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Published on March 7, 2008

However, Energy Minister Poonpirom Liptapanlop yesterday said the subsidy would stand for only four months and that consumers would still experience "ups and downs" in the retail price.

"We have no policy to maintain the retail price of diesel below Bt30 a litre, but we know diesel could rise above that level, and that could prompt manufacturers to raise product prices," Poonpirom said.

She said the decision would not create further debt for the Oil Fund.

The ministry plans to scrap a 50-satang-a-litre contribution to mass-transit projects.

It will also cut by 10 satang a litre a compulsory contribution to the Oil Fund from diesel sales, and the Oil Fund's reserves could also be used. In total, the moves will cut diesel prices 90 satang per litre.

Poonpirom said the proposals had yet to be approved by the National Energy Policy Committee (NEPC), which meets next Wednesday.

The NEPC, which is chaired by Poonpirom, could approve one or all of the proposals.

If approved, the measures will be implemented this month and last until May.

Thammasat University economics lecturer Plaiphol Khumsap said the measures would temporarily delay price hikes in times of global oil-price volatility but give the wrong message.

"The ministry must ensure that oil prices reflect reality.

It's best now and for the future for consumers to save energy and switch to alternative energy sources.

Moreover, the delayed price hikes will only be temporary, because global oil prices will tend to rise further," he said.

Meanwhile, Energy permanent secretary Pornchai Rujiprapha will discuss the country's stocks of pure biodiesel with the Commerce and Agriculture ministries.

He is concerned about smoothing out production of biodiesel B2 and B10.

With an output of 1.3 million tonnes of crude palm oil, only 360,000 tonnes are left for pure biodiesel production.

If Thailand is to add 5-per-cent biodiesel to diesel to create B5 alternative fuel, at least 700,000 tonnes will be required, he said.

He said the three ministries had to address the issue, because shortages of crude palm oil were anticipated.

The Energy Ministry will propose the stocking-up of crude palm oil, with PTT and Bangchak Petroleum managing the stocks.

The Nation