Govt hastens plan to wean from fuel subsidy
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THE NATIONAL Energy Policy Committee will meet this month to consider implementing an energy price reform package that might further increase diesel and liquefied petroleum gas prices.
“It will be a two-way street. Users of transport applications such as gasohol as well as gasoline users will certainly benefit, while we might increase diesel a bit,” Energy Minister Narongchai Akrasanee said yesterday.
Thanks to the sharp drop in world oil prices, any increase would be gradual and held to a minimum, he said.
The excise tax rate on diesel should be raised to a similar level as on gasoline products. However, since the Oil Fund levy on diesel is over Bt3 a litre, authorities will transform the levy into the excise tax, so the final price will not have to be changed much.
According to the Energy Policy and Planning Office, every litre of diesel is subjected to a Bt0.75 excise tax and Bt3.7 Oil Fund levy.
To equalise the excise tax on diesel with petrol’s Bt5.04 tax, the diesel price might still have to be raised by Bt0.59 a litre after removing the Oil Fund levy.
Diesel retails for Bt29.69 a litre, cheaper than Bt33.78 for 91-octane gasohol, even though its ex-refinery price is more expensive at about Bt0.30 a litre.
The prices for LPG used for transport and for cooking could also be raised further but the net impact to an average consumer, who typically consumes both transport and cooking fuels, will be neutral or even positive.
“As the prime minister has told Parliament, that energy prices will be restructured to reflect their costs, the next NEPC meeting will consider how we will make the adjustments,” he said.
“The same goods that are used for a similar purpose, their prices must be similar. The excise tax for goods that are used for a similar purpose must also be similar,” he said.
Due to the Oil Fund subsidy, LPG for cooking and automobiles sells for Bt22.63 per kilogram, less than Bt25.37 for industrial uses.
The NEPC’s meeting to consider energy price reform has been moved up from December, apparently to take advantage of the fall of more than 20 per cent in global world oil prices from their recent highs.
Narongchai said the restructuring of the energy tariff will be completed during the one-year term of this government. The excise tax also has to be raised since the Finance Ministry needs money to cover its shortfall in tax collections.
According to the Energy Fund Administration Institute, the Oil Fund has returned to positive territory with Bt807 million accumulated as of November 2.
