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Persuading owners to switch costs too much
SANTAN SANTIVIMOLNAT
The Industry Ministry slammed plans yesterday for the speedy introduction of E85 gasohol, warning it would cost the government too much to persuade vehicle users to switch to the new fuel. E85, a mixture of 85% ethanol and 15% gasoline, made its debut last week at a single PTT service station in Bangkok at a price of 20.19 baht per litre.
Majority state-owned PTT expects to have 14 stations offering the fuel by year-end, even though there are almost no cars locally that can use the fuel, save for a few models that are being tested by carmakers.
Many automakers, particularly Japanese companies, believe the government should focus on building a solid market for E20 gasohol, which has proved highly popular, before moving to the next stage. E20- compatible passenger cars have been the industry's most promising sellers in an otherwise sluggish year.
Chakramon Phasukvanich, the permanent secretary for the Industry Ministry, said that E85 should be introduced step by step to give the parties involved, such as auto makers, petrol stations and oil refineries, enough time to adapt to the new environment.
Ultimately, consumers will be the ones who decide whether the new fuel will exist in the market, he said at a seminar yesterday on the Thai automotive industry.
''We agree with the E85 implementation but disagree with a policy to replace gasoline with E85 within three years. The fuel should be introduced as a new choice for the consumers and let them decide on the fuel,'' said Mr Chakramon, whose ministry is responsible for automotive development policy.
''The existing energy development plan is rather sound but it is surprising that the Energy Ministry is so speedily implementing E85 fuel.''
In addition, Mr Chakramon said the government may lose a lot of money in an effort to encourage consumers to switch to E85, given that its subsidised price will be about one-third cheaper than gasoline.
Authorities are reducing or waiving excise taxes to promote the fuel and if that is insufficient, money from the state Oil Fund will be used to subsidise E85.
''We disagree with reducing or waiving the excise tax because that will distort the market,'' he said.
Atchaka Sribunruang Brimble, the director-general of the Industrial Economics Office, also said that if the excise tax on E85-powered vehicles was cut to below 25%, it would hurt the whole automotive industry.
She said E85 vehicle promotion would hurt the eco-car projects, now being developed by six foreign carmakers, and other types of cars and pickup trucks if cars running on E85 enjoyed very cheap fuel.
She said the policy to promote the production and use of E85 could be implemented alongside the eco-car project without any changes in excise tax.
Under the plan, eco-cars and the engines will roll off local lines in 2010 while E85 engines will not be available until 2012.
Ninnart Chaithirapinyo, the vice-chairman of Toyota Motor Thailand, said the government must keep the current excise tax structure on vehicles or else it will have a domino effect on the whole industry.
He said Toyota did not oppose E85 usage because it would help improve energy security, adding that the company also had plans to produce E85 cars over the next four years in Thailand.
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