Ministry to 'transform' oil prices

Ministry to 'transform' oil prices

The state's previous policy to fix the domestic prices of all types of oil will be brought back into use again to help people better avoid daily oil price fluctuations, according to Energy Minister Pirapan Salirathavibhaga's recent interview with a television programme.

During his talk in Smart Energy, broadcast over the weekend, Mr Pirapan said the Energy Ministry is working on a plan to "transform" the oil price structure to better regulate the prices of diesel, gasoline and gasohol.

The government is spending money from the Oil Fuel Fund to subsidise oil prices, with subsidies for diesel scheduled to expire at the end of March. Authorities did not say how long the subsidy for gasoline and gasohol, which started on Feb 1, would last.

Mr Pirapan did not elaborate on how the government will regulate oil prices, saying only that the new measure is similar to the oil price control used some 40 years ago, before allowing prices to float and be determined by the market.

The minister expects the new measure to be in place within this year.

This will enable authorities to better regulate oil prices the same way they currently control the prices of liquefied petroleum gas, which is used as cooking gas by households, he said.

Mr Pirapan said he is not certain the current oil price structure, which is partly determined by oil traders, truly reflects production costs.

He believes fixing oil prices is a good solution as he wants people to be free from daily price fluctuations.

"Let the government and oil traders jointly deal with the fluctuation issue, so people can buy oil at more stable prices," said Mr Pirapan.

He is also working on a plan for Thailand to have a national oil reserve, which is known as Strategic Petroleum Reserve (SPR), as SPR management can be another tool to help the country cap fuel prices.

Authorities initiated an SPR plan in 2013, following a suggestion by the International Energy Agency, but the plan was stalled due to domestic political conflicts.

In the power sector, Mr Pirapan expects the current power tariff of 4.18 baht per kilowatt-hour to decrease, leading to cheaper electricity bills between May and August.

He attributed the decrease to more inexpensive gas supply from the Erawan gas block in the Gulf of Thailand. According to the Energy Regulatory Commission, the prices of imported liquefied national gas were also tending to decrease.

Gas accounts for 60% of the fuels used for power generation in Thailand.

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