Refiners reduce margins to assist hard-hit

Pichai Chunhavajira said refiners had agreed to cut the diesel refining margin by Bt3 per litre as the benefits would go to the most-affected sectors. If diesel was to be cut across the board, the margin could have been cut by only 25 satang per litre, he said.

Thai Oil, PTT Aromatics and Refining, IRPC and Bangchak Petroleum yesterday agreed to cut the margin by Bt3 a litre for six months, from June to November. The move will hurt margins by 4 satang per litre, from Bt1.50 per litre.

The amount will be deducted and presented to the Oil Fund, and the National Energy Policy Commission will handle the fund. The commission will consider on Monday how to deliver the cheap diesel to the needy industries, primarily the transport, fishery and agricultural sectors.

"The four refineries volunteered to cut their margins. This is not a compulsory or market-intervention measure," Energy Minister Poonpirom Liptapanlop insisted, noting that Esso (Thailand) and Star Petroleum Refining had approached the ministry to lend similar assistance.

The first to benefit from the move are 14,636 public buses in Bangkok, which consume 30 million litres of diesel a month. Bus-operators staged a protest on Thursday against a court injunction which stopped fare increases, causing chaos throughout Bangkok. They agreed to end the protest when the Transport Ministry agreed to supply cheaper diesel.

Yesterday Prime Minister Samak Sundaravej unexpectedly showed up to thank all refineries while they were in the meeting with Poonpirom.

Energy deputy permanent secretary Norkhun Sittipong said after the allocation of 30 million litres a month to buses, the rest will be split amongst other sectors. Small fishing boats consume 15 million litres a month while the agricultural sector needs 10 million to 20 million litres.

PTT president and CEO Prasert Bunsumpun said the four refineries would now discuss which would contribute how much each month. He noted that this move would lighten the burden while the operators would need to resort to long-term strategies to cope with high oil prices, including gas-engine retrofitting.

He noted that some sectors needed special care due to soaring oil prices but a single organisation could not bear the burden forever.

Chainoi Puankosoom, chairman of the Federation of Thai Industries' Refining Club, said refineries would hold discussions later on moves to educate the public on their operations as well as refining margins.