Energy policymakers yesterday approved a new formula for calculating retail prices of liquefied petroleum gas (LPG), aiming to create fairness among producers and users.
Energy Minister Narongchai Akrasanee said the National Energy Policy Administration (Nepa) approved the new formula for LPG prices by using a median price from the cost of LPG from three major sources: imported LPG, local gas separation plants and oil refineries.
Contentious issues have arisen over the cost and retail prices of LPG and whether it is fair for users in different segments — motorists, households, industry — to be charged differently.
Policymakers have moved to get rid of subsidies for LPG.
Mr Narongchai said the median price was a last resort to put an end to the argument, as there are three sources of LPG used in the country and they have three different costs.
The median price of LPG stands at US$488 a tonne, resulting in the current retail price of 24.16 baht a kilogramme.
The median price will be reviewed and announced monthly by Nepa in order to reflect the actual global price.
The better part of LPG used in the country comes from PTT Plc's gas separation plants (48%), with the rest from imported gas (27%) and oil refineries (25%).
The state has capped the retail LPG price at $333 a tonne since 2005, resulting in a heavy burden on PTT, which is not compensated for the cost-price gap.
PTT senior executive vice-president Nuttachat Charuchinda welcomed the new formula and floating LPG price.
"We don't need to subsidise the gap between the actual cost and retail prices anymore," he said.
For more than a decade, PTT has sold LPG at $333 a tonne for household and transport-sector use, leading to billions of baht in losses.
Other LPG traders, including oil refineries and importers, each year receive a subsidy from the state Oil Fund of roughly 20 billion baht.
A senior Energy Ministry official said the median price would also help end the dispute between activists and PTT about different prices for households versus petrochemical companies.
Activist groups have accused PTT of selling LPG to its subsidiaries at lower prices than for households, despite the fact that LPG is one of Thailand's natural resources.
The official said the median price would be applied across the board.