Energy Ministry’s new bill targets stable oil and LPG prices

The Energy Ministry’s new bill aiming to control domestic oil and cooking gas prices requires a public hearing to assess its impact on oil traders and government revenue, according to an energy expert.

Currently under review by the Council of State, the bill proposes the establishment of a new commission, akin to the Energy Regulatory Commission, to regulate retail prices of oil and liquefied petroleum gas (LPG) through taxes and subsidies.

Energy Minister Pirapan Salirathavibhaga indicated that the bill would be submitted to Parliament for consideration, with enforcement expected by the end of the year. The primary goal is to mitigate consumer price volatility in both business and household sectors.

Local Thai officials must listen to what oil producers, traders and distributors say, not just oil end users as said former energy executive Yodphot Wongrukmit, stressing the importance of public consultation before the bill proceeds to lawmakers.

The oil industry has seen significant investment since the government ceased fully controlling retail oil prices in 1991 to foster trade and competition. Yodphot insists that greater control over oil and LPG prices should involve input from industry stakeholders.

He expressed concerns that oil refinery operators, retailers, and transport operators would be adversely affected by the new bill. According to Pirapan, the commission will set appropriate tax rates on oil, a task currently managed by the Finance Ministry. Once the new law is enacted, financial officials will be solely responsible for tax collection.

Yodphot questioned whether the government might lose revenue if the commission sets oil taxes to ensure appropriate prices. He noted that the oil tax is a critical revenue source, with excise tax on diesel comprising over 50% of all fuel taxes and generating 50-60 billion baht annually.

The bill also grants the commission authority to manage oil and LPG price subsidy programmes via the state Oil Fuel Fund. This raised concerns for Yodphot, given the fund’s significant loss of over 111 billion baht. He highlighted the limited resources available for subsidising oil and LPG prices through the rapidly depleting fund.

Yodphot recommended that the government target specific groups of low-income oil and LPG users for subsidy schemes, rather than implementing universal subsidies. He cautioned against prolonged price subsidy policies in the energy sector, as this might hinder energy conservation efforts, which are crucial for the country’s carbon dioxide reduction campaign, reported Bangkok Post.