Price of LPG to be adjusted from Monday
The government intends to adjust the price of liquefied petroleum gas (LPG) starting from Monday as LPG cost will gradually increase to US$614 per tonne (Bt19,500) in 2016 from the current $450 and the government won't be able to bear the burden, accordi
Vachara Kunawatanawuti, PTT executive vice president, yesterday said PTT had hired Deloitte to do a study about the future LPG marginal cost from 2010 until 2016. According to the study, based on the global oil price of more than $100 per barrel, LPG cost in 2012 would be around $533 per tonne. The expected cost from 2013-2016 would be: $568, $580, $595, and $614, respectively. The government now has fixed the purchasing price of LPG at $333 per tonne. As a result, PTT, the LPG seller, has to shoulder the cost of LPG and face losses every year. Hence, the government has decided to float the LPG price starting from Monday.
The structural cost of LPG includes the gas price, gas transmission cost, capital expenditure and operating expenditure.
Somchai Kooyai, PTT vice president for production, planning and technical management, said 63 per cent of the total natural gas feed from the Gulf of Thailand was used as fuel in power plants, the industrial sector, and to produce natural gas for vehicle (NGV). Thirty-seven per cent is fed to all six gas-separation plants. About 35 per cent of the gas from the separation plants is used as fuel in households, the industrial sector, and in exports, whereas 65 per cent is fed to the petrochemical industry.
He said natural gas sold to the petrochemical industry fetches a higher price when compared with sales to households and the transportation sectors. That’s the reason why the LPG fed to the household and transportation sectors have faced supply shortage, and the government has had to import LPG every year. The price adjustment reflecting the real cost will help Thai people use energy more cautiously, resulting in reduction of LPG imports.
Suthep Liumsirijarern, director-general of the Energy Policy and Planning Office, said the fixed LPG purchasing cost of $333 per tonne had resulted in retail price per household of Bt18.33 per kilogram, whereas the actual retail price should be Bt26.53 per kilogram. Thai households get LPG at a cheaper price compared with neighbouring countries. The LPG price in Laos is equivalent to Bt40 per kilogram, while in Vietnam, Cambodia, and Malaysia it is Bt37, Bt41, and Bt19, respectively. The sharp difference in retail LPG price has led to LPG smuggling to neighbouring countries.
“The LPG cost is made up of gas price Bt10.43 per kilogram, excise tax Bt2.17, municipal tax Bt0.22, contribution to the Oil Fund Bt0.87, marketing margin Bt3.25, and value-added tax Bt1.19. So, the end price should be Bt26.53 per kilogram. The government cannot distort the LPG price anymore,” he said.
The Energy Ministry will gradually adjust the LPG price in the transportation sector, starting Monday, at the rate of Bt0.75 per kilogram per month. The LPG price by the end of this year will be around Bt27 per kilogram. The LPG price for the industrial sector will be increased by Bt12 per kilogram this year, so the price at the end of this year will be Bt30 per kilogram.
Manoon Siriwan, an energy expert, said the adjustment of LPG price was reasonable, but the Energy Ministry and PTT should inform the people about the real structural cost. This would help people understand the move and accept the need for LPG price adjustment.
