ALTERNATIVE FUELS
LPG subsidy is bleeding the importer in billions, soon it could deal a serious blow to the economy unless proper action is taken
WIWAT CHANG
LPG is a cheap quick fix for consumers, but at the expense of the whole economy. |
CNG is a globally promoted alternative fuel, but more so for commercial vehicles. |
2009 Hyundai Elantra (i30 in Europe) LPI will be the world's first LPG-electric hybrid. |
CNG-only Honda Civic GX available in the US since 1998 mainly for fleet. |
The aggressively fast soaring oil prices this year have created probably the most serious fuel problem in 35 years. In the first half of this year, automotive fuel prices have risen nearly 50%.
For many people, money has never disappeared from the wallet so quickly.
Compounded by rising costs of virtually all other commodities, including our national staple diet of rice, the financial sting suddenly turned into a near-fatal blow. People panicked and searched for quick-fix solutions.
The price discrepancies between petrol and the two auto gases were easiest to grasp - B40 for petrol versus B8.5 per kilogram of CNG (compressed natural gas) and B11.5 per litre of LPG (liquefied petroleum gas).
The math was easy to work out and the three to four times saving never seemed more attractive.
With LPG and CNG conversions costing B17,000 and B35,000 up respectively, everybody was convinced they could cover the costs sooner than later.
They then jumped ship - from petrol or even diesel - to petrol engine vehicles with LPG or CNG conversions.
Most of the people who converted believed they would recover their investments within three months for LPG to seven months for CNG, as they had been told.
What many of them did not realise was that the recovery periods were based on 100km a day of driving or 3,000km a month.
This means that for some users who drive less than that, the recovery time could double or even quadruple - to over two years - in the case of the more sophisticated CNG conversion.
Still, every fuel converts can accept this provided that the gas prices remain unchanged. But that's the biggest catch - they can not remain this low forever.
Price of CNG could go up to 50% of conventional petrol price, according to government policy, although this is delayed to keep inflation down (or government popularity depending on who you believe).
On the other hand, LPG demand has surpassed domestic supply that has prompted its import since the beginning of the year, as we all know now.
An estimated 1.2m vehicles on Thai roads now run on LPG compared with less than 100,000 for CNG.
But with price regulation, imported LPG is now being sold at the same price as the one produced locally and that is only around one-third of its actual paid import cost.
Subsidy is the only mechanism maintaining LPG retail price and it has to come out of someone's pocket. That pocket belongs to the state owned PTT and they're spending as much as B25bn on the subsidy.
At that rate, PTT or any other energy firm cannot keep throwing money away indefinitely.
LPG has long been destined to be the country's main source of fuel for household consumption - cooking - as in many other countries via price regulation.
The current administration, under fire on several issues including energy management, has recently bought itself time to decide the way forward on energy by simply spending more money on petrol subsidies for a few more months.
After which it received calls from the Thai Automotive Industry Association (TAIA) and the Thai Automotive Journalists Association (TAJA) for clearer energy policies to steer the country forward.
So, hasn't the government been getting good advice from key people in the automotive and energy sector?
At a recent seminar on alternative automotive fuel, Associate Professor Phulporn Saengbangpla, honorary president of the Society of Automotive Engineers Thailand (TSAE) suggested LPG, after he was queried which alternative he would choose between LPG and CNG.
Earlier, while giving presentation on the two gases, she hinted that CNG explosions were violent and scary.
She must have forgotten the notorious LPG explosion some twenty years ago on Bangkok's Petchaburi Road when an LPG truck rolled over, ruptured the tank and engulfed a large area in flames killing dozens of people.
A representative from the Energy Ministry, Pramote Yantaksa, explained that the government does have a long term policy on fuel use, but the implementation often changes from one ministers to the other.
He is right in a way.
Suparat Sirisuwannangkura, who chairs a sub-committee of the TSAE (and is a senior VP at Toyota Motor Thailand), is against double-pricing for LPG as it will lead to various irregularities and reaffirmed that only CNG should be promoted for automotive use.
There are always three kinds of advisers: ones that dispense advice for one own's interest, ones that abstain from taking side for fear of getting blamed, and the ones that actually give good advice.
Opinions split in so many ways as to how the energy policy should be formulated and should it be implemented.
However, the most sensible solution apparently is perhaps to ban LPG for automotive use within a certain time frame and providing sufficient time for those converts to recover their costs first - may be one or two years.
Auto LPG stations and LPG systems in vehicles must be banned and taken out or converted to other systems.
LPG can no longer continue as a dual-use energy fit both for vehicles and cooking if it bleeds the country, and the same goes for other forms of monetary support. It must be reserved and subsidised exclusively for cooking and related use.
CNG, on the other hand, needs to be better supported for use in the commercial sector - which accounts for two-thirds of total land transport fuel consumption - where benefits can be gained more effectively through lower long-term operational costs.
As one renowned automotive critic Pattanadej Asasappakij said: "The government should stop seducing the people with (subsidised) low fuel (petrol and diesel) prices and leave the market mechanisms alone."
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