NCPO told to consider gas price hike

[webfact]

NCPO Told To Consider Gas Price Hike
By Khaosod English


PTT Public Co. oil rig [Photo from PTT website].

BANGKOK — The director of Thailand’s state-owned petroleum company has advised the military junta to raise the price of gas to make up for massive losses of revenue last year.

Piyasawat Amranand, executive director of PTT Public Co., said the company has been losing money for seven years because of its effort to subsidise the price of LPG and NGV gas, which are used for cooking and driving, respectively.

"Especially last year, we lost 30 billion baht," Mr. Piyasawat said. "If this continues, it will affect the investment status of PTT."

He continued, "It depends on the government and whether they are willing to raise the price to reflect the true cost, or are too scared by the public reaction."

According to Mr. Piyasawat, the current price for NGV has been pegged at 10.50 baht per kilogram for the general population, which is far lower than the price PTT sells to other state enterprises, such as the Electricity Generating Authority of Thailand (EGAT).

"Since we sell it cheap to the people, more gas is consumed," Mr. Piyasawat said.

NGV is commonly used by public transportation vehicles in Thailand because of its low, subsidised price.

Since staging the coup against the elected government on 22 May, the military junta's National Council for Peace and Order (NCPO) has promised to restore economic growth and improve the well-being of the Thai public.

The NCPO has not yet publicly responded to Mr. Piyasawat's proposal.

Meanwhile, PTT Global Chemical, a subsidary of the state-owned enterprise, was sued by local government officials today for damages caused by its oil spill in the Gulf of Thailand last year. Today marks the first anniversary of the spill, in which more than 50,000 litres of crude oil were leaked from a faulty pipeline operated by PTT Global Chemical.

The company was also recently sued by business owners on Koh Samet island, whose beaches were polluted by the spill.

Source: http://en.khaosod.co.th/detail.php?newsid=1406619988


-- Khaosod English 2014-07-29

[toybits]

So much for the bring back happiness to Thai people... sigh..... In the mean time fuel in neighboring Laos is around 15 baht per liter (equivalent to gasohol 91)... Perplexed to the max...

Edited July 29, 2014 by toybits

[scotbeve]

Toybits, there's no surprise here... PTT wants their "just" rewards the same as all the other big oil players. Cooking the books are an art to these mega-companies.

[smutcakes]

This for me is a big test for the NCPO.

By all accounts really the price should rise, but it has not done so due to it being political suicide with voters.

I suppose if the NCPO are really willing to increase the price to the appropriate level, then it will go a some way to convincing me that they are not up to any politically motivated 'funny business'. i.e they will do the best for the country as a whole, as they don't have the same election concerns as parties do.

To be fair this is a bit of a catch 22 for them, damn if they do damned if they don't.

[bkkjames]

How much profit did this company make last year - the whole company?

[wwest5829]

This for me is a big test for the NCPO.

By all accounts really the price should rise, but it has not done so due to it being political suicide with voters.

I suppose if the NCPO are really willing to increase the price to the appropriate level, then it will go a some way to convincing me that they are not up to any politically motivated 'funny business'. i.e they will do the best for the country as a whole, as they don't have the same election concerns as parties do.

To be fair this is a bit of a catch 22 for them, damn if they do damned if they don't.

I agree, "Catch 22" situation. On first reading my mind immediately went to wondering if this too is a program to be condemned as populist (programs can go too far as we have seen) but... In doing what is best for the country, I would venture to submit that providing for the wellbeing of the majority of the populace is the prime reason for government...but then I lean more toward Locke than Hobbes.

[smutcakes]

This for me is a big test for the NCPO.

By all accounts really the price should rise, but it has not done so due to it being political suicide with voters.

I suppose if the NCPO are really willing to increase the price to the appropriate level, then it will go a some way to convincing me that they are not up to any politically motivated 'funny business'. i.e they will do the best for the country as a whole, as they don't have the same election concerns as parties do.

To be fair this is a bit of a catch 22 for them, damn if they do damned if they don't.

I agree, "Catch 22" situation. On first reading my mind immediately went to wondering if this too is a program to be condemned as populist (programs can go too far as we have seen) but... In doing what is best for the country, I would venture to submit that providing for the wellbeing of the majority of the populace is the prime reason for government...but then I lean more toward Locke than Hobbes.

Unfortunately it is a publicly listed company, albeit with the major shareholder being the Ministry of Finance. As a publicly listed company they have a duty to shareholders, which i would wager for many other than the MOF does not include subsidizing the cost of gas for the local persons, at a cost of xbn baht per annum. If they want to subsidize for the local persons, is there a case for it to be removed from a publicly traded company and brought wholly under control of the MOF, although again this opens up another whole set of potential pitfalls. Not least that the Govts seemingly struggle to run crossword competition never mind a huge petrochemical company. Maybe better to completely privatize it with no MOF involvement, that way they could charge the market rate for the gas, and it would be completely removed as a potential political tool.

[Benmart]

So much for the bring back happiness to Thai people... sigh..... In the mean time fuel in neighboring Laos is around 15 baht per liter (equivalent to gasohol 91)... Perplexed to the max...

I believe drivers are free to drive or relocate to Laos to take advantage of the low prices there. I'm not being critical. Subsidies are being scrutinized and unfortunately the people will carry the burden that has been assumed by the state in the past.

