Thai govt hastens plan to wean from fuel subsidy

[webfact]

Govt hastens plan to wean from fuel subsidy
PICHAYA CHANGSORN
THE NATION

BANGKOK: -- THE NATIONAL Energy Policy Committee will meet this month to consider implementing an energy price reform package that might further increase diesel and liquefied petroleum gas prices.

"It will be a two-way street. Users of transport applications such as gasohol as well as gasoline users will certainly benefit, while we might increase diesel a bit," Energy Minister Narongchai Akrasanee said yesterday.

Thanks to the sharp drop in world oil prices, any increase would be gradual and held to a minimum, he said.

The excise tax rate on diesel should be raised to a similar level as on gasoline products. However, since the Oil Fund levy on diesel is over Bt3 a litre, authorities will transform the levy into the excise tax, so the final price will not have to be changed much.

According to the Energy Policy and Planning Office, every litre of diesel is subjected to a Bt0.75 excise tax and Bt3.7 Oil Fund levy.

To equalise the excise tax on diesel with petrol's Bt5.04 tax, the diesel price might still have to be raised by Bt0.59 a litre after removing the Oil Fund levy.

Diesel retails for Bt29.69 a litre, cheaper than Bt33.78 for 91-octane gasohol, even though its ex-refinery price is more expensive at about Bt0.30 a litre.

The prices for LPG used for transport and for cooking could also be raised further but the net impact to an average consumer, who typically consumes both transport and cooking fuels, will be neutral or even positive.

"As the prime minister has told Parliament, that energy prices will be restructured to reflect their costs, the next NEPC meeting will consider how we will make the adjustments," he said.

"The same goods that are used for a similar purpose, their prices must be similar. The excise tax for goods that are used for a similar purpose must also be similar," he said.

Due to the Oil Fund subsidy, LPG for cooking and automobiles sells for Bt22.63 per kilogram, less than Bt25.37 for industrial uses.

The NEPC's meeting to consider energy price reform has been moved up from December, apparently to take advantage of the fall of more than 20 per cent in global world oil prices from their recent highs.

Narongchai said the restructuring of the energy tariff will be completed during the one-year term of this government. The excise tax also has to be raised since the Finance Ministry needs money to cover its shortfall in tax collections.

According to the Energy Fund Administration Institute, the Oil Fund has returned to positive territory with Bt807 million accumulated as of November 2.

Source: http://www.nationmultimedia.com/business/Govt-hastens-plan-to-wean-from-fuel-subsidy-30247069.html


-- The Nation 2014-11-06

[MaiChai]

Costs of food and pretty much everything has rocketed in cities like Bangkok. Thus fuel price raises need to be done carefully. Tricky balancing act.

[siampolee]

The true cost of fuel has to be paid for,we cannot allow fuel costs to be subsidized or there will be an economic time bomb ticking away .

The true cost will not affect the cost of foodstuffs or other products by such a great margin, however the continual subsidizing of fuel costs will over time become a dangerous economic time bomb.

That time bomb will need to be continually defused by increased taxation either direct or indirect or by the introduction of stealth taxes.Such measures in the long term will indeed prove far more costly than letting fuel cost float at the market level.

[Robby nz]

Mistake to raise the price of diesel as it is the fuel of commerce. Same for Gas used in heavy transport and taxis.

A fair proportion of trucks and buses use diesel, farm machinery uses diesel, coastal shipping uses diesel as do fishing boats, rail uses diesel, many factories use diesel to run generators, pumps and other machinery.

Raising the price will raise the price of everything connected with all these activities.

Sure there are also private cars that run on diesel but far more is used in commerce.

Whereas petrol is used almost exclusively for private use motorcycles and cars, something that can be increased without having an effect on the price of goods and transport. And hopefully cut down on the use of private vehicles.

In NZ they subsidise the price of diesel with a higher price for petrol for the very reason of keeping the cost of commercial transport down and therefor all the costs associated with that transport down.

[NeverSure]

33.78 bht per liter is about 15% more than I'm paying in the US for 91 octane gasohol. That includes the road tax.

It's "subsidized" in Thailand? How can that be?

(I'm paying US$3.40 per US gallon if someone wants to check my math for me. One US gallon is 3.78 ltrs. 1 USD = 32.775 bht.)

Unless I made a mistake, I think someone is playing with the numbers.

