Chula offers formulae for setting NGV price
A study by Chulalongkorn University provides four alternatives for Energy Minister Arak Chonlatanon to consider when setting the price of natural gas for vehicles. The study also recommends that the private sector be able to join in setting up future NGV
The first alternative suggests that calculating the base cost of NGV should not depend on the import cost of liquefied natural gas (LNG), the source of which is different. A single nationwide average retail price of NGV should be set regardless of the distance of a station from the pipeline.
The second alternative also disregards the cost of LNG, but sets two retail prices, with a lower price for stations on the pipeline and a higher price for those off the pipeline.
The third alternative is to recognise the LNG-NGV and transformational costs but still have a single nationwide average price. And the final alternative is to add the transformation cost but, again, set two different retail prices based on a station’s proximity to the pipeline.
The first option would mean a retail NGV price of Bt13.16 per kilogram nationwide. The second option would set the price at Bt11.26 per kilo at stations on the pipeline and Bt14.38 for those that are not. The third option would create an average retail price of Bt12.92 per kilo nationwide and the final option would set the price at Bt11.02 per kilo for stations attached to the pipeline and Bt14.13 per kilo for those that aren’t.
All the alternative prices considered would be lower than the price set earlier by the National Energy Policy Committee of Bt14.50 per kilo. Currently, the retail price of NGV is Bt10.50 per kilo.
The study also recommended that the private sector should get involved and that if the majority of future stations were located on the pipeline, the price of NGV could be decreased.
The study found that the main factor affecting the retail price of NGV was management costs and hauling charges to stations located off the pipeline.
It also found that costs at PTT-operated filling stations are higher than those at private-sector stations.
The study acknowledged that the cost of transporting gas to off-pipeline stations was high. If the ministry chooses to set an average retail price where the location of the station is not a consideration, this might have the adverse effect of having all future stations located next to pipelines, to take advantage of the lower wholesale cost and the higher retail price. This could result in less-than-ideal locations and a higher retail price than necessary, both of which would be unfair to consumers.