[fobuff]

Coming from the leader of a military dictatorship. bs

[rickirs]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

How much profit did this company make last year - the whole company?

for 2013: shareholder equity $11.7 billion USD

for 2013: Profit before taxes was $3.36 billion USD; after taxes was $1.845 billion USD

for 2012: practically the same

for 2013: net cash provided by operating activities $3.7 billion USD vs. 2012 at $3.45 billion USD

ref. http://www.pttep.com/en/InvestorRelations_FinancialStatements.aspx?year=2013

[Arkady]

Need to take into account that Piysawasti has always been a fierce advocate of free market pricing. He believes that subsidising gas for cooking and transportation causes wasteful usage. But not mentioned is the fact that PTT's subsidiaries and EGAT also pay subsidised prices compared to private industry.

Anyway he is doing his job as chairman of PTT by calling for an end of subsidies that hurt PTT shareholders, while glossing over the subsidies that benefit them. Free market policies would lead to the end of PTT's monopoly on gas pipelines and its bankruptcy. So it is important to be selective.

The issue will probably be decided by whoever becomes energy minister, not the chairman of PTT who has a conflict of interests.

Sent from my iPhone using Thaivisa Connect Thailand

[maximillian]

"Especially last year, we lost 30 billion baht," Mr. Piyasawat said.

Tell me where you lost it, I'll gladly help to find it.

[useronthenet]

Cooking gas has risen significantly over the past year from 330 baht to 390 baht, and now to 420 baht per normal tank.

So I wondering how the company could be making such a loss ?

[Lee4Life]

This for me is a big test for the NCPO.

By all accounts really the price should rise, but it has not done so due to it being political suicide with voters.

I suppose if the NCPO are really willing to increase the price to the appropriate level, then it will go a some way to convincing me that they are not up to any politically motivated 'funny business'. i.e they will do the best for the country as a whole, as they don't have the same election concerns as parties do.

To be fair this is a bit of a catch 22 for them, damn if they do damned if they don't.

I agree, "Catch 22" situation. On first reading my mind immediately went to wondering if this too is a program to be condemned as populist (programs can go too far as we have seen) but... In doing what is best for the country, I would venture to submit that providing for the wellbeing of the majority of the populace is the prime reason for government...but then I lean more toward Locke than Hobbes.

I am not saying that you are incorrect...but what are you basing your assumptions on? Why should the prices rise?

Edited July 29, 2014 by Lee4Life

[monkeycountry]

How much profit did this company make last year - the whole company?

About 94 billion.

However, keep in mind the profit margin is only 3%, much lower than pretty much any other company.

It does not change the fact that the company directly subsidises NGV and LPG creating a loss on those products of 30 billion and rising. Why should any company be forced to do that? Yes, the government is a major shareholder, but not the only shareholder. If the government and the publilc insists on subsidising fuel, why not let the government pay for it directly, instead of asking PTT shareholders to pay?

[monkeycountry]

So much for the bring back happiness to Thai people... sigh..... In the mean time fuel in neighboring Laos is around 15 baht per liter (equivalent to gasohol 91)... Perplexed to the max...

I believe drivers are free to drive or relocate to Laos to take advantage of the low prices there. I'm not being critical. Subsidies are being scrutinized and unfortunately the people will carry the burden that has been assumed by the state in the past.

Partly correct. The burden of subsidies is partly assumed by the state, and partly by a large number of shareholders, including lots of private citizens. If the people insist on subsidies, it seems only fair that the people pay for it 100% by letting the government carry the whole burden, not just half of it as it is now.

[ratcatcher]

With the amount of debt that many Thais are carrying, any major increase in fuel prices will have a serious effect. How will these people who have gone out and purchased nice new pickups and cars be able to afford these higher prices when servicing their debts seems to consume a large portion of their income.

Diesel, LPG and CNG prices have been kept low for years, any sudden rises will cause a major dent in the Gross Happiness Index.

[Krataiboy]

With the amount of debt that many Thais are carrying, any major increase in fuel prices will have a serious effect. How will these people who have gone out and purchased nice new pickups and cars be able to afford these higher prices when servicing their debts seems to consume a large portion of their income.

Diesel, LPG and CNG prices have been kept low for years, any sudden rises will cause a major dent in the Gross Happiness Index.

Never mind those wer idiots who have put themselves in hock to buy their shiny new grunt machines - everything we buy will be affected by higher energy prices as everything has to be transported. Get ready for some (even more) serious inflation.

[belg]

they just want some money to cover the costs of all the oil spills... someone has to foot the bill

[smutcakes]

With the amount of debt that many Thais are carrying, any major increase in fuel prices will have a serious effect. How will these people who have gone out and purchased nice new pickups and cars be able to afford these higher prices when servicing their debts seems to consume a large portion of their income.

Diesel, LPG and CNG prices have been kept low for years, any sudden rises will cause a major dent in the Gross Happiness Index.

Very easily, just take money from a lone shark and then have the banks re-lend them the money to pay of the loan sharks like the NCPO proposal to get rid of loan sharks......

[Minnehaha]

Just had the small tank in the kitchen replaced this morning. I have the receipts in a stack in the drawer and here are some data points. I have never looked into the listed price of gas and I know it is announced monthly or every 3 months. Just never cared to look. How can a fluctuation of 27% can happen May - Sept in 2013 is interesting. Thats a big drop.

I have a small tank. Sometimes they write 7kg on the receipt but more often they write "Bug Lug" in Thai. When I order I say "Bug Lug" and that brings the correct tank

5/18/13

360 Baht

9/27/13

260 Baht

12/14/13

270 Baht

5/30/14

290 Baht

9/9/14

300 Baht