The seven-year subsidy scheme for liquefied petroleum gas (LPG) ends today following approval yesterday by the Energy Policy Administration Committee.
The LPG retail price increases today by 1.03 baht to 24.16 baht per kilogramme for all sectors excluding 7% value-added tax.
Only low-income groups and street food vendors who register with the Energy Ministry can buy subsidised LPG for 18.13 baht.
The committee also approved a price increase for compressed natural gas (CNG) of one baht per kg effective today to reduce the losses of PTT Plc, the sole seller of CNG.
CNG for private transport operators now costs 12.50 baht, while public transport operators must pay 9.50 baht.
However, there is a good news for petrol and diesel users, with their prices respectively decreasing by 50 satang and 40 satang a litre, in line with declining global crude prices.
The state Oil Fund is now free of the burden of subsidising LPG, with the price reflecting the actual refinery cost.
The fund is returning to the black with earnings after expenses of 327 million baht per day compared with an accumulated loss of 7.41 billion baht in May.
Energy Minister Narongchai Akrasanee said the Oil Fund's burden from the cooking gas subsidy reached as much as 300 billion baht from 2008-13.
Past governments used the fund as a tool to subsidise the LPG price since 2008, when the country changed from being a net exporter of cooking gas to become a net importer.
Domestic LPG prices were capped at a time when the price of crude oil reached the highest level in its history at US$147 a barrel.
Motorists rushed to modify engines that used petrol and diesel so they could switch to far cheaper cooking gas.
Thailand's LPG price now averages $558 a tonne, which is a median price calculated from three LPG sources — PTT's gas separation plants ($333), local oil refineries ($548) and imported LPG ($651).
For CNG, PTT lost 10 billion baht from 2008-12, but in 2013 it lost almost 20 billion baht, as it had to import expensive liquefied natural gas to serve rising demand from the transport sector.
The optimum CNG price is 16.5 baht per kg, according to a Chulalongkorn University study.
Mr Narongchai said once energy price restructuring was completed, gasohol and diesel prices would be almost equal and reflect the actual costs.