Diesel price to be closer to petrol

Diesel price to be closer to petrol

The diesel price will come close to those of petrol and gasohol while LPG and NGV prices will also increase as part of a government policy to price fuels based on their real costs.

The public, however, appears to  disagree with the plan, with the majority of those surveyed in a new opinion poll believing current prices could be lower. 

Energy Minister Narongchai Akrasanee said on Friday that the ministry planned to restructure the prices of all types of fuels.

The excise tax on diesel will be increased next year by transforming the levy paid to the Oil Fund, now at 4.30 baht a litre, into an excise tax. Eventually, diesel will cost almost as much as petrol.

The prices of gas — both LPG used by households and NGV used by motorists — will also be raised to reflect real costs, said Dr Narongchai.

The current government, he said, believed that fuel subsidies by past governments caused damage to the country's balance sheet and also encouraged people to use energy recklessly.

Previous governments subsidised fuel prices by manipulating the levies collected by the Oil Fund, which had been set up as a cushion against the impact of volatile world oil prices. They collected more from certain types of fuels to subsidise others, especially diesel, which the incumbent government feels is populist and unfair.

Earlier, Manoon Siriwan, a national reform councillor, suggested the government gradually raise the price of LPG or cooking gas since the difference between the actual cost and the price was quite high, at 27 baht a kilogramme compared to 22.63 baht that consumers now pay.

The diesel price will come close to those of petrol and gasohol while LPG and NGV prices will also increase as part of a government policy to price fuels based on their real costs. (Photo by Somchai Poomlard)

The same applied for NGV, he said, as PTT claimed the cost was 15-16 baht a kg compared to the pump price of 11.50 baht. "What should be considered is the duty on NGV, which is exempted at present. Usage is as high as 9,000 tonnes a day so if the duty is set at four baht, some 100 billion baht will be added to state coffers," Mr Manoon said.

But a Bangkok University poll released on Saturday found most people did not agree with the planned abolition of the Oil Fund.

The poll, based on interviews with 1,157 people, found 69.9% thought current fuel prices were higher than they should be while 27.5% thought they were reasonable. World oil prices have declined by 30% in the past few weeks from their peak at around $110 a barrel.

Most respondents (56.3%) disagreed with the planned scrapping of the Oil Fund, which is supposed to bring petrol prices down while raising those of diesel, LPG and NGV. Only 35.9% agreed with the plan.

They also felt politicians were the biggest obstacle to energy reform (61.8%), followed by PTT and government officials.

As well, 38.1% believed the public would be the biggest beneficiaries of energy price reform, followed by PTT (16.8%), politicians (12.9%) and private companies (11.9%).

After the reform, 43.4% believed overall energy prices would be lower while 31.9% expected them to be unchanged and 16.9% thought they would go up.

Interestingly, the majority felt PTT Plc, as a state enterprise, had not acted in the best interest of the public, with 60.4% perceiving it thought only of its shareholders and profist. Only 33.9% thought it had done a good job for the people.

The majority (64.3%) also opposed having government officials sitting on the boards of state energy enterprises and companies.

In another development, the Energy Ministry is planning new feed-in tariff rates for alternative energy except solar power to better promote its use, according to Areepong Bhoocha-oom, the ministry's permanent secretary .

The ministry is also in talks with the Agriculture Ministry to expand cultivation of sugarcane, oil plan and cassava for use as energy crops. "This will help us generate more alternative energy such as biodiesel and ethanol," Mr Areepong said.

The ministry will also also forge ahead with the construction of coal-fired power plants in Krabi and Songkhla provinces. The Krabi plant will start supplying power to the grid in 2019. "Both projects went through public hearings and bids to find contractors can begin next year," Dr Narongchai said.

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