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Published on April 11, 2008

He said this was because of the wide gap between the domestic and the global prices for LPG. At present, domestic LPG is fixed at US$332 (Bt10,500) per tonne, compared with $800 on the global market, a gap of $468.

Prasert said he feared the burden would be too large for the government to shoulder and passed on to consumers without comprehensive measures covering the entire LPG industry.

"LPG consumption will rise significantly by the end of next year, because of the Energy Ministry's price-fixing policy, persistently high oil prices and the smuggling of LPG out of the country.

"We estimate 200,000 tonnes will be imported this year, but next year the import volume could be 800,000 tonnes, because local producers may reduce their production capacity if the government has no measure to deal with the problem," Prasert said.

PTT is now in charge of LPG imports and shoulders the price differential on the understanding that it will be repaid by the government later.

Prasert said on the expectation that the average price of Dubai crude oil would be $90 a barrel, up from $68 last year, more motorists would be encouraged to switch to LPG, which - because of the price-fixing scheme - remains cheap. The cheap domestic price also encourages smuggling to neighbouring countries.

"The Energy Ministry must set retail prices in accordance with the actual cost of LPG. Meanwhile, the Energy Business Department must stop issuing licences to new LPG stations. The number of new stations is expanding fast, and it will become difficult to sort things out," he said.

Because of the low domestic price, refineries are discouraged from producing LPG, resulting in tight demand and supply.

The Energy Ministry wants refineries to power their operations with bunker oil rather than burn LPG, in order to ensure greater supplies in the market.

The ministry also plans to introduce a two-tier pricing formula in July, whereby household users will pay less for LPG than do motorists.

Also in July, more stations offering natural gas for vehicles (NGV) are expected to be operating, and LPG users will have fewer complaints about switching from more pricey LPG to NGV.

Watcharapong Thongrung

The Nation