Govt green­lights cook­ing gas price cap

The Myanmar Times - - International Business -

THE En­ergy Pol­icy Ad­min­is­tra­tion Com­mit­tee (Epac) has agreed to cap the re­tail price of cook­ing gas at be­low global mar­ket prices, even as the state cook­ing gas fund threat­ens to go broke.

The mar­ket price of cook­ing gas is ris­ing, but with 392 mil­lion baht in cash in hand, the state cook­ing gas fund will only be able to sub­sidise the cap un­til mid-July, as­sum­ing ad­di­tional re­sources are not chan­nelled into the fund. The state cook­ing gas fund was driven to near bank­ruptcy through ex­ces­sive sub­si­dies.

The sub­sidy will cost 346 mil­lion baht a month, 46 mil­lion baht less than the fund’s to­tal cash re­serves. PTT Plc, the na­tional oil and gas con­glom­er­ate, will contribute 49 mil­lion baht to the mea­sures, but the state Oil Fund is ex­pected to cover the rest, which means it will run dry within a month.

The fund wants to main­tain the re­tail price at 363 baht per 15-kilo­gramme cylin­der for house­holds, and at 325 baht per cylin­der for small street food busi­nesses reg­is­tered with the En­ergy Min­istry.

Twarath Sutabutr, di­rec­tor-gen­eral of the En­ergy Pol­icy and Plan­ning Of­fice, said 7.57 mil­lion house­hold units are ex­pected to re­ceive the cook­ing gas price sub­sidy, while the street food ven­dors stand at 395,544 units.

He said once the cash runs out, the pol­i­cy­mak­ers have planned for one of three op­tions: loans to the state cook­ing gas fund, de­lay­ing pay­ment to cook­ing gas op­er­a­tors, mostly oil re­finer­ies, in­clud­ing PTT Group, and bor­row­ing from the state oil fund, which has cash in hand of 30.7 bil­lion baht.

“The cross sub­sidy will not be re­peated, and levies will be col­lected from mo­torists while the fund sub­sidises gas users,” Mr Twarath said.

The cook­ing gas price was floated in 2014 when global oil prices fell be­low US$50 a bar­rel. Pol­i­cy­mak­ers re­sumed the sub­sidy sev­eral weeks ago be­cause of ris­ing global oil prices.

In 2014, the state Oil Fund used to cross-sub­sidise gas users. In the same year, the fund was sep­a­rated into a new state cook­ing gas fund and pol­i­cy­mak­ers ter­mi­nated the cross-sub­sidy scheme.

Mr Twarath said cook­ing gas prices in the global mar­ket may de­cline dur­ing the sum­mer sea­son in Western coun­tries and the fund may not need mas­sive cap­i­tal for sub­sidy.

He said the pol­i­cy­mak­ers also ap­proved main­tain­ing cash in hand for the 30.7-bil­lion-baht state Oil Fund by cut­ting the bud­get sub­sidy for bio­fu­els and in­creas­ing levy col­lec­tion from petrol users.

Epac ap­proved a cut in the sub­sidy bud­get for bio­fu­els such as gaso­hol 95 E20 to 2.63 baht per litre from 3 baht and gaso­hol 95 E85 to 8.98 baht from 9.35 baht, but dou­bled the levy col­lec­tion of gaso­hol 95 E10 to 72 sa­tang from 35 sa­tang, bring­ing it to the same level of the gaso­hol 91 E10 rate. The levy col­lec­tion for ben­zene was also in­creased from 6.31 baht per litre to 6.68 baht.

Mean­while, Epac ap­proved a de­crease in ex­cise tax for diesel to 5.85 baht per litre from 5.98 baht, while new-grade biodiesel or B20 tax was set at 5.15 baht.

The changes will be de­cided upon af­ter the Fi­nance Min­istry pro­poses the ex­cise tax to the cabi­net.

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