21/02/2011 (Bangkok Post) - Prime Minister Abhisit Vejjajiva has rejected Commerce Minister Porntiva Nakasai's proposal for the government to spend one billion baht to stem rising palm oil prices.

In his weekly television show, the prime minister yesterday said the shortage of cooking palm oil would be discussed at a meeting of the National Oil Palm Policy Committee (NOPPC) tomorrow.

Mr Abhisit said Deputy Prime Minister Suthep Thaugsuban, who chairs the committee, had been gathering information on the shortage of cooking palm oil and had kept him abreast of the issue.

The shortage has worsened in recent months as bottled cooking oil has disappeared from stores and the prices have risen.

Ms Porntiva planned to seek cabinet approval for one billion baht to cover the difference in price between the production cost and selling price so the palm oil industry could maintain the capped price of 47 baht for a one-litre bottle of palm oil.

But Mr Abhisit said yesterday he saw no need to disburse such a large budget to alleviate the problem.

The issue will be discussed in the palm oil committee meeting tomorrow and a resolution is expected to be reached.

Ms Porntiva yesterday said she would explain the ministry's decision to stall a second import of 120,000 tonnes of crude palm oil, as well as propose a measure to solve the shortage of cooking oil to the palm oil committee during a meeting.

The ministry had sought the committee's permission to import two lots of crude palm olein _ one of 30,000 tonnes, and another of 120,000 tonnes _ to ease the domestic shortage.

The first lot of 30,000 tonnes was distributed to 10 palm oil refineries to produce bottled cooking palm oil. The second lot has yet to be imported despite the committee's approval late last month.

Ms Porntiva said prices of the second lot of imported crude oil have increased from 39.50 baht a litre to 41 to 42 baht. The ministry has been negotiating with oil refineries about the retail price of cooking palm oil.

She said around one billion baht was needed from the government to maintain the set retail price of 47 baht a litre for refined palm oil.

The fund would be used to subsidise production costs.

Unless the state funding was allocated, prices of bottled cooking oil would increase to 55 to 56 baht a litre to reflect the actual production costs, said the commerce minister, who is a member of the coalition's Bhumjaithai Party.

Democrat Party spokesman Buranat Samuttarak said the party supported the use of legal action against the hoarding of palm oil that led to the shortage of cooking oil in the country.

The Democrats also wanted the Commerce Ministry to urgently explain why the second import of crude palm oil has been delayed.

The ministry should also set a time frame for the import and explain what criteria were used for distributing imported oil to the refineries, said the spokesman.

Meanwhile, the Department of Special Investigation is set to complete its investigation of 10 palm oil refineries on Wednesday, said the department chief Tharit Pengdit. The refineries have received quotas for importing crude palm oil totalling 30,000 tonnes for refining and distributing domestically, but suspicions of hoarding have been raised.

The DSI on Saturday asked the Internal Trade Department to confiscate 1,400 tonnes of crude palm oil from Morakot Industries in Samut Prakan's Phra Pradaeng district, after it inspected the factory, saying the company had failed to refine all of the crude oil quota it had received from the Commerce Ministry.