Energy credit card fails to tackle the real issue

The Energy Ministry has found there are signs that taxi drivers could be in default of several million baht after they refused to repay their energy credit-card debts since the inception of the project early this year. More than Bt8 million has been reported as bad debts in four months.

The signs are not promising. First of all, the energy credit-card project does not help solve the problem of increasing cost of living for the low-income earners because the credit card simply provides loans to the taxi drivers if they run short of cash. In addition, the project can accumulate a loss for the Oil Fund, which finances the project. About 35,000 taxi drivers have reportedly applied for the energy credit cards.

The taxi credit-card project is another populist project of the Yingluck government. The government hastily launched the project in the middle of January this year without adequately informing taxi drivers of the details. Some taxi drivers did not bother to repay the credit-card debt because they misunderstood it as a cash give-away by the government. Some taxi drivers who did not belong to any taxi cooperatives did not get access to the credit cards.

The government said the project was designed to alleviate the burden of taxi drivers who had been adversely affected by the rising NGV price. With the cards, each driver is given Bt3,000 credit per month and a discount of Bt0.50-Bt2 per kilogram, but their monthly purchase must not exceed Bt9,000. However, the project does not address the root cause – the rising cost of living.

The government should instead restructure energy prices comprehensively to make the prices reflect the actual cost. Then the government would be able to target the affected groups of people. The energy credit card simply provides credit to the taxi drivers, but does not cushion them against the rising cost of living. In addition, the government should encourage the public to be aware of the real cost of energy to promote energy efficiency. A fuel subsidy will simply encourage people to consume energy without conscience.

Nonetheless, the Energy Ministry has reportedly planned to fix the problem by merging energy credit cards with the farmers’ credit cards, which are operated by the Finance Ministry. It is reported that the government has plans to ask the Bank for Agriculture and Agricultural Cooperatives (BAAC) to negotiate with PTT and Bangchak Petroleum to enable farmer credit-card holders to swipe the cards for fuel purchases as well.

The merger of the two cards is not a wise solution. It does not solve the problem of rising cost of living. Continuing with an ineffective credit-card project can create more bad debts. In that case, more money from the tax payers will be used to finance the project because if the project runs at a loss, BAAC may have to ask the Finance Ministry for more capital to subsidise the losses incurred by bad debts.

The government should restructure fuel prices instead of distorting the market by subsidising certain types of fuel but floating the others. Then, the government can target the affected groups and assist them accordingly instead of implementing ineffective projects and squandering public money. 

The recent Bt2,000 coupons for flood victims to purchase electrical appliances are a case in point where public spending was wasted. The electrical retailers reaped the benefits from ambiguous conditions and requirements at the expense of the taxpayers.

The government rushed to introduce the populist policies to cater to its vote stronghold but the project can have a negative impact in the longer term. In fact, there are many other services the government can provide for taxi or public bus drivers – such as access to medical services because they are prone to road accidents. The Energy Ministry must quickly fix the taxi credit-card project because it wastes a massive amount of public spending without serving its purpose.