Natie Tabmanie Deputy Director-General

Energy Policy and Planning Office, Ministry of Energy Capacity Building Workshop on Fossil-Fuel Subsidy Reform

18 March 2013

Fossil - Fuel Subsidy Reform in Thailand Case Study on Communication Strategies

Overview of Petroleum Products

2

Oil ULG 95 ULG 91

Gasohol 95 (E10) Gasohol 91

Gasohol 95 (E20) Gasohol 95 (E85)

H-Diesel

LPG

NGV

Gas

Diesel

- Oil -

Overview of fossil-fuel subsidies

The government cut excise tax to keep the price below 30 baht/litre.

Gasohol

The government subsidizes gasohol 95 (E20 and E85) to promote the use of

renewable energy (ethanol).

3

- Gas - Overview of fossil-fuel subsidies

LPG

4

The government caps LPG price at $333/ton

For imported LPG, the government subsidizes the difference between the

market price and government’s mandated price cap.

For LPG produced by refineries, the government subsidizes the difference

between LPG price from refineries and government’s mandated price cap.

Production Cost Estimated Retail Price

$/Ton Baht/kg.

Regulated Price 332.75 9.97 18.13

LPG (gas-based) 550.00 16.48 25.09

LPG (oil-based) 760.12 22.78 31.83

Import Price* 979.00 29.33 38.85

* Import Price= CP+ Premium+ Other Expenses (Insurance, Loss, Demurrage, Import duty, Surveyor/witness fee& Lab expenses, Management Fee, Depot Operating Expense)

CP 895 $/Ton Exchange Rate 29.9635 Baht/$ LPG Production Cost As of 14 March 2013

NGV

- Gas -

Overview of fossil-fuel subsidies

The government capped NGV retail price at 10.50 baht/kg.

At present, no government’s subsidy.

PTT currently bears the burdens between the cost and the retail price.

5

15

17

19

21

23

25

27

29

31

Jan

-11

Feb

-11

Mar

-11

Ap

r-1

1

May

-11

Jun

-11

Jul-

11

Au

g-11

Sep

-11

Oct

-11

No

v-1

1

Dec

-11

Jan

-12

Feb

-12

Mar

-12

Ap

r-1

2

May

-12

Jun

-12

Jul-

12

Au

g-1

2

Sep

-12

Oct

-12

No

v-1

2

Dec

-12

Jan

-13

Household

Industry

Transport 21.13

24.13

30.13

27.13

30.13

24.86

18.88

21.13

20.38

19.63

21.38

Cabinet resolution 4 Oct 2011 Capped LPG price for household until the end of 2012.

Cabinet resolution 3 May 2011 Raised LPG price 3 baht/quarter for 4 times, started July 2011.

Cabinet resolution 14 May 2012 Raised LPG price for industry until meeting its cost from refineries. CEPA resolution 14 May 2012 Set up ceiling price of LPG for industry at 30.13.

27.89

18.13

Cabinet resolution 4 Oct 2011 Raised LPG price by 0.75 baht/kg/month, starting from 16 Jan 2012

Cabinet resolution 14 May 2012 Capped LPG price for transport at 21.13 baht/kg for three months.

CEPA 24 May 2012 Raised LPG price for transport by 0.25 baht/kg

Cabinet resolution 3 May 2011 Continued capping price at 18.13 baht /kg.

Baht/kg

LPG Retail Price Movement

6

NGV Retail Price Movement

0

2

4

6

8

10

12

Jan-

01

Jun-

01

Nov-0

1

Apr-0

2

Sep-

02

Feb-

03

Jul-0

3

Dec-

03

May

-04

Oct-0

4

Mar

-05

Aug-

05

Jan-

06

Jun-

06

Nov-0

6

Apr-0

7

Sep-

07

Feb-

08

Jul-0

8

Dec-

08

May

-09

Oct-0

9

Mar

-10

Aug-

10

Jan-

11

Jun-

11

Nov-1

1

Apr-1

2

Sep-

12

Baht/kg

10.50

8.50

Cabinet resolution 3 May 2012 Capped NGV price at 10.50 baht/kg from 16 May – 15 Oct 2012

Cabinet resolution 4 Oct 2011 Raised NGV price by 0.50 baht/kg/month, starting from 16 Jan 2012

Cabinet resolution 14 Oct 2012 Continued capping NGV price at 10.50 baht/kg from 16 Oct 2012 onward.

