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Government subsidy scheme criticized

The President of the Bangchak cited the need to resort to other energy resources given that once the ASEAN Economic Community has begun, Thailand will have more natural resources from other nations, which could eventually force the prices of bio-fuel in the Kingdom to drop.

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Gas station Bangkok

Dr. Anusorn Sangnimnuan, President of the Bangchak Petroleum Public Co., Ltd said the political campaigns of most political parties are not clear on energy policy while he wished to see them promoting inexhaustible energy such as solar and ethanol as well as bio-diesel.

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He claimed that the present fuel price subsidy only further increases financial burden on the government.

Thailand’s subsidy on diesel currently costs the government THB9.52 billion or USD313.7 million) per month to keep the retail price of diesel below the threshold of THB30 per litre.

The President of the Bangchak cited the need to resort to other energy resources given that once the ASEAN Economic Community has begun, Thailand will have more natural resources from other nations, which could eventually force the prices of bio-fuel in the Kingdom to drop. He urged the government to terminate the subsidy scheme and allow the market mechanism to determine the prices.

Meanwhile, he said Bangchak has no problems of service delays and shortages of NGV at the moment. As Bangchak has only 17 NGV stations across Thailand, he admitted that there are long lines waiting to fill up their tanks. The company is not thinking about expanding more stations due to the subsidy scheme which is not worth the investment.

via Bangchak urged the gov to drop subsidy scheme : National News Bureau of Thailand.

Thailand’s subsidy on diesel currently costs the government THB9.52 billion  or USD313.7 million) per month to keep the retail price of diesel below the threshold of THB30 per litre.

If oil prices  continue its rising trend due to Middle East unrest, Thailand won’t be able to maintain its diesel subsidy more  than two months before the oil fund runs dry.

The Thai government retains authority to control prices or set de facto price ceilings for 38 goods and 1service, including staple agricultural products (sugar, cooking oil, condensed milk, wheat flour, andothers), liquefied petroleum gas, medicines, sound recordings, and student uniforms.

Under the 1999“Act Relating to Price of Merchandise and Service,” a government committee headed by the Minister ofCommerce has the authority to “Prescribe the purchase price or distribution price of merchandise orservice…”, “prescribe maximum profit per unit…”, and set the terms and conditions, including maximumpermissible volumes, of any goods and service in Thailand. The law was amended in 1999 with theadvent of a competition law and was meant to be phased out.

However, with several critical aspects ofcompetition law still undefined, the old law continues in place with no termination under consideration.
Price control review mechanisms are nontransparent. Only sugar currently is subject to a retail priceceiling. In practice, the government also uses its control of major suppliers of products and servicesunder state monopoly, such as the petroleum, aviation, and telecommunications sectors, to influenceprices in the local market.

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