Thailand has commenced what could be a long-term pricing correction program for CNG and LPG which will see fuel prices increasing every six months. The program was introduced after energy giant PTT signed an agreement last month with the Land Transport Federation of Thailand (LTFT) and seeks to increase the cost of the fuels to a level more reflective of their actual cost. Prices to date have been heavily subsidised by PTT, which is public/privately owned, effectively providing a disincentive for PTT to actively grow the market and threatening the long-term sustainability of the fuel.
The agreement saw the price of CNG rise by 1 baht ($US0.03) this week to 12.55 baht/kg, still well below PTT’s break even price of 16 baht/kg. Public transport vehicles and taxis are exempt from the rise and will continue to get lower priced fuel at 8.5 baht/kg.
Sources in Thailand say that despite the agreement, any further price rises would still be subject to government policy at the time and that press reports indicating that PTT would add another 200 CNG stations as part of the agreement are incorrect. Thailand currently has 497 CNG stations and 457,000 CNG vehicles.