The Energy Ministry's latest efforts at tightening control of domestic oil and cooking gas prices under a new bill requires a public hearing to examine its impact on oil traders and government revenue, says an energy expert.
Under the bill, which is currently being scrutinised by the Council of State, a new commission, with roles similar to the Energy Regulatory Commission, will be set up to regulate the retail prices of oil and liquefied petroleum gas (LPG) via taxes and subsidies.
The bill is scheduled to be forwarded for consideration to parliament before being enforced by the end of this year, Energy Minister Pirapan Salirathavibhaga said earlier.
The aim is to reduce price fluctuations for consumers of oil and LPG in the business and household sectors.
"Authorities must listen to what oil producers, traders and distributors say, not just oil end users," said former energy executive Yodphot Wongrukmit, who added that the bill should first go through a public consultation before being forwarded to lawmakers.
Oil business operators spent a huge amount of money investing in the business after the government decided to end its policy of fully controlling the retail prices of oil in 1991 to promote trade and competition in the market.
If the authorities wish to have greater control of oil and LPG prices again, they first need to seek opinions from people within the oil industry, said Mr Yodphot.
He believes oil refinery operators, oil retailers and oil transport operators would be affected by the new bill.
According to Mr Pirapan, the commission will determine appropriate tax rates to be imposed on oil.
This duty is currently carried out by the Finance Ministry, but once the new law is in place, financial officials will be solely responsible for collecting the tax.
Mr Yodphot said he wonders whether the government will lose revenue if the oil tax is set by the commission in order to ensure "appropriate" oil prices.
The oil tax is a key revenue for the country. Currently excise tax on diesel makes up more than 50% of taxes imposed on all types of fuels, he said, adding that the diesel excise tax generates 50-60 billion baht a year.
The new bill will also authorise the commission to manage oil and LPG price subsidy programmes through the state Oil Fuel Fund.
But this prompted Mr Yodphot to raise doubts over the state's dependence on the fund, which has already incurred a loss of more than 111 billion baht. The country has very limited funds to subsidise oil and LPG prices via the fast-diminishing fund, he said.
Mr Yodphot recommended the government target specific groups of oil and LPG users, particularly those on low incomes, for inclusion in the subsidy schemes, rather than implementing these as universal schemes.
He also warned the government of implementing a price subsidy policy in the energy sector for too long because this could affect efforts to promote energy conservation, which is an essential part of the country's carbon dioxide reduction campaign.