Seminar hears calls for global energy
Academics have encouraged a return to global energy prices to prevent irresponsible energy consumption and to lower the burden on the state, which now accounts for 5 per cent of annual expenditures.
Dr Praipol Koomsap, a professor at Thammasat University's faculty of economics, said in a seminar held yesterday by the Senate Commission on Energy titled "Government's Energy Price Mandate: Is It the Right Option or Is It Misguided?" that the energy policy was flawed.
The reduction of diesel and petrol levies to the Oil Fund has resulted in the immediate reduction of gasohol consumption, which the government supports. However, the price differential between gasohol and non-ethanol petrol should help return gasohol consumption to normal.
PTT has calculated the cost to the country of mandating energy prices up to this year. It determined that Bt140 billion, or 5 per cent of the national budget, was spent last year to subsidise prices.
Oil companies and refiners lost out on profits, because diesel was compensated by Bt68 billion, liquefied petroleum gas (LPG) by Bt36 billion, and natural gas for vehicles (NGV) by Bt5 billion. Petrol entrepreneurs had lost opportunities amounting to Bt21 billion.
Yet these universal subsidies reached only a small proportion of those they were meant to help. For example, diesel subsidies benefited only 19 per cent of the targeted market, LPG 26 per cent and NGV 13 per cent.
If the government continues mandating energy prices, it will cost an estimated Bt200 billion, which could account for as much as 7 per cent of the overall 2015 budget.
Accordingly, Policy Watch has undertaken a study energy price restructure, and the resulting proposal will be sent to the government next week.
The study concludes with 10 recommended revisions. Most important, the researchers feel that prices should not be mandated at both the wholesale and retail levels, because these mandates cause consumption to increase, resulting in higher imports and more damage to the environment.
The study finds that energy prices should be allowed to fluctuate. While it is not necessary that prices in Thailand move exactly with global prices, they should be allowed to float.
Diesel prices should continue to be lower than those of non-ethanol petrol, that is, 91- and 95-octane. Currently the price difference is Bt5 per litre, with diesel consumption at 50 million litres per day and petrol at 20 million litres. Gasohol should be Bt3-Bt4 per litre lower than 91-octane.
In addition, the price structure should include a proportion of various taxes including value-added tax, excise tax and municipal tax at about 15-20 per cent. These taxes should increase prices at the pump by Bt1.50-Bt2 per litre.
In the meantime, the Oil Fund should try to stabilise price subsidies. It is estimated that providing Bt5 billion per month in subsidies is suitable.
