Bt10 Bn Loan For Oil Fund

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Bt10 bn loan for Oil Fund

Watcharapong Thongrung

The Nation

Panel wants octane 91 sales halted to boost alternative energy promotion

The Energy Policy Administration Committee has approved borrowing of Bt10 billion for the Oil Fund, which is operating at a loss as a result of the government's scrapping of levies to support the fund, and will today propose that the National Energy Policy Council consider scrapping octane 91 petrol sales.

"If the Prime Minister [Yingluck Shinawatra] agrees, the plan should proceed immediately. The termination of octane-91 sales would be a clear indication that the alternative-energy promotion policy is working, as more motorists are switching to gasohol," Energy Minister Pichai Naripthaphan said yesterday.

Loans would be sought from local financial institutions, Pichai said, adding that Bt10 billion should be sufficient for the fund, whose losses currently stand at Bt1 billion. The borrowing plan will be submitted today to the National Energy Policy Council, which is chaired by Yingluck.

The Energy Ministry is considering the resumption of Oil Fund levies on octane-91 and octane-95 petrol, as well as on diesel, thanks to recent declines in oil prices, Pichai said.

Contributions of levies on octane-91, octane-95 and diesel to the Oil Fund were suspended to partially fulfil one of many promises made by the ruling Pheu Thai Party in its campaign ahead of the July 3 election.

Before the scheme was implemented, levies on octane-91, octane-95 and diesel were Bt6.7, Bt7.5 and Bt1.27, respectively.

Yingluck vowed before the election that the party would cancel the Oil Fund levies imposed on retail fuel oil.

However, the Pheu Thai-led government announced the suspension of Oil Fund contributions from only three fuel types: octane-91, octane-95 and diesel. The measure was criticised as benefiting the wealthy, who tend to drive cars using the fuels, while sending the wrong signals in terms of fossil-fuel consumption, as it has brought the retail price of octane-91 close to that of gasohol, a more eco-friendly fuel.

The levies' suspension has prompted complaints from oil retailers and ethanol producers, as cheaper premium petrol prices have led to lower consumption of ethanol-mixed gasohol products.

Pichai said the loan would be used to subsidise prices of fuels including LPG, NGV and gasohol.

"The meeting of the council today will also discuss how to handle the termination of price controls for LPG and NGV at the end of September," he said.

A source from the Energy Ministry said the committee will propose ending sales of octane-91 within a year because it will take a while to draw down remaining inventory.

Global oil prices are expected to fall, due to concerns over the economic situations in both the US and Europe.

If world oil prices decrease, the Energy Ministry will consider collecting levies for the Oil Fund as was done in the past, before the levies were cancelled on octane-95, -91 and diesel on August 27.

Pichai also said the committee agreed to shelve its campaign to promote palm oil plantations. In January 2008, the Energy Ministry signed an order with the Agriculture Ministry providing funds to continually promote the growing of palm oil. So far, Bt1 billion has been spent on the scheme.

However, with the Oil Fund's finances in an unpredictable state, the ministries will no longer be able to support the measure. Furthermore, planting palm oil has received significant interest from the private sector and does not need to rely on continued government support, Pichai said.

-- The Nation 2011-09-30

[marquess]

So in other words even if world market prices fall, the consumer won't really benefit, as it will be an opportunity for more levies--lets pay the market price and be done with it! If oil is high we pay the market price and visa versa, rather than labouring under a false economy.

[MILT]

So in other words even if world market prices fall, the consumer won't really benefit, as it will be an opportunity for more levies--lets pay the market price and be done with it! If oil is high we pay the market price and visa versa, rather than labouring under a false economy.

Totally agree. The policies was not thought out and just implemented to fulfill a election promise. It seems that a lot of factors were either ignored or never thought of.

[Thai at Heart]

Subsidise, don't subsidise, subsidise, don't subsidise.

Aren't they giving a tax break to first time car owners? So, shouldn't their tax revenue from petroleum products actually rise in total value?

Why they get so het up with these excise duties, I don't know. Exempt all the necessities of life for the poor, childrens clothes, food, nappies, school books, get rid of these anachronistic levies, bring down high rate income taxes a bit and put up VAT.

[otherstuff1957]

^ Actually, most of the Auto Plants in Thailand are already operating at full capacity, so the tax break is unlikely to increase the number of cars sold by very much, but it will reduce the government's tax revenue. As for increasing VAT, VAT taxes tend to have a disproportionate impact on the poor. If you want a tax structure that is fairer for the poor, you need to increase the income tax rate and decrease the VAT taxes.

Basically, PT's economic policies pretty much mirror Reaganomics, which brought the US economy to the brink of the precipice that it is now following over.

[lannarebirth]

Borrowing 10 Billion to plug shortfalls, and that at only $80/bbl. prices. Profound economic ignorance by this administration. That or it's a heist in plain sight.

[Ricardo]

Perhaps they should have reduced, rather than totally-eliminated, the levies a few weeks ago and then they wouldn't now need to refinance the Oil Fund, to correct their first error, but at least a resumption of limited-levies is now back on-the-table.

This doesn't give the impression, of a strategy and pre-election promise, which were ever costed or thought-through properly, in the first place. Or am I just thinking like a sensible farang once more, will I never learn, T i T !

[OzMick]

" The termination of octane-91 sales would be a clear indication that the alternative-energy promotion policy is working, as more motorists are switching to gasohol," Energy Minister Pichai Naripthaphan said...."

Actually, it would be a clear signal that their policy was NOT working, and they had to force the issue. And for all of use who's vehicles are not gasahol tolerant - tough TIT.

