'Distorted' pump prices for diesel, petrol must be adjusted, energy minister says

Energy Minister Narongchai Akrasanee insists on going ahead with adjusting the petrol and diesel pricing formula, citing the need to levy similar taxes on the oil products.

He also says the energy-price structure has been distorted under previous civilian governments, including the one led by Abhisit Vejjajiva, which keeps the diesel pump price much lower than the prices of petrol products. While those governments’ intention was to ease the cost of living, it led to price distortion, he said.

Narongchai also signalled a likely rise in the price of liquefied petroleum gas (LPG) for transport.

To be fair to all users, taxes levied on petrol and diesel should need to be closer, he said. Currently, the excise tax on diesel is only about 75 satang per litre, while Bt4-Bt5 per litre is levied on petrol and gasohol.

In response to demand for cuts in retail fuel prices to reflect the declines in global crude-oil prices, Narongchai said there had been consistent reductions locally, though big cuts to the diesel price were not possible. Diesel may stay at Bt28 per litre for some time.

He said previous governments had subsidised energy prices to keep diesel from exceeding Bt30 per litre at the pump, and had controlled the LPG price for a long time. This policy saw the Oil Fund get into the red by nearly Bt10 billion.

The sharp drops in global crude-oil prices provided an opportunity to increase contributions to the Oil Fund, he said. When the fund sees financial stability, the contributions might be reduced or even cancelled.

Narongchai expects global crude prices to stay at low levels for a while yet, given current political and economic situations around the world.

He added that the price of LPG for transport might be raised to reflect the cost of imported gas. Currently, the LPG price for households, transport and industry is Bt24.16 per kilogram.

Sukrit Surabotsopon, president of IRPC, said the crude-oil price should stay around US$80-$90 per barrel next year.