Fuel price reforms will be fair to all, says Narongchai
Newly appointed Energy Minister Narongchai Akrasanee is expected to kick off energy price reforms next month.
Lowering energy prices has always been a key tool for governments to please voters, but policymakers foresee market distortion as a result of long-time price subsidies.
Pro-subsidy activists say operators should sacrifice profits for people.
Mr Narongchai yesterday pledged to restructure prices to be fair to people across all sectors.
"Do not worry about low-income earners. We're subsidising this group because they cannot afford any further burden," he said.
Price changes will focus mainly on liquefied petroleum gas (LPG) and compressed natural gas (CNG), which have had prices capped at far lower than actual costs.
LPG is being subsidised by the state Oil Fund by as much as 10 billion baht a year, while CNG is being subsidised by PTT Plc, the national oil and gas firm, by 20 billion a year.
Mr Narongchai declined to give further details, saying the changes were still being discussed, but a senior Energy Ministry source said the LPG price for cars would be raised to 22.63 baht a kilogramme from 21.38 baht.
Policymakers fear increasing demand for LPG will encourage higher consumption, leading to a higher subsidy cost.
However, the different prices for the four types of LPG use have not yet been considered, the source said.
LPG is used in the industrial, petrochemical, household and car sectors. Only the industrial sector has consumed LPG at the global market price after the previous government floated it at 29.33 baht last year.
CNG is capped at 10.55 baht per kg, but a Chulalongkorn University study found the appropriate price was 16 baht.
Mr Narongchai said in the long term, his ministry would encourage the public to support clean coal technology, as Thailand must diversify its fuel mix for power production from its current 79% dependency on natural gas.
"We must assure the public that high-quality coal is not bad for the environment — the black colour of coal does not mean it's dirty," he said.
Mr Narongchai said if Thailand depended too much on gas in the future, it would lose competitiveness in terms of energy expenses due to costly imports of liquefied natural gas (LNG).
Use of LNG would double electricity costs, and Thai businesses would lose ground to competitors.
"The long-term development of the power sector is to secure resources with appropriate costs in a clean environment while ensuring electricity generation is not disrupted," said Mr Narongchai.
He said bidding for petroleum exploration would resume within one year.