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Published on January 10, 2008

Bangchak Petroleum is considering raising the retail price of diesel tomorrow, and if it does, the new price will for the first time breach the psychological level of Bt30 a litre.

At the same time, the Energy Ministry is checking inventories of palm oil for biodiesel production, in hopes of reducing oil imports and providing cheaper alternative fuels to consumers.

Bangchak president Anusorn Sangnimnuan said the company was presently maintaining the retail price, although the marketing margin for diesel was less than Bt1 per litre, and crude oil prices increased again on Tuesday.

"We're closely monitoring the Singaporean price, and the [retail] price could be changed on Friday. We'll maintain the petrol price [as it stands], because the marketing margin is more than Bt1.40 a litre," Anusorn said.

Energy Minister Piyasvasti Amranand yesterday said the Oil Fund could not be exploited to subsidise oil prices. He suggested a cut in fuel excise taxes but admitted that would reduce government revenue.

So far this year, fuel retailers have raised petrol prices twice, bringing 95-octane petrol to an all-time high of Bt33.69 a litre and 91-octane petrol to Bt32.39. Diesel now stands at Bt29.74 a litre, and any increase will be crucial, since Thailand consumes 50 million litres a day.

The price of Dubai crude oil yesterday was US$90.33 (Bt3,000) per barrel, while refined diesel remained above $100 per barrel - a measure equal to about 159 litres. Faced with spiralling oil costs, Thailand is increasingly resorting to alternative fuels, particularly biodiesel, and palm oil is a major raw material in its manufacture.

Starting on February 1, all retailers must mix two parts of biodiesel with 98 parts of diesel to produce "B2 fuel", which will require 1.2 million litres of pure biodiesel a day. The Energy Ministry plans to force all retailers to sell B5 diesel, containing 5 per cent biodiesel, by the end of 2011.

Energy permanent secretary Pornchai Rujiprapha yesterday said would be discussions next week between the Energy and Commerce ministries on the inventories of palm oil and the country's plantation area. The issue of balancing demand for palm oil for the food and energy sectors would also be discussed.

"Thailand should not suffer shortages of crude palm oil, due to the country's huge plantation area. We're also importing palm oil for alternative-fuel production, so this will not affect food demand," he said.

Manufacturers of cooking oil have complained demand for palm oil by the energy sector has pushed up the price of vegetable oil. However, Piyasvasti said even without turning local palm oil into biodiesel, palm-oil prices would have risen, because of huge demand for alternative fuels around the world.

Finance deputy permanent secretary Sathit Limpongpan yesterday said he had instructed the Treasury Department to lease its land for oil-crop plantations. The department owns about 12 million rai of land around the country, occupied mainly by state agencies, state enterprises and encroachers.

"The land could be leased to farmers," he said. Treasury land could also be turned into convention centres to promote the tourism industry. Phuket and Chiang Mai sites could be used for such venues, which could be as popular as Bangkok's Queen Sirikit National Convention Centre, which was also built on Treasury land.

 The Nation