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Bangkok Post (Thailand): ‘Gasohol works or we fix it’

Bangkok Post (Thailand): ‘Gasohol works or we fix it’

“Shell Co of Thailand has pledged to take full responsibility if cars running on Shell gasohol break down, as it strives to boost its sales and motorists’ confidence to shift to crop-derived alternative energy.”: “Motorists who keep their receipts after filling up their cars with Shell gasohol can claim for damages within one month if their cars develop engine problems.”

Wednesday Aug 03, 2005

BUSRIN TREERAPONGPICHIT

Shell Co of Thailand has pledged to take full responsibility if cars running on Shell gasohol break down, as it strives to boost its sales and motorists’ confidence to shift to crop-derived alternative energy.

“A full guarantee will be given to any motorists whose cars are damaged after filling up with Shell gasohol,” chairman Tiraphot Vajrabhaya said yesterday.

Shell is the third local oil company to introduce gasohol, a blend of 90% gasoline and 10% crop-derived ethanol, after Bangchak and PTT, but the first to offer a performance pledge.

Motorists who keep their receipts after filling up their cars with Shell gasohol can claim for damages within one month if their cars develop engine problems.

However, vehicles including motorcycles covered by the guarantee must be models confirmed by their manufacturers as compatible with gasohol.

“We have not reserved a special budget for this programme because we believe that we will not have to pay for any engine breakdown at all,” Mr Tiraphot said.

The guarantee will cover full engine repair, like first-class insurance coverage.

Shell’s marketing strategy aims to send a strong message to motorists that its gasohol is safe and to encourage them to shift to Shell products. The government has declared that octane 95 gasoline will be phased out and completely replaced by gasohol 95 by the end of 2007.

Gasohol is 1.50 baht per litre cheaper than premium gasoline, but many motorists remain hesitant about using it because they are unsure about engine wear.

Mr Tiraphot said Shell hoped to double its gasohol sales to 25 million litres per month by the end of this year, which would represent 50% of the existing sales of Shell premium petrol.

Bangchak, which pioneered gasohol commercially in Thailand, led the local market with sales of 22 million litres last month, a figure it expects will rise to 40 million litres by the end of the year.

Mr Tiraphot said oil companies had been reluctant to step up their marketing of gasohol because they’ve been concerned about an about ethanol shortage due to inconsistent raw material supply.

Ethanol production currently totals 10 million litres per month while demand is around 5-6 million litres.

He said Shell may replace its premium petrol sales with gasohol by mid-2006 if the demand soars impressively as promoted by the government.

The company has earmarked 160 million baht to make gasohol available at 450 Shell stations nationwide by the end of this year, up from 324 currently, and to cover all 640 of its stations at the middle of next year.

Mr.Tiraphot forecast that oil prices would hover in the range of US$50-55 per barrel for a while, with local premium petrol remaining above 25 baht per litre. The current price is 25.74 baht.

However, oil traders are still suffering from low marketing margins and hope for an improvement in the near future.

They say they can break even if the marketing margin for gasoline improves to 1.50 baht per litre while that of diesel picks up to one baht.

“So far, we’re suffering losses on every litre of petrol sold,” he said.

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