Caretaker Energy Minister Viset Choopiban said yesterday that if ethanol prices were too high, the state might act to limit the effect on gasohol prices.

"We could reduce the contribution from gasohol sales to the Oil Fund," he said. "The Energy Policy and Planning Office is looking into the details." Oil companies currently pay 94 satang for every litre of gasohol they sell to the Oil Fund. Energy Policy and Planning Office director-general Metta Banterngsook said this contribution could be reduced 10 satang for every Bt1 increase in the price of ethanol. For example, if the price of ethanol spiked Bt3 per litre, the contribution could be slashed 30 satang per litre.

"It is highly possible the ethanol price will not hold at the Bt19 level," he said. "The price should remain high in the short term, due to the small number of ethanol producers. We anticipate that the situation will improve in the second half [of the year], when the supply will increase, making the price more competitive."

An Energy Ministry source said that if the ethanol price was too high, oil companies might need to adjust the differential between the prices of retail gasohol and petrol from Bt1.50 per litre to Bt1.

Ethanol shortages have been reported for some time, as few companies have successfully begun production, and PTT Plc has to import millions of tonnes of it to meet domestic demand.

Ethanol has been touted by the Thaksin administration as an alternative fuel capable of saving energy-import bills, because at a time of high oil prices, it replaces a petrochemical additive mixed with petrol.

World oil prices are expected to remain above US$60 (Bt2,300) per barrel for some time, as high-consuming Western countries remain locked in winter, and armed conflict continues in the oil-producing countries of the Middle East.

Last week in Singapore, officials from regional energy ministries attending an Asia Power Congress foresaw Asian countries being the key to production of alternative fuels to reduce dependence on oil.

Energy permanent secretary Cherdphong Sirivit, who attended the meeting, said investment in alternative fuels was expected to reach $1.3 billion per year, half of which would go to Asia.

"The congress foresaw that if crude oil prices stayed above $60 per barrel, investment [in alternative fuels] would continue to rise, along with concern for the environment," he said.

Meanwhile, Egat Plc chief executive Kraisri Karnasutra yesterday urged the government to lay out a long-term energy plan, because within the next five years, it was estimated that 80 per cent of domestic electricity would be produced from natural gas.

"At that level, it poses risks in terms of energy security as well as production costs," said Kraisri.

He urged creation of an energy master plan that highlighted alternative and new fuels.

"Right now, a replacement for natural gas could be coal, of which reserves are higher than those of oil and for which prices are more stable than those of other fuels," he said.

He also raised the importance to Thailand of possible hydropower production in neighbouring countries.

"Clear strategies are necessary, so that we can plot production plans in accordance with future risks," said Kraisri. "We need to make decisions now, because many other nations - particularly China and Vietnam - are also planning to invest in our neighbouring countries."