The state push to reduce the price of gasohol 91 by 2.5 baht per litre for three months is expected to cause motorists using a variety of gasohol to shift to gasohol 91, which is projected to be phased out.
The cabinet last week agreed in principle to reduce the excise tax on gasohol and is expected meet on Tuesday for final approval. The government is estimated to lose 1 billion baht from reducing the excise tax under this proposal.
The price of gasohol 91, a mix of gasoline and ethanol, is currently 37.98 baht a litre.
The measure will lead to more use of gasohol 91, but overall consumption of gasoline and gasohol should not significantly change, said Rangsan Puangprang chief financial officer of PTG Energy Plc.
During the first eight months of this year, consumption of gasoline and gasohol rose by 5.5% to 31.9 million litres per day, up from 30.2 million litres daily year-on-year, according to the Department of Energy Business.
Four types of gasohol are sold at petrol stations. Gasohol E10, which is blended with 10% ethanol, is known as gasohol 91 or 95, with the numbers referring to different octane ratings.
Gasohol E20 is a mix of gasoline and 20% ethanol.
Some motorists also use gasohol E85, which is composed of 85% ethanol.
Mr Rangsan said the lower price of gasohol 91 may affect the plan to promote more use of biofuel.
During the Prayut Chan-o-cha administration, energy authorities said they aimed to make gasohol E20 the primary oil fuel at petrol stations in place of gasohol E10, which will be gradually phased out.
The officials also said they would consider whether they should phase out unpopular gasohol E85.
Energy Minister Pirapan Salirathavibhaga said last week his ministry will consider reducing the retail prices of other types of fuel, such as gasoline 95 and other grades.
This will constitute the largest restructuring of oil prices in 10 years, he said.
Sureeyot Khowsurat, chairman of the Tapioca Ethanol Association, said she would like the government to keep promoting the use of gasohol E20 and make it the primary fuel as this will boost the production of ethanol from 4.5 million litres per day to 6-7 million litres per day.
More ethanol usage benefits farmers as cassava and sugar cane growers can earn more revenue.
Cassava and molasses are the key raw materials for making ethanol.