesel also powers most farm equipment and most trucks that transport food from the farms to food processing plants & warehouses and then to the stores. If diesel prices go up, food will become more expensive. Floating the price of diesel could have a disastrous effect on the Thai standard of living!

Very true. The food also has to be transported to market which takes diesel.

[Thai at Heart]

Diesel also powers most farm equipment and most trucks that transport food from the farms to food processing plants & warehouses and then to the stores. If diesel prices go up, food will become more expensive. Floating the price of diesel could have a disastrous effect on the Thai standard of living!

Very true. The food also has to be transported to market which takes diesel.

Hence why the desperately misplaced policies of governments over the last 30 years to not invest in railway transportation to get these commodities moved around the country, or out to the place of export.

They allowed the trucking companies far too much control in transportation policy, and now oil prices are under pressure, so a double whammy comes.

[whybother]

Hence why the desperately misplaced policies of governments over the last 30 years to not invest in railway transportation to get these commodities moved around the country, or out to the place of export.

They allowed the trucking companies far too much control in transportation policy, and now oil prices are under pressure, so a double whammy comes.

Which is the same problem the world over.

[Crushdepth]

Diesel also powers most farm equipment and most trucks that transport food from the farms to food processing plants & warehouses and then to the stores. If diesel prices go up, food will become more expensive. Floating the price of diesel could have a disastrous effect on the Thai standard of living!

The problem is that subsidising fuel is unsustainable. The flow on effect to food prices is inevitable.

[animatic]

I guess the Red Solution when they run out of fuel and affordable food transport will be the Eat The Rich, while they last, and then just find a hole and die in it while screaming that is their democratic right..

Edited July 8, 2011 by animatic