The Department of Energy Business (DOEB) says it will start phasing out gasohol 91 in the domestic oil retailing market from January 2018.
Director-general Witoon Kulcharoenwirat said the move would comply with the National Oil Plan (2015-36), which aims to help cut the costs of oil retailers and indirectly encourage consumers to switch to oil with a greater percentage of ethanol as the country will be left with two high-percentage ethanol fuels, gasohol E20 and gasohol E85.
He said all refineries in the country have agreed with the plan although they will be burdened with rising production costs of around two satang per litre to upgrade the production process for each oil refinery.
The department already narrowed the retail price gap between gasohol 91 and gasohol 95 from one baht per litre to 27 satang per litre last month.
Energy policymakers plan to gradually adjust the prices of the two types of gasohol to the same level before phasing out gasohol 91 to avoid pushing the burden of the price hike on to consumers.
Currently, gasohol 91 represents 39% of the country's total petrol consumption, while gasohol accounts for 36%. Gasohol E-20, E-85 and pure petrol account for the remainder.
Pongchai Chaichirawiwat, senior executive vice-president of the marketing business unit of Bangchak Petroleum Plc, said the policy could affect oil refineries, which may have to import more gasoline base to blend with ethanol to produce gasohol 95 and the surplus.
Moreover, during the period that gasohol 91 is phased out, refineries would have to export a high volume of gasohol 91 to meet demand.
The scrapping of gasohol 91 would mean a rise in imports of G-base 1 petrol, the raw petrol material blended with 5% ethanol to produce gasohol 95.
The DOEB also plans to raise the excise tax on petrol and premium diesel, which is compatible with super cars, to the highest ceiling at 10 baht per litre in order to encourage motorists to switch to eco-cars.
Mr Witoon said the department is seeking the Energy Policy Administration Committee's approval of the new tax rate of 6.3 baht per litre for petrol and 5.65 baht for diesel. This will help boost state revenue by a further 1.2 billion baht per month.
The price of premium diesel currently stands at 27-28 baht, while standard diesel is priced 23.55 baht. The price of premium-grade petrol is now 31.11 baht, compared with 30.66 baht for normal grade.
In a separate development, Mr Witoon said the Fuel Pipeline Transportation Company's 7.5-billion-baht pipeline carrying oil from the Central region to the northern province of Lampang is expected to start breaking ground in August. Commercial operation is due to start in 2018.
Meanwhile, the Thai Pipeline Co, a wholly owned subsidiary of local petroleum operator SC Group, is expected to start the development of a pipeline in the Northeast by next year. The 350-kilometre pipeline from Saraburi to Khon Kaen has an investment budget of 10 billion baht and is due to start operation in 2019.
The DOEB reported petrol and gasohol consumption in the first half of the year rose 10.91% on year to 28.6 million litres per day, while consumption of diesel increased 4.24% to 64 million litres per day.
In contrast, consumption of liquefied petroleum gas dropped 12% on year to 16.2 million kilogrammes per day and consumption of compressed natural gas fell 8.39% to 7.98 million kg per day.
