By BERNAMA
Thailand’s military-backed government will raise prices of liquefied petroleum gas (LPG) for transportation and natural gas for vehicles (NGV) from Oct 1, as part of its closely-watched energy reforms, a senior energy ministry official said on Tuesday.
The increases will be a step closer to revamp the structure of domestic fuel prices from a highly-regulated system to a market-based one.
The move is positive for state-controlled PTT Pcl, the country’s sole gas supplier which has posted losses of about 100 billion baht (RM10.1 billion) from NGV subsidies since 2003.
After the announcement, PTT shares extended earlier gains and were 1.42% higher at 0900 GMT, while the broad index was 0.04% lower.
Chakree Buranakanon, senior executive vice president of PTT, told reporters that PTT’s loss from NGV business will be reduced by 2 billion baht a year after the price hike and PTT has incurred a loss of more than 20 billion baht a year from the subsidy burden.
Under the new structure, LPG prices for transportation will be raised by 0.62 baht/kg to 22 baht/kg, while NGV prices for retail users will be raised by 1.00 baht to 11.50 baht.
To ease the impact of the cost of living, prices of NGV for public users such as bus and taxi drivers are capped at 8.50 baht/kg, the ministry said in a statement. This compared with PTT’s cost of 15-16 baht/kg.
“The price hike will help reflect more actual costs of domestic fuel prices,” the ministry’s permanent secretary Areepong Bhoocha-oom told a news conference.
Domestic energy prices in Thailand have been distorted by various populist policies under previous governments through the Oil Fund.
PTT has to import LPG at global prices, which are around US$760 (RM2,490) per tonne now, and sell them at the government-fixed price of US$333 per tonne. The Oil Fund has to levy a tax on gasoline users to compensate PTT.
Prices of LPG for cooking have been raised to 22.63 baht per kg to reduce the huge subsidy burden carried by the Oil Fund, while the price of LPG for industrial users is 29.33 baht.
In 2013, LPG for household cooking gas was 32% of total LPG consumption in Thailand. This compared with 35% for the petrochemicals sector and 24% for transportation, according to data from the energy ministry.
NGV accounted for 12% of Thailand’s energy use for land transport.
— by Pisit Changplayngam
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