New body proposed to regulate energy prices
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New body proposed to regulate energy prices

Energy ministry body would take over role of setting tax rates on fuel from finance ministry

An attendant tops up the fuel tank of a car at a Bangchak service station in Bangkok. (Photo: Somchai Poomlard)
An attendant tops up the fuel tank of a car at a Bangchak service station in Bangkok. (Photo: Somchai Poomlard)

Energy authorities will be given more power to regulate domestic oil and cooking gas prices through taxes and subsidies under a new law, says Energy Minister Pirapan Salirathavibhaga.

The bill, now being considered by the Council of State, the government’s legal advisory body, is aimed at reducing the impact of price fluctuations that affect businesses and households.

“The bill, which needs to gain approval from parliament, is expected to take effect by the end of this year,” Mr Pirapan said on Wednesday.

Under the bill, a new commission would be set up to determine appropriate tax rates on oil products. This duty is currently carried out by the Ministry of Finance, but once the new law is in place, financial officials will be responsible only for collecting the tax.

Letting energy authorities decide on the tax rates will not violate laws under the Ministry of Finance, said Mr Pirapan, adding that the authorities would base their tax calculations on economic conditions. 

Users of gasoline, gasohol — a mix of gasoline and ethanol — and diesel are currently required to pay excise tax.

The government uses excise tax in this category as a tool to control the domestic prices of gasoline, gasohol and diesel.

Another tool is the oil and cooking gas price subsidy programmes under the state Oil Fuel Fund, overseen by the Oil Fuel Fund Office.

According to the bill, the Oil Fuel Fund Office will be dissolved, paving the way for the new commission to manage the fund, which has run up debts of 110 billion baht from subsiding fuel prices.

The role of the commission will be similar to that of the Energy Regulatory Commission, which is tasked with setting the power tariff, which is used to calculate power bills, said Mr Pirapan.

Under the bill, the commission will meet to discuss oil and cooking gas prices and will make price adjustments on a monthly basis, according to media reports citing the minister’s earlier interview. 

This will give businesses and households enough time to better plan their fuel usage.

The commission will ensure appropriate oil and cooking gas prices for the public.

“People will not see high fuel prices and the sluggish economy occur at the same time,” said Mr Pirapan.

Thailand fully controlled the retail prices of oil before ending this policy in 1991 to promote trade and competition in the market, as well as injecting money from new investments into the economy.

The free trade of petroleum products is good, but it must sometimes be under legal control to ensure fairness for consumers, said Mr Pirapan.

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