Thai transport bosses unveiled a 15-20 per cent increase in freight rates, with immediate effect, while other transport providers are poised to increase fares to cover costs.

Higher freight rates, coming as oil prices hover at record levels, will drive up manufacturing costs and prices for consumers.

"The government should come up with remedial measures within seven days on how to help truck service providers or half of the nation's trucks - around 100,000 - will grind to a halt," said Apichart Phrairung-ruang, chairman of the land transport federation.

He said the increase yesterday was a response to reports that the government was issuing a public bus "fleet card". This allows bus drivers to fill their tanks with diesel costing Bt1 per litre below the market price. But the subsidy excludes truckers, he said.

When diesel was at Bt14.59 per litre, the operating cost was Bt5 per km but at Bt27, the cost had risen to Bt10-15 per km.

"A study says fuel bills should not exceed 32 per cent of total costs but now they account for 50-60 per cent," he said.

In another blow to consumers, provincial bus operators are poised to raise fares, despite the government's proposal to have the increase delayed in return for cheaper diesel. Bangkok bus operators also asked for a Bt1 fare increase.

Suchinda Cherdchai, a provincial private bus operators' representative, said fares must be increased by nine satang per km.

He said the operators would discuss issues on Thursday before seeking a meeting with caretaker transport minister Pongsak Ruktapong-pisal.

"We can't accept the ministry's proposal to raise the fares by only three satang per km. Meanwhile, the subsidies are complex as normally buses are refilled at the bus stations, not petrol stations," she said.

Today, the Energy Ministry will hold discussions with oil trading companies and refineries to finalise details of the subsidy programme.

A PTT source said the refineries agreed to help by reducing the refining fee by Bt2 to Bt114 per barrel or around Bt0.50 to Bt0.75 a litre.

"All the refineries agreed to help the public go through this difficult period," he said.

Meanwhile, Apinan Sumanaseni, president of Thai Airways, was also considering raising fuel surcharges as prices head towards US$80 (Bt3,020) per barrel.

Crude oil futures retreated yesterday on profit taking after prices topped US$75 a barrel last week. Light sweet crude for delivery in June fell by 46 cents to US$74.71 a barrel by midday in Europe on the New York Mercantile Exchange.

A member of the Organisation of Petroleum Exporting Countries (Opec) announced yesterday that the oil-producing cartel would not boost output to ease the price hike.

Banyong Amphorntrakul, executive chairman of the Private Bus Operators Association in Bangkok, said fares must be raised by Bt1.

"If it wanted to help people on low incomes, the government could issue special tickets to those who earn less than Bt7,000 a month. Without fare increases, we have to reduce the number of buses in service," Banyong said.

Under pressure last week, authorities came up with a proposal to issue coupons to bus operators. A source from the Energy Ministry favoured the government subsidy programme, saying other measures, including a lower contribution to the Oil Fund, could hurt the economy.

As of April 10, the Oil Fund's debt was Bt63.9 billion, although the contribution from octane-95 and octane-91 petrol sales was raised to Bt2.50 and Bt2.30 per litre, respectively. The diesel contribution is Bt1.95.

Some of the debt were refinanced through a bond issue. The Oil Fund restructured the remaining debt, promising to repay creditors in just two years instead of the original offer of five years. But if the Oil Fund is to subsidise fuel bills again, the debt will rise and the fund will be unable to repay the debt as planned, the ministry source noted.

"While no one is serious about energy conservation, we fear higher fuel bills will affect the economy. Last year, consumption dropped by 5 per cent against the 32-per-cent increase in fuel bills," he said.

Energy expert Piyasvasti Amaranand disagreed with the government's policy to selectively subsidise certain businesses. He said the government should float the prices and reduce the money going to the Oil Fund by Bt1 per litre. "The reduction will cushion the effects of rising prices," he said.

Piyasvasti said floating oil prices should solve the problem of shortages at small gas stations. He added that PTT's attempt to subsidise petrol prices had caused supply shortages.

A PTT source said if market forces were unleashed, petrol would sell at Bt30 and diesel at Bt28 per litre. The source confirmed that PTT would supply fuel to 1,400 petrol stations nationwide but it would not sell gasoline to independent oil sellers while it was losing money doing so.

Without adjustment in the marketing fee, some independent petrol stations are running out of diesel.

Panich Pongpirodom, director-general of Energy Business Department, yesterday insisted there was no diesel shortage as refineries were operating at full stream to refine 922,000 barrels per day while daily consumption in April usually dropped from March to 50 from 55 million litres.

Metta Banterngsook, director-general of the Energy Policy and Planning Office, added that large petrol suppliers would not run out of diesel although it may be scarce at some independent stations.

Energy Reporters

The Nation