Expert Emphasizes Need for Public Feedback on Energy Pricing Bill
PUBLISHED: July 29, 2024, 09:11
The Energy Ministry is intensifying its control over domestic oil and cooking gas prices through a new bill, making public hearings essential for understanding its potential impact on oil traders and government revenue, says an energy expert.
This proposed legislation, currently under review by the Council of State, aims to establish a new commission—similar to the Energy Regulatory Commission—to oversee the regulation of retail prices for oil and liquefied petroleum gas (LPG) using taxes and subsidies.
Energy Minister Pirapan Salirathavibhaga has announced that the bill is expected to be presented to parliament for approval by the end of the year.
The primary objective is to stabilize oil and LPG prices for both consumers in the business sector and households.
Former energy executive Yodphot Wongrukmit emphasizes the importance of engaging with the perspectives of oil producers, traders, and distributors, stating that the bill should undergo public consultation before being passed to lawmakers.
Since the government lifted its complete control over oil retail pricing in 1991 to foster market trade and competition, oil business operators have made significant investments within the sector.
If the government plans to exercise more stringent control over oil and LPG prices again, input from industry stakeholders is crucial, according to Mr. Yodphot.
He predicts that oil refinery operators, retailers, and transporters will be directly impacted by the new bill.
The proposed commission will have the authority to set appropriate tax rates for oil, a role currently managed by the Finance Ministry. Following the enactment of the new law, tax collection responsibilities will rest solely with financial officials.
Concerns have been raised by Mr. Yodphot regarding potential revenue losses if the commission seeks to maintain “appropriate” oil prices through tax regulations.
The oil tax currently represents a vital revenue source for the country, with the excise tax on diesel accounting for over 50% of fuel-related taxes, generating approximately 50-60 billion baht annually.
Additionally, the new bill will empower the commission to operate oil and LPG price subsidy programs through the state Oil Fuel Fund. However, Mr. Yodphot questions the sustainability of these subsidies, pointing to the fund’s current deficit exceeding 111 billion baht.
He advocates for targeted subsidy measures aimed at low-income oil and LPG users rather than broad-based initiatives.
Furthermore, Mr. Yodphot cautions against prolonged energy price subsidies, highlighting that this could hinder crucial energy conservation initiatives, integral to the nation’s carbon dioxide reduction goals.
