Business wants free-electricity scheme reviewed
The government has been urged to revise the policy of providing free electricity to those who use less than 90 units per month, as it has not helped boost the economy.
As well, prices of liquefied petroleum gas (LPG) should be floated within a year along with diesel prices, according to business representatives and academics.
"The free-electricity scheme adds a burden to the industrial sector," Payungsak Chartsuthipol, chairman of the Federation of Thai Industries, told a seminar yesterday on the government's energy-price policies.
He said it was estimated that 7 million households were eligible for free electricity under the scheme, which would cost Bt12 billion a year. Households that use just over 90 units per month would likely reduce their consumption so as to get free electricity. So the number of households benefiting from the scheme could jump to 10 million, increase the programme's cost to Bt30 billion.
He said this burden would be borne by industries using large amounts of electricity, as they had see their electricity costs increase by 3-5 per cent per month during the two months since the measure has been implemented. And if 10 million households receive free electricity, that cost will increase to 7 per cent.
Payungsak said that if the government wanted to maintain the free-electricity programme, it should distribute the cost of it among all users. Also the subsidy should be a one-time or at least part-time measure. Finally, the eligibility requirement should be reduced from 90 units to 50 per month.
He said LPG prices should be gradually floated with support measures to help industries that will be particularly hurt, such as the ceramic and glass industries. These are small businesses mostly owned by Thai entrepreneurs.
Praipol Koomsap, an economics professor at Thammasat University, also proposed floating fuel prices within a year, adding that the government should provide support to certain targeted groups such as the poor.
He proposed increasing the retail price of diesel from Bt28 to Bt32 per litre and LPG from Bt18.30 to Bt28 per kilogram. These increases would include the recommended taxes. Other fuel prices should be adjusted similarly, with all increases gradually introduced to allow consumers to adapt.
Chodechai Suwanaporn, executive vice president for energy economics and policy at PTT, said the pricing strategy should consider five factors. These were long-term energy storage, ensuring more efficient use, balancing the diversity of energy consumption, ensuring the ability to supply energy when needed, and attempting to reduce damaging environmental effects.
At the seminar, energy-consumption groups such as truck and bus companies joined forces to criticise the estimates of the cost of energy subsidies of petrol, LPG and natural gas for vehicles by the Energy Ministry and PTT. They indicated that allowing these prices to float would result in a lot of people suffering.
Meanwhile, Kampon Adireksombat, senior economist at Tisco Securities, said inflation should ease with falling oil prices after a cut in Oil Fund levies. Headline inflation should be 3.7 per cent this year and 3.4 per cent next year if the government subsidy lasts six months starting from August, as opposed to 3.9 and 3.5 per cent respectively without the measure.
This new subsidy scheme would also mean the government forgoing revenue of Bt 97.8 billion or 1 per cent of gross domestic product, he added.
