Urges government to gradually reduce energy price subsidy

BANGKOK, Jan 6 – The government should gradually reduce its subsidy on energy prices and allow them to move in response to normal market mechanisms, according to a leading academic.

Pattamawadee Suzuki, dean of the Thammasat University Faculty of Economics, said the government had subsidised power bills, and liquefied petroleum gas (LPG) and natural gas for vehicles (NGV) prices by Bt6 billion and Bt15.62 billion respectively since September 2010.

Also, the government had transferred money from the Oil Fund to subsidise fuel prices.

Continuing to implement the measures now is unjustifiable because the oil prices tend to rise in the long run. The government should review its subsidy policy and let the prices move in accordance with market mechanisms, she said.

The measures, if allowed to be implemented for a long period, could have a negative effect on the country’s fiscal position.

“As a general election is expected to be held soon, the government and its coalition partners will [be tempted to] issue short-term measures to court voters. Some projects are seen wasteful in terms of budget.

“Instead of responding with short-term measures, the government should give priority to long-term projects such as construction of electric rail routes or the basic infrastructure.”

Long-term measures, if implemented successfully, could win the public’s trust and hearts, she said. (MCOT online news)