Korn urges govt to slap oil refineries with ‘windfall tax’, margin cap

Korn, a former finance minister, held a press conference to propose three measures to help Thailand pull through the oil crisis.

Apart from capping the margin and slapping a windfall tax, Korn urged the government to become more serious about enforcing energy conservation measures.

He especially named PTT Plc in his call for action against oil refineries to bring down prices, saying the Finance Ministry holds shares in PTT, which owns up to 70 per cent of refineries in Thailand.

Korn told the press that the Oil Fund is now struggling and will not be able to shoulder more financial burdens as the debt it incurred from oil subsidies will hit 100 billion baht by the end of June.

He said the government should cap the refining margin because Thais have been “robbed” for over a year by refineries collecting high margins, resulting in high oil prices.

He explained that crude oil recently stood at about 25.92 baht a litre on average, but the retail price was about 34.48 baht per litre. This means, refineries enjoy a margin of 8.56 baht per litre, while the actual refining cost is about 0.87 baht a litre, he said.

“So, the refining margin rose to 10 times the real cost, yet their [refineries’] cost has not increased. This is blatant robbery and the government has not provided any explanations,” Korn said.

“The question is who owns the refineries? PTT owns more than 70 per cent of the country and yet the government has nothing to say.”

He added that the Commerce Ministry has the power to control prices, but has failed to act. Also, he said, the Energy Ministry is directly responsible, yet it failed to act.

“The energy minister was with PTT before, so he should know this well. This is not the time for him to worry about his friends [at PTT]. There are steps he can take for the good of the country and the people. He should hurry up,” he said.

Korn also pointed out that the Finance Ministry does not just have the windfall tax to use as a tool, but can also take action as a shareholder of PTT. He said it’s time refineries were slapped with a windfall tax because they have been enjoying a high margin for too long.