Subsidy transfer to fuel depleted cooking gas fund

A cross-subsidy fuelled by a levy on oil users is being resumed as the State Oil Fund for cooking gas is already broke, says the Energy Ministry.

Energy policymakers approved transferring cash from the oil users’ account for the cooking gas account to maintain the retail price at 363 baht per 15-kilogramme standard cylinder for the rest of 2018.

Energy Minister Siri Jirapongphan said the Energy Policy Administration Committee last week approved the first sum of 3 billion baht from the oil users’ account.

The cross-subsidy programme was terminated in 2014 after a decade because it made the cooking gas account go into the red, with a debt of 93 billion baht in 2007.

Cooking gas, also known as liquefied petroleum gas (LPG), is a commodity and has been a hot-button political issue over the last two decades as politicians attempted to keep prices low to placate the masses.

Global oil prices collapsed during 2014-2016 to below US$50 per barrel, making the subsidy unnecessary.

The Energy Policy and Planning Office website reports the cooking gas account was 117 million baht in the red as of July 15 because it has been subsidising the cooking gas price at 6.234 baht per kg to cap the price at 13.08 baht per kg, equal to 363 baht per cylinder, excluding the transport fee.

The cooking gas account used to have a balance of 1 billion baht but has dwindle away because of policy decisions.

But the oil user account stood at 29.64 billion baht, almost as high as 33 billion baht during 2014-2015.

The State Oil Fund was established to promote biofuels by allocating the levy collected from fossil-based oil users to biofuels, including the subsidy for gasohol E20 at 2.63 baht per litre, E85 at 8.98 baht per litre and biodiesel B20 at 3.5 baht per litre.

Separately, the ministry yesterday launched the first commercial sale of B20, distributed by PTT Oil and Retail Business (PTTOR).

“Thailand is the first country to open the commercial sale of B20 beating out Indonesia, whose bio diesel content is at 10% or B10,” said Mr Siri.

He said Thailand has announced it will spearhead bio fuel development, ranging from ethanol to metyl ester.

Mr Siri made the announcement at the UN’s Sustainable Development Symposium in New York last week.

The first B20 user is SC Carrier Co, a truck operator with a 1,200-strong fleet in Chon Buri. SC Carrier is one of PTTOR’s diesel distributors for trucks, expecting sales volume at 270,000 litres per month.

The policymakers aims for B20 to make up 22% or 15 million litres of the country’s total daily diesel consumption of 65 million litres.