[PETERTHEEATER]

The gasoline vehicle/motorcycle users have been subsidising the oil burners for too long and the current government recognises that this cannot continue. Yes, increases in the retail price of both diesel and LPG/CNG will led to higher transportation costs and, inevitably, cost of living rises but it has to be done. The expertise is in introducing the increases in a sensible manner.

To the poster who suggested that diesel prices should be frozen and gasoline increased I guess you are selfishly guarding you own oil burner costs.....

[h90]

Costs of food and pretty much everything has rocketed in cities like Bangkok. Thus fuel price raises need to be done carefully. Tricky balancing act.

Read the other newspaper, on counting the rice, already 1 Trillion Baht is missing. They must save money. Better on the fuel than increasing the taxes.....

[Robby nz]

The gasoline vehicle/motorcycle users have been subsidising the oil burners for too long and the current government recognises that this cannot continue. Yes, increases in the retail price of both diesel and LPG/CNG will led to higher transportation costs and, inevitably, cost of living rises but it has to be done. The expertise is in introducing the increases in a sensible manner.

To the poster who suggested that diesel prices should be frozen and gasoline increased I guess you are selfishly guarding you own oil burner costs.....

Nope just common sense mate.

An increase in diesel will increase the price of many other things as you admit.

An increase in the price of petrol will only increase the costs of those who use it, and there is little reason why most cant cut their use.

Tell me why does the cost of living have to be raised in this way ?

Possibly its you who dosent want your petrol price to increase.

[diehard60]

Might?????? I did go up but not by what they said but by to 30.44 from 30.14. It is now higher then it was two month ago. The PM is not realy helping the people in the rural areas.

[rickirs]

Narongchai raised the fuel excise tax because the Finance Ministry needs money to cover its shortfall in tax collections.

On the other hand the government has created unapproved budget expenditures for expensive rice and rubber farmer subsidies, a tourism tax break, etc. Despite a NLA-approved budget, there doesn’t seem to be any government unified budget strategy being followed. The NLA-approved budget seems to have become a “fiat” budget controlled independently by the cabinet ministers. As such the government budget could easily spiral out of control and into greater deficit spending. This will not help Thailand reverse its curretn economic woes.

[PETERTHEEATER]

The gasoline vehicle/motorcycle users have been subsidising the oil burners for too long and the current government recognises that this cannot continue. Yes, increases in the retail price of both diesel and LPG/CNG will led to higher transportation costs and, inevitably, cost of living rises but it has to be done. The expertise is in introducing the increases in a sensible manner.

To the poster who suggested that diesel prices should be frozen and gasoline increased I guess you are selfishly guarding you own oil burner costs.....

Nope just common sense mate.

An increase in diesel will increase the price of many other things as you admit.

An increase in the price of petrol will only increase the costs of those who use it, and there is little reason why most cant cut their use.

Tell me why does the cost of living have to be raised in this way ?

Possibly its you who dosent want your petrol price to increase.

Yes Robby, of course I don't wont to see the cost of my preferred fuel to increase. Nor do I want to see a rise in the cost of living but subsidies should not be allowed to prevail indefinitely hence the sensible approach by the government to introduce graduated increases. It would help their case uf the economic reasons were explained in simple terms to the population.

The action that some other foreign governments have been forced to take in the past, too late, by raising fuel prices by 50 or 60 percent or more has not gone un-noticed.

I was in Saudi Arabia in the 70's when the retail fuel prices doubled overnight and that made some eyes water but dissent was stifled.....

[MadMac]

Someone needs to invent a rice motor, that also runs with the rotten stuff. Actually they could use this to make alcohol/gasohol. In other countries crops are planted for bioenergy.

[Robespiere]

Energy policy is going to rip the ghastly yellow coalition apart from the inside.

Good.

[Ulic]

Not sure I understand "subsidy" in Thailand. The fuel prices are about the same as I am paying in Canada at the moment but

here various provincial and federal taxes account for about a third of the price of gasoline.

[NeverSure]

Someone needs to invent a rice motor, that also runs with the rotten stuff. Actually they could use this to make alcohol/gasohol. In other countries crops are planted for bioenergy.

Funny you would say that. When the early Japanese cars first hit the market in the 1960's they were referred to as "rice burners."

I don't know if there is enough sugar in rice to convert it to alcohol. Usually something like corn is used. I know alcohol is made from rice, but I wonder if they don't have to add some form of sugar to it.