PTT hopes Govt’s fuel price subsidy will be short-term


BANGKOK, 21 April 2011 – Energy giant PTT Plc has suggested the Government to refrain from pegging the prices of diesel and liquefied petroleum gas (LPG) for a long period of time as it would lead to higher demand and imports. 

PTT President and CEO Prasert Bunsumpun indicated that the global oil price had been hovering at a high level as a result of the surging demand and the ongoing unrest in oil producing countries in the Middle East and North Africa. Therefore, he viewed that the Government’s policy to freeze energy prices, particularly diesel and LPG, by means of subsidization and tax reduction should not be adopted over the long haul due to a heavy burden on the country.

Mr Prasert elaborated that the newly-imposed excise tax cut measure to keep the diesel price below 30 THB a liter would cost the Government over 100 billion THB in revenue each year, whereas the amount could instead be spent on other key areas of national development.

Further price distortion is also expected to augment the overall power consumption of the country and even affect the automotive industry as more motorists would be attracted to the cheaper diesel and LPG. With the limited domestic production capacity, more imports of both types of energy would eventually become necessary.