Thailand launches push to use more ethanol, gas

BANGKOK May 27 (Reuters) - Thailand passed a tax incentive package on Tuesday to lure motorists and truckers to switch to ethanol or compressed natural gas from gasoline or diesel as the net crude oil importer seeks to counter soaring oil prices.

The package, approved by the cabinet on Tuesday, was moved up by two years from an original schedule as the country sees oil prices pushing up inflation and affecting economic growth, cabinet ministers said.

"We have to speed up the plan as global oil prices have already exceeded our projected price of $120/barrel for this year," Finance Minister Surapong Suebwonglee told reporters.

U.S. crude CLc1 stood at $133.18 a barrel by 0647 GMT, little changed from late electronic trade on Monday but up nearly 40 percent this year, after touching a record high of $135.09 last week.

The incentive plans were estimated to save Thailand, which imports 80 percent of its crude needs, 15 percent of its 700 billion baht ($21.8 billion) annual fuel costs, Energy Minister Poonpirom Liptapanlop told reporters.

After three years of strong sales growth of E10 -- a mix of 10 percent ethanol and 90 percent gasoline, Thailand would launch E85 -- a 85:15 mix of ethanol and gasoline, in October, she said.

The cabinet agreed to lower the excise tax for imported cars that use both E85 and gasoline as two state-run oil firms -- PTT PCL PTT.BK and Bangchak Petroleum BCP.BK -- vowed to start selling the fuel at 50 service stations by October, Poonpirom said.

"It should be popular very quickly as it will be 10 baht (31 U.S cents) per litre cheaper than the premium gasoline," she told a state run television on Monday.

Gasoline of 95 octane is sold at 39.59 baht/litre at Bangkok stations versus 35.59 baht/litre for E10 and 33.59 baht/litre of E20, thanks to lower government duties and surcharges to attract motorists to use the biofuels.

The Energy Ministry aims to get E85 to a 60 percent share of annual gasoline demand by 2011, which stood at 7.34 billion litres last year, Poonpirom said.

Sales of E10 rose three times to 1.76 billion litres in 2007 from 2005, while sales of 95-octane gasoline fell by half to 1.1 billion litres in the same period, the Energy Ministry data shows.

Thailand imported 798,408 barrels of crude per day in 2007, 3.3 percent less than in 2006 due to demand for cheaper biofuel and natural gas.

Poonpirom said General Motors (GM.N), Ford Motor (F.N) and Volvo (VOLVb.ST) -- all small players in the Thai auto market -- would import their complete-built cars to Thailand in 3-5 months and would switch their locally-assembled cars to use E85 in 18 months.

But it would take Japanese car makers, the dominant players in the Thai market, 24 months to adjust the engines, she said.

The cabinet also approved extending a tax cut for cars, trucks and buses running on natural gas by four years and ordered PTT to finance the engine conversion cost of 21,000 taxi cabs to run on natural gas from liquefied petroleum gas, she said. ($1=32.11 Baht) (Additional reporting by Trisanat Kongkhunthian; Editing by Michael Urquhart)