Korn rebuts talk of fuel subsidies

Efforts to develop alternative energy in Thailand will make little progress if domestic fuel prices do not increase, said Finance Minister Korn Chatikavanij. He played down comments made earlier this week by Pruektichai Damrongrut, a deputy finance minister, that the government could cut fuel taxes or even implement outright subsidies if crude oil prices continue to rise. The State Oil Fund has a positive financial position but faces a burden of 600 million baht per month to offset excise tax increases made last month. Although the Senate rejected the government’s decree to raise the excise tax ceiling from five to 10 baht per litre, authorities remained committed to the basic premise of the law, he said. “If we subsidise fuel, even though our country is a net oil importer, it will only hinder our efforts to develop alternative fuel sources, something which is critical for our future and beneficial for our farm sector,” said Mr Korn. The government has already pushed the introduction of E20, a blend of 20 percent ethanol and petrol, and is reviewing tax policies for E85-powered vehicles. (June 25, 2009)