Diesel, NGV and LPG subsidies will cost 14 billions THB to PTT

PTT Plc expects that subsidising fuel prices under government policies will cost the country’s biggest oil company up to 14 billion baht this year.

As the market leader, the company played a key role in stabilising local fuel prices, said Prasert Bunsumpun, the PTT president and chief executive.

Half of the estimated 14 billion baht in losses would come from its retail oil operations, he said.

”But oil prices continue to fluctuate. In the first four months, we sold every litre of diesel at a loss of 0.32 baht below actual cost. This is according to the instructions given by the government.

Mr Prasert told investors at a briefing at the SET yesterday that PTT would also bear losses for subsidising compressed natural gas under the NGV (natural gas for vehicles) programme.

While CNG prices are to be increased to between 10 and 12 baht per kilogramme next year from 8.50 baht now, prices would still be 50% lower than current diesel prices.

The losses would also affect PTT’s plans to invest 50 billion baht in NGV facilities over the next four years, Mr Prasert added.

But Mr Prasert said state policies caused the company to lose profits.

Rather than export liquefied petroleum gas at prices of $900 per tonne in the global market, PTT is forced to serve domestic demand at a fixed price of $320 per tonne. PTT now has to import up to 200,000 tonnes of LPG per year to meet demand, even as domestic supplies are smuggled out of the country due to profiteering opportunities on the subsidised fuel.

LPG imports are likely to rise to 500,000 tonnes in 2009 as a result of soaring demand from motorists seeking relief from high diesel and petrol prices. (Bangkok Post)


We can argue about the figures (that change on a monthly basis, PTT complains since a long time).

But the facts remain : the gvt subsidizes, in direct or indirect ways, diesel, LPG and NGV (both presented, ironically as “solutions” to the oil crisis…).

1 Response to “Diesel, NGV and LPG subsidies will cost 14 billions THB to PTT”

  1. 1 rbg 24 June 2008 at 12:12 am

    Thai “Logic” again. God save us or Buddha save us from these “Academics” with their PHDs from some genius Thai think tank. This place no way embodies any semblance of democracy. A totally closed, controlled economy with zero competition allowed. Just for fun guys try this simple redneck plan. Balance your 35 percent absurd excise tax on small fuel efficient autos with your 7 percent gift on big, heavy pickups and save zillions in fuel.Don’t give anyone a break, just balance your taxes to reflect the same revenues. Cut all fuel subsidies and let the markets work. Quit screwing the Thai public with insane cost of all these programs to line the pockets of the well connected.

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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.

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