Energy Minister Narongchai Akrasanee has defended the decision not to cut retail oil prices in Thailand at the same pace as the decrease in global crude prices.
"We have essentially maintained the levy collection for the state Oil Fund from some types of fuels because the fund remains in need of funding to be used for price interventions when oil prices fluctuate," he said.
The Oil Fund has a duty to subsidise biofuels such as gasohol and biodiesel to promote the use of alternative fuels in serving the government's policy to cut reliance on imported crude oil.
Global oil prices had fallen by 40% to US$66 a barrel yesterday from about $105 five months ago, but retail oil prices in Thailand decreased by only 18% over the period.
Mr Narongchai said the problem stemmed from long-time subsidies of liquefied petroleum gas (LPG), compressed natural gas (CNG) and diesel that caused distortions to supply and demand.
"Some motorists enjoyed prices cheaper than the actual fuel cost for a very long time at the expense of others. Now they still pay gas bills cheaper than before but they cannot be as low as the actual cost because we won't let anyone pay energy costs for you through cross-subsidies," he said.
Since Mr Narongchai took his post in June, the heavy subsidies of LPG, CNG and diesel have been cut and the LPG price has been floated.
The next step is to maintain low levies to the Oil Fund to ensure that the fund has enough cash reserves for the future.
"It is possible that the crude price will rebound any time, so we should prepare funding for the time when consumers really need a subsidy," said Mr Narongchai.
After the LPG price was floated, the fund gained more than 300 million baht from levies and now has reserves of more than 10 billion baht.
The government's next move will be to adjust the price of diesel to be on a par with petrol from the current gap of nearly three baht per litre. The CNG price will also be floated.
Large oil retailers yesterday cut the retail prices of all types of petrol except E85 by 40 satang per litre.
The price of diesel remains unchanged.
For the electricity sector's development, apart from strictly enforcing power purchase agreement conditions, Mr Narongchai has also assigned the regulator to amend agreements to be more specific in terms of power delivery periods.
The strict rules will be applied across the board for large operators, small power producers and renewable energy plants.
Mr Narongchai said the amended rules would go before the National Energy Policy Council for approval on Monday.
The move aims to prevent speculating investors from jumping on the bandwagon without readiness or intentions to develop projects while hoping to resell licences for a short-term profit.
That has been a problem with solar farm licences given to operators since 2010. An operational deadline of December 2015 has been given to 178 investors in solar farm projects with a combined capacity of 1,013 megawatts.
Wind farm power licences have hit similar problems. Although licences have been issued for projects worth 1,800 MW since 2009, only 300 MW have come online.