[kartman]

Perhaps their thinking is by eliminating 91 octane people whose vehicles only run on it will buy a new car and they can recoup some tax , oh wait a minute their refunding tax on them .

[whybother]

Pichai also said the committee agreed to shelve its campaign to promote palm oil plantations. In January 2008, the Energy Ministry signed an order with the Agriculture Ministry providing funds to continually promote the growing of palm oil. So far, Bt1 billion has been spent on the scheme.

They spent a billion baht on marketing palm oil? Nice little cash cow for someone, that one.

[apetley]

It is not just cars and motorcycles that run on 91 petrol. What about all of the 2 stroke agricultural machines such as sprayers, weed whackers etc that will only run on 91 petrol? Maybe the govt will subsidise the purpose of brand new equipment for all the farmers.

[thaicbr]

It is not just cars and motorcycles that run on 91 petrol. What about all of the 2 stroke agricultural machines such as sprayers, weed whackers etc that will only run on 91 petrol? Maybe the govt will subsidise the purpose of brand new equipment for all the farmers.

Most of the poorest people are still running around on 2 stroke motorcycles.. but funny enough i remember seeing a list put out by PTT a few years ago that said they were ok to run on gasohol 91..... B)NOT.

There is absolutely no reason to discontinue 91 sales. Other than bloody mindness and stupididty. So far this government seems to be doing it's utmost to make things MORE expensive for the poor..

[Soi Sauce]

Most govs are preety duplicit, but this lot sre unbelievable. Trubble is the Thais are so poorly educated that they actually believe the garbage the corrupteds in chief tell to them, and the corrupteds in chief believe the lies they tell.

Well; the poor voted for the rich coz the rich sed they'd make them better off. So the rich sed f u you dummies, we're here to fill our coffers, not yours or the country's, and the poor still believe them.

Sad suckers from top to bottom of a society more rotten then the uk. It will end in worse tears then the uk riots and, I hope, the lying rich, not the shops, will be the target. Alresdy the country is borrowing to pay for its lies. Is the idea to demoloish the currency so the IMF orders the gov to sell off its utilities, oil co, etc, then the corrupters in chief can buy them up cheap.

It's already been mooted, watch it happen.

Considering Burma, Zimbabwe, or N. Korea for a move,as they are more democratic than here.

Edited September 30, 2011 by Soi Sauce

[janverbeem]

Jeez,times flies in Thailand.

When they cancelled the levy on certain oil products it was announced that there were enough reserves in the fund to cover the next 6 months after which they would borrow money.

Since then oil crude oil prices have decreased with 10% on the world markets but the prices at the pump have slightly increased..

So it must be 6 months already than that the oil levy was scrapped,not?

[Emptyset]

Basically, PT's economic policies pretty much mirror Reaganomics, which brought the US economy to the brink of the precipice that it is now following over.

How do their policies mirror Reaganomics? Only similarity I see is the corporate tax cuts, which are intended to offset the minimum wage rise.

[whybother]

Basically, PT's economic policies pretty much mirror Reaganomics, which brought the US economy to the brink of the precipice that it is now following over.

How do their policies mirror Reaganomics? Only similarity I see is the corporate tax cuts, which are intended to offset the minimum wage rise.

I wonder if all companies will get the tax cuts ... not just the ones in the 7 provinces where the "minimum wage" is being increased.

[Emptyset]

Basically, PT's economic policies pretty much mirror Reaganomics, which brought the US economy to the brink of the precipice that it is now following over.

How do their policies mirror Reaganomics? Only similarity I see is the corporate tax cuts, which are intended to offset the minimum wage rise.

I wonder if all companies will get the tax cuts ... not just the ones in the 7 provinces where the "minimum wage" is being increased.

No idea, but there was something in the Bangkok Post yesterday with Thirachai saying that incentives will be reviewed as other countries only give them to the most productive sectors, not all sectors (something along those lines anyway). Not sure what it'll mean practically.

[whybother]

No idea, but there was something in the Bangkok Post yesterday with Thirachai saying that incentives will be reviewed as other countries only give them to the most productive sectors, not all sectors (something along those lines anyway). Not sure what it'll mean practically.

So, they'll be able to pick and choose who they give the tax cuts to. That sounds rather convenient.

[lannarebirth]

No idea, but there was something in the Bangkok Post yesterday with Thirachai saying that incentives will be reviewed as other countries only give them to the most productive sectors, not all sectors (something along those lines anyway). Not sure what it'll mean practically.

So, they'll be able to pick and choose who they give the tax cuts to. That sounds rather convenient.

That was all spelt out in the campaign literature, surely?

[ballpoint]

No idea, but there was something in the Bangkok Post yesterday with Thirachai saying that incentives will be reviewed as other countries only give them to the most productive sectors, not all sectors (something along those lines anyway). Not sure what it'll mean practically.

So, they'll be able to pick and choose who they give the tax cuts to. That sounds rather convenient.

I'm sure they'll do it alphabetically, starting with 'S'.

[Ricardo]

Jeez,times flies in Thailand.

When they cancelled the levy on certain oil products it was announced that there were enough reserves in the fund to cover the next 6 months after which they would borrow money.

Since then oil crude oil prices have decreased with 10% on the world markets but the prices at the pump have slightly increased..

So it must be 6 months already than that the oil levy was scrapped,not?

Three or four weeks is a long time in politics, as some long-gone British politician might have said.

But at least the price of cooking-gas hasn't yet doubled, due to the removal of the long-standing subsidy, that one will really hit the poor, and put up the cost-of-living !

[Buchholz]

The Energy Policy Administration Committee has approved borrowing of Bt10 billion for the Oil Fund, which is operating at a loss as a result of the government's scrapping of levies to support the fund

well done...