ENERGY
Oil fund will foot B3bn fuel subsidy
- By: YUTHANA PRAIWAN
- Published: 8/01/2009 at 12:00 AM
- Newspaper section: Business
The state Oil Fund will be required to spend around three billion baht to subsidise fuel prices after excise tax on fuel resumes in February, according to Energy Minister Wannarat Charnnukul.
The new subsidy programme will help motorists continue to enjoy low fuel prices even though the former government's populist measures that waived excise taxes for gasohol and diesel since July were to finish by the end of January.
The Samak Sundaravej administration introduced the measure, aimed at containing the cost of living, during the oil price spike.
From Feb 1, the retail prices of gasohol 95 and gasohol 91 will rise by 3.30 baht per litre. Diesel will cost an extra 2.30 baht and diesel B5, a mixture of biofuel with diesel, an extra 2.10 baht per litre.
The precise amount of the new subsidy has yet to be established but it will cover only part of these costs from the return of excise taxes.
The minister has also insisted that the measure will be only for the short term. Retail fuel prices are currently the lowest in four years and cheap fuel could discourage motorists from saving energy.
"We will hold them [oil prices] for a while to avoid a sudden rise in fuel costs and then let them float to market prices, as the alternative is that motorists would not be aware of oil conservation," he said.
He said the Oil Fund would be required to spend another 8.9 billion baht to compensate PTT Plc for its loss from importing expensive liquefied petroleum gas (LPG) to sell at lower prices last year when demand for LPG as vehicle fuel soared.According to the Energy Fund Administration Institute, the state agency overseeing the management of state energy-related funds, the Oil Fund currently has only 10.1 billion baht in cash in hand.
Yet subsidising fuel prices while global crude prices are so low is raising the eyebrows of some senior officials. An official from the Energy Ministry, who declined to be named, is critical of the subsidy programme.
"Although the fund has about 10 billion baht in cash now, that doesn't mean the fund has enough money for unnecessary expenses. It still needs to repay PTT nearly nine billion baht, while its net income from tax is now only 200 million baht a month. Honestly, I disagree with this. I don't want to see its [the Oil Fund's] balance fall short again," he said.
He also argued that the fund should save cash for when oil prices climb again as the global economy recovers. The oil price is expected to gain momentum in the second half of this year as demand returns.
In 2004, the Oil Fund plunged into a massive debt of nearly 100 billion baht because of a one-year fuel subsidy by the Thaksin Shinawatra government. The fund only cleared its debt in 2006 through imposing high fuel levies.
- Sky-High targets 5% growth
- True sees 30% growth in gaming
- Good start for Samsung Jet
- Cheaper mobile calls for EU travellers
- Schneider spends B200m on plant
- DIGITAL MARKETING CALLS FOR CAREFUL PLANNING
- CAT new president focuses on CDMA
- 3G licence issue risks delay to 2010
Keep this article in your social bookmark:
Or you can: 