NGV Retail Price

Wellhead Price

7

Oil Fund Subsidy on LPG

Year 2008 2009 2010 2011 2012 Total

Subsidies 7,947 6,896 22,261 36,272 447,214 1120,590

Million Baht

Oil Fund Subsidy on NGV

Year 2008 2009 2010 2011 2012 Total

Subsidies - - 3,070 4,674 882 8,626

Million Baht

Oil Fund Burden from Subsidizing LPG and NGV

8

(Baht/Litre) Ex-refinery

Price Excise Tax

Municipal Tax

Oil Fund

Conserv. Fund

Wholesale Price

VAT

WS+ VAT

Marketing

Margin

VAT

Retail Price

ULG 95 24.4679 7.0000 0.7000 9.7000 0.2500 42.1179 2.9483 45.0662 2.9756 0.2083 48.2500

ULG 91 24.0467 7.0000 0.7000 8.4000 0.2500 40.3967 2.8278 43.2245 2.3603 0.1652 45.75

Gasohol 95 (E10) 24.5263 6.3000 0.6300 4.0000 0.2500 35.7063 2.4994 38.2057 1.5180 0.1063 39.83

Gasohol 91 24.3164 6.3000 0.6300 1.7000 0.2500 33.1964 2.3237 35.5201 1.7382 0.1217 37.38

Gasohol 95 (E20) 24.5020 5.6000 0.5600 -0.4000 0.2500 30.5120 2.1358 32.6478 1.8058 0.1264 34.58

Gasohol 95 (E85) 23.5262 1.0500 0.1050 -10.9000 0.2500 14.0312 0.9822 15.0134 7.4455 0.5212 22.98

H-Diesel (0.005%S) 24.5701 0.0050 0.0005 1.5000 0.2500 26.3256 1.8428 28.1683 1.7025 0.1192 29.99

Fuel Oil 600 (1) 2%S 19.5356 1.0718 0.1072 0.0600 0.0700 20.8445 1.4591 22.3036

Fuel Oil 1500 (2) 2%S 18.7968 1.0264 0.1026 0.0600 0.0700 20.0558 1.4039 21.4597

The government cuts excise tax in combination with Oil Fund

management to keep diesel price lower than 30 baht/litre.

The government subsidizes Gasohol price via the Oil Fund to promote the

use of renewable energy.

Subsidies on Gasohol and Diesel

9

LPG Price Adjustment

&

Communication Strategies

Case Study

10

Continue capping the LPG retail price for household

and transport until the end of March 2013.

Develop mitigation measures for low-income people

and street vendors

Government Policies

National Energy Policy Council Resolutions 8 March 2013

11

Phase 1

• Identify LPG users • e.g. Households below poverty line, food stalls and

vendors.

Phase 2

• Identify mitigation measures • e.g. discount coupon

Phase 3

• Announce price adjustment/subsidy reduction plan

• e.g. period of LPG price adjustment, target price.

Phase 4 • Monitoring

LPG Price Adjustment

Price Adjustment and Communication Strategies

12

Communication Strategies/PR plan

January – March 2013

Before LPG price adjustment

April – December 2013

After LPG price adjustment

PR Strategies for LPG Price Adjustment

13

• Change the attitude of the people affected by LPG price adjustment

• People affected by LPG price adjustment • Develop mitigation measures

• General Public/ Academics/ NGO/ Staff (MOEn Executives), Media, Opposition/ Interest groups

• The opposition has more systematic and has gained momentum • The opposition arouses public sentiment via social network media

• Use proactive and holistic energy issue while presenting balanced fact to counter the current issue

• Learn the truth for our energy future • Holistic knowledge on energy

• PR (Reputation Management) • Form a monitoring team • Utilize integrated communication channels

• Closely monitor the current situation • Revise strategy

• Campaign duration

Goal

Issue

Audience (Stakeholders)

Challenge

Strategy

Time

Idea

Execution

Measurement

G I

A

C

S

I

E

M

T

2. Transport 1. LPG price for transport will be raised to 24.82 baht/kg, which equals to cost of LPG from the gas separation plant, not 36 baht/kg, which is the CP price. 2. The price is still relatively below gasoline and gasohol

Communication Strategies/PR Plan

Issues concerning LPG price adjustment

1. Household/Street vendors

1.Spending on LPG increases from 18.13 baht/kg to 24.82 baht/kg.

2. Poor households (approx. 9 million households) will still pay for LPG at 18.13 baht/kg.

3. Cost of spending on LPG to increase by less than 1% of minimum wage.

14

Target Group

PR Plan

Before Adjustment Jan – Mar 2013

After Adjustment Mar – Dec 203

General Public

(Household/ Street vendors)

• Create a better understand about the need to adjust and raise LPG price

• Inform and explain mitigation measures

• Create an awareness about the efficient use of LPG in order to decrease the growing consumption.

Channel: 1. Interviews: MOEn

executives and experts 2. Seminars and public

hearings 3. Traditional and new media:

- Leaflets - Posters - TV media - Printing media - Radio media - Online News

Channel: 1. Interviews: MOEn executives

- The outcome of LPG price adjustment

2. Traditional and new media: - Leaflets - TV - Printing media - Radio media - Online news

PR Plan

15

An advertorial that will be published in daily printing media

Communication Strategies / PR Plan

16

An Advertorial that will be published in Thai printing media (Weekly/Monthly)

Communication Strategies / PR Plan

17

Communication Strategies / PR Plan

Leaflet “Truth LPG Today” 18

Opposition’s Leaflet

19

Thank you for

your kind attention

- www.eppo.go.th -