Tuesday, May 27, 2008

Thai govt. decides to cut excise tax on E85

Bangkok, Thailand. -- An initiative to introduce E85 gasohol, the 85% ethanol-blended gasoline, to the Thai market received a boost yesterday when the government decided to cut the excise tax on it to promote the use of alcohol-fuelled cars.

General Motors, Ford and Volvo are the first group of car makers ready to import their E85-fuelled vehicles to the Thai market within three months after the government finalised the exact rate for the tax, and this will generate demand in the local market, said Deputy Prime Minister and Finance Minister Surapong Suebwonglee after a meeting of economic ministers aimed at curbing rising energy prices.

The three western car makers could set up local production lines for the cars within 18 months. Japanese car makers said they could open local production lines of E85-fuelled cars within two years.

E85, a blend of 85% ethanol and 15% premium petrol, will be introduced in Thailand as world oil prices continue to skyrocket.

To encourage car makers to market cars using E85, Mr Surapong said, the government will cut the excise tax on the cars to below 25%, which is the tax now imposed on E20-fuelled cars.

Current excise tax rate for normal passenger cars is at a minimum of 30% and rises depending on engine size.

The Finance Ministry will ask for government approval in principle on the tax reduction today.

The exact rate of the reduction and details of other energy conservation schemes will be proposed for cabinet endorsement next week, he said.

To facilitate the use of E85 fuel in Thailand, PTT Plc and Bangchak Petroleum Plc are ready to sell E85 in their 30-50 service stations within 3-5 months. Sales of the fuel could be swiftly increased depending on demand.

He said the supply of ethanol to produce E85 is sufficient. At present, 11 ethanol producers could supply 900,000 litres per day, compared with demand of 800,000 litres. By next year, the number of producers will increase to 22 with total production capacity of 2.5 million litres per day.

The government would also extend the excise tax reduction for cars using natural gas for vehicles (NGV) and related equipment until 2012, said the minister.

The extension includes tax on imported NGV-using completely built-up (CBU) car units which is cut to zero per cent from 30%, tax for cars with engines modified to use NGV, which has now been reduced to 22% from 30%, and tax on imported NGV cylinders and gas controlling equipment.

The government will push to have all state agencies' vehicles modified to use NGV and set a target to boost the number of private car owners using NGV to 120,000 by the end of this year from 71,000 now.

Mr Surapong also said the cabinet would kick off its energy conservation schemes by increasing the temperature of the air-conditioning units in the cabinet meeting room to 26 degrees Celsius.

[Source : Bangkok Post 05/27/2008]


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