Fuel price cuts imminent

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Fuel price cuts imminent
Govt prioritises key policies for House
Published: 13/08/2011 at 12:00 AM
Bangkok Post: Newspaper section: News
 
The new government has begun prioritising its key economic policies, with a plan to suspend the state Oil Fund's fuel levies to be implemented first.

Cabinet members responsible for economic affairs yesterday held a meeting with representatives of the National Economic and Social Development Board to discuss a draft government policy statement, which incorporates campaign pledges from Pheu Thai Party and its coalition member parties.

The policy statement will be for Prime Minister Yingluck Shinawatra to read out before parliament _ a constitutional precondition for legalising the government's administrative powers.

Attending the meeting were Deputy Prime Minister Yongyuth Wichaidit, Commerce Minister Kittiratt Na-Ranong, Finance Minister Thirachai Phuvanatnaranubala and Energy Minister Pichai Naripthaphan.

Ms Yingluck said all key economic and populist policies promised by Pheu Thai during the campaign would be included in the policy statement, including the 300-baht daily minimum wage and 15,000-baht monthly minimum salary for bachelor graduates.

Mr Kittiratt, also a deputy prime minister overseeing economic affairs, said the meeting had drawn up a draft government economic policy statement comprising campaign pledges from Pheu Thai and other coalition parties.

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The meeting had also prioritised which of the economic measures should be implemented first, and when.

Policies requiring immediate implementation and likely to yield quick results include lowering fuel prices by reducing state Oil Fund levies.

"Suspending the collection of fuel levies by the Oil Fund will help ease retail oil prices immediately," said Mr Kittiratt.

The Oil Fund collects levies on vehicle fuels to raise money for energy security.

However, most of the money in recent years has gone to subsidise liquefied petroleum gas (LPG), compressed natural gas (CNG) and, more recently, diesel.

Mr Kittiratt said other economic measures will be implemented in stages and most should materialise in the first half of next year, such as the minimum pay brackets and a corporate tax reduction from 30% to 23%.

He said the scheme to mortgage paddy rice at 15,000 baht a tonne must be implemented in time for the harvest season in November.

But the minimum wage rise and a proposed cut of the corporate income tax from 30% to 23% may take some time to implement because the two policies would require law amendments first, Mr Kittiratt said, adding that the government will have to explain the 300-baht daily rate to the private sector, the Federation of Thai Industries and the Thai Chamber of Commerce.

The government will also find ways to minimise the impact of the policy and to reduce the production costs of entrepreneurs, Mr Kittiratt said.

He said the draft policy statement will be sent to coalition parties for consideration on Monday.

Energy Minister Mr Pichai said his ministry will suspend collecting levies on premium petrol (benzene 95), regular petrol (benzene 91) and diesel for a short term or no more than one year.

The policy will be implemented immediately after the government delivers its policy statement before parliament.

However, reducing Oil Fund subsidies will cost the state about 3 billion baht a month and the government may need to find other measures to offset the liabilities, such as issuing government bonds to subsidise the prices of LPG and CNG, which could be pushed up if the fund's subsidies are reduced.

"This policy will be short-term, lasting no more than a year," Mr Pichai said.

"It will not affect the use of alternative energy or gasohol."

This would bring down the price of premium petrol (benzene 95) by 7.5 baht a litre, regular petrol (benzene 91) by 6.7 baht and diesel by 2.2 baht.

Mr Pichai said the Oil Fund will begin to collect fuel levies again when the public is earning better incomes as a result of the government's economic policies.