LPG : when reality catches up with arithmetic

An interesting article from Nation about LPG, the massive increase of consumption because of the subsidy, the cost for PTT, the price increase scheduled for august etc.

On the “fuels-for-vehicles-landscape” of Thailand, LPG is a very important piece. The tax cuts (for 6 months only) on diesel and gashol should not hide the LPG issue (read here).

Here are some quotes.

“For 15 years, we’ve been a net exporter, but if we must import up to 1.1 million tonnes next year as expected, Thailand will become the fourthlargest importer in Asia, following China, Japan, South Korea and India. They import 37 million tonnes, 11.3 million tonnes, 6.2 million tonnes and 1 million tonnes, respectively,” he said.

He said if the price remained unchanged or was raised slightly, demand would not slow down and PTT could not absorb the financial burden.

He said PTT this year alone was responsible for importing 450,000 tonnes and shoulders a difference of US$600 (Bt20,100) per tonne between the local and the global price. The burden will only rise as import volume climbs.

He called the LPG price “highly volatile”. Now it costs $927 a tonne, up from $905 last month. To ship it to Thailand, the importer must shoulder a premium of $50 a tonne plus other expenses, mostly for large carrier vessels costing $35,000 to $45,000 a day. In all, the cost comes to about $1,000 a tonne.

If Thailand fails to raise the domestic price to match the global level, or Bt38 a kilogram, demand will rise 14 per cent per year, as has happened in the past two years, mainly on higher demand from vehicles, he said.

The Energy Ministry has not yet revealed how much the LPG price for vehicle and industrial use will be raised. It plans to announce the new price next month.

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