Gas subsidies to carry on, Eppo says

Gas subsidies to carry on, Eppo says

The Energy Policy and Planning Office (Eppo) insists the State Oil Fund is stable and the government will reduce the burden for consumers of liquefied petroleum gas (LPG), Eppo director-general Twarath Sutabutr said Thursday. Authorities will also work harder to promote free competition in the domestic market, he added.

Mr Twarath was referring to the results of an Energy Policy Administration Committee (Epac) meeting chaired by Energy Minister Siri Jirapongphan on Wednesday.

On July 5 the National Energy Policy Council resolved to stabilise the domestic LPG market amid a fluctuating global market. It sought cooperation from state-owned gas and oil company PTT in not exporting any LPG produced at its gas-separation plant unless there is a "serious technical need".

But records from the first five months of 2018 show that LPG imports averaged 42,120 tonnes per month while exports stood at 22,876 tonnes. Domestic demand is 20,000 tonnes above production capacity. As such, domestic gas separation and oil refinery businesses should reduce their exports and focus more on domestic sales and competition to help improve the situation, officials said.

Meanwhile, Epac will change the period of reference for LPG prices from weekly to bi-weekly at the end of this month, Mr Twarath said.

Earlier this week, the Eppo website reported the cooking gas account was 117 million baht in the red as of July 15. This is because it has been subsidising the price at 6.234 baht per kilogramme to cap the price at 13.08 baht per kg, equal to 363 baht per cylinder, excluding transport fees. The account used to have a balance of 1 billion baht but this has dwindled away due to various policy decisions.

Meanwhile, falling domestic oil prices are still lower than the drop seen globally, resulting in a high marketing margin.

The Epac decided to cut the subsidy budget and range levies from 0.5 baht to 0.13 baht for diesel, and from 3.51 baht to 3.10 baht for biodiesel B20, he said. The oil user account of the State Oil Fund now stands at 29.67 billion baht, giving it greater liquidity of 724 million baht/month as expenses have fallen from 1.04 billion baht/month to 315 million baht.

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