Epac OKs cooking gas cap

Epac OKs cooking gas cap

Subsidy to cost B346m monthly, straining funds

The price of 15kg cylinders for household cooking (smaller cylinders, right) is to be capped at 363 baht, around 17 baht below what dealers are currently charging. (File photo)
The price of 15kg cylinders for household cooking (smaller cylinders, right) is to be capped at 363 baht, around 17 baht below what dealers are currently charging. (File photo)

The Energy Policy Administration Committee (Epac) has agreed to cap the retail price of cooking gas at below global market prices, even as the state cooking gas fund threatens to go broke.

The market price of cooking gas is rising, but with 392 million baht in cash in hand, the state cooking gas fund will only be able to subsidise the cap until mid-July, assuming additional resources are not channelled into the fund. The state cooking gas fund was driven to near bankruptcy through excessive subsidies.

The subsidy will cost 346 million baht a month, 46 million baht less than the fund's total cash reserves. PTT Plc, the national oil and gas conglomerate, will contribute 49 million baht to the measures, but the state Oil Fund is expected to cover the rest, which means it will run dry within a month.

The fund wants to maintain the retail price at 363 baht per 15-kilogramme cylinder for households, and at 325 baht per cylinder for small street food businesses registered with the Energy Ministry.

Twarath Sutabutr, director-general of the Energy Policy and Planning Office, said 7.57 million household units are expected to receive the cooking gas price subsidy, while the street food vendors stand at 395,544 units.

He said once the cash runs out, the policymakers have planned for one of three options: loans to the state cooking gas fund, delaying payment to cooking gas operators, mostly oil refineries, including PTT Group, and borrowing from the state oil fund, which has cash in hand of 30.7 billion baht.

"The cross subsidy will not be repeated, and levies will be collected from motorists while the fund subsidises gas users," Mr Twarath said.

The cooking gas price was floated in 2014 when global oil prices fell below US$50 a barrel. Policymakers resumed the subsidy several weeks ago because of rising global oil prices.

In 2014, the state Oil Fund used to cross-subsidise gas users. In the same year, the fund was separated into a new state cooking gas fund and policymakers terminated the cross-subsidy scheme.

Mr Twarath said cooking gas prices in the global market may decline during the summer season in Western countries and the fund may not need massive capital for subsidy.

He said the policymakers also approved maintaining cash in hand for the 30.7-billion-baht state Oil Fund by cutting the budget subsidy for biofuels and increasing levy collection from petrol users.

Epac approved a cut in the subsidy budget for biofuels such as gasohol 95 E20 to 2.63 baht per litre from 3 baht and gasohol 95 E85 to 8.98 baht from 9.35 baht, but doubled the levy collection of gasohol 95 E10 to 72 satang from 35 satang, bringing it to the same level of the gasohol 91 E10 rate.

The levy collection for benzene was also increased from 6.31 baht per litre to 6.68 baht.

Meanwhile, Epac approved a decrease in excise tax for diesel to 5.85 baht per litre from 5.98 baht, while new-grade biodiesel or B20 tax was set at 5.15 baht.

The changes will be decided upon after the Finance Ministry proposes the excise tax to the cabinet.

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