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Thai government cuts LPG subsidies

Dec. 29, 1997

In preparation for liberalization of Thailand's liquefied petroleum gas market, the government has cut some long-standing subsidies. The move is expected to allow domestic LPG prices, unchanged for several years, to rise. Full deregulation is expected in the next few months. The process began with depletion of the subsidy fund that was drawn from a levy imposed on the sale of other oil products. The government spent 400 million baht ($9.5 million)/ month maintaining the retail price of LPG,

In preparation for liberalization of Thailand's liquefied petroleum gas market, the government has cut some long-standing subsidies.

The move is expected to allow domestic LPG prices, unchanged for several years, to rise. Full deregulation is expected in the next few months. The process began with depletion of the subsidy fund that was drawn from a levy imposed on the sale of other oil products.

The government spent 400 million baht ($9.5 million)/ month maintaining the retail price of LPG, which in Thailand is used mainly for household cooking.

The government continues to control the retail price of household LPG and subsidize LPG transportation to prevent LPG prices from rising too rapidly.

Piyasvasti Amranand, secretary general of the National Energy Policy Office (NEPO), said this initial deregulation was a "partial float" to prepare the consuming public for full liberalization early next year, when world LPG prices are expected to ease.

Effective on Oct. 9, the price of LPG for household use went up 24.65% to 13.40 baht/kg (32¢/ kg).

To promote competition in local LPG trade, the Commerce Ministry will soon lift the control on LPG imports.