Year 2009

 May

PTT projects loss of more than B7bn from NGV trade

PTT Plc, the country's sole natural gas seller, expects to lose more than 7 billion baht from its natural gas for vehicles (NGV) business this year, according to Punnachai Footrakul, vice-president for natural gas marketing.

The majority state-owned company lost 5 billion baht on NGV last year.

PTT has kept pump prices for NGV at 8.50 baht a kilogramme for several years, which is lower than its current cost of 14 baht a kg, to comply with Energy Ministry policy to promote the fuel.

"PTT sought the ministry's approval to lift the retail price to 12 baht two years ago but there was no response. Our cumulative loss from NGV operations is 14 billion baht, with another 7 billion baht likely this year", said Mr Punnachai.

The sharp rise in oil prices from late 2007 to mid-2008 pushed up natural gas demand substantially. Although the price of oil has declined more than 60% since July last year, NGV demand continues to rise, particularly among transport fleet operators who like the subsidy, he said.

"It is essential to lift the gas retail price to trim our losses. We are not asking for a rise to the actual cost of 14 baht, but just a small increase is acceptable."

Demand for NGV has risen from 1,000 tonnes per day early last year to 2,900 tonnes in December and 3,300 tonnes this month. The number of NGV-compatible vehicles has risen to 142,000 from 128,000 at the end of last year and is expected to hit 160,000 this year.

The number of newly modified engines is about 100 units per day, dropping from 500 last July when oil was three times costlier.

PTT is still proceeding with 7 billion baht worth of NGV facilities investments, including adding 90 filling stations this year.

The company will also ask the Energy Conservation Fund to provide a 2-billion-baht fund for soft loans to help the operators of 20,000 taxis convert their vehicles from liquefied petroleum gas (LPG) to NGV.

About 40,000 of the total 60,000 taxis operating in Greater Bangkok already use modified their engines to make them compatible with natural gas. LPG is also heavily subsidised but the aim for many years was to help households and food vendors who use the fuel for cooking.

This article is written by Bangkok Post

11/05/2009

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