PTT asked to clarify charges for LPG imports

PTT has to date received more than Bt80 billion in compensation for LPG imports. 

An Energy Ministry source yesterday said EPPO executives had recently written to the oil and gas giant, asking it to provide more details on how it calculates the compensation it receives for the high-cost imported gas, which because of the government’s price controls, PTT then has to turn around and sell domestically at the lower, controlled price in order to meet domestic demand.

Imports of LPG, which started in April 2008, mean the Oil Fund has had to shoulder compensation to PTT to the tune of Bt80.48 billion. Bt7.95 billion was paid in 2008, Bt6.89 billion in 2009, Bt22.26 billion in 2010, Bt25.8 billion last year and Bt17.58 billion until May 31 this year.

With LPG prices fluctuating in line with global demand, over the period in question prices have moved between US$800 (Bt25,100) and $1,000 per tonne. However, now world prices have fallen back to the $800-$900 level, the ministry wants to see how PTT is determining its compensation. 

Once the EPPO has a clearer understanding of the process, it will be able to explain the calculation to the Energy Policy Administration Committee, which supervises the Oil Fund, and the panel can then explain its findings to LPG consumers, the ministry source said.

The source added that prior to 2008, production of LPG in Thailand had been more than sufficient to meet local demand and the country used to export the surplus. 

However, the policy of price controls by the government has resulted in the local price of LPG being lower than the global price. This has encouraged more Thai consumers to use LPG each year, leading to higher imports since 2008 and a consequent rise in the level of compensation paid to PTT.

A PTT source said the company had had to pay different amounts for LPG imports since April 2008 due to global price fluctuations. The amount that PTT imports is not sufficient 

for it to have any kind of meaningful bargaining power with LPG traders, so it has no choice but to pay more as the global price rises. 

The company, which calculates the price differential and submits the bill to the Oil 

Fund, is confident that explain-ing the procedure to the EPPO will not be a problem, said the source.