Diesel subsidy to hike loss of oil fund
The Oil Fund is set to incur a bigger loss as the Energy Policy Administrative Committee (EPAC) has approved diesel subsidy and has also delayed floating gas prices.
The committee yesterday approved the Oil Fund’s subsidy for diesel by 60 satang per litre and reduce the levy on petrol and gasohol products, with effect from today. The Oil Fund will consequently incur a Bt79 million loss per day, against the loss of Bt37 million per day before this measure. As of August 12, the fund carried forward total loss of Bt14.430 billion.
Energy Minister Arak Chonlatanon said after the EPAC meeting that this subsidy is aimed at alleviating the cost-of-living burden of consumers as well as the operating costs of business operators, who are affected by the increases in global oil prices.
Arak added that the government has to subsidise diesel price as oil retailers’ marketing margin for diesel has dropped to 40 satang per litre, against the acceptable Bt1.50 rate. The subsidy of 60 satang per litre for diesel price would hike their margin to Bt1 per litre.
The committee also resolved to reduce the Oil Fund’s levy on petrol and gasohol products, except E85, by 50 satang per litre. This will reduce the Oil Fund’s levy on 95-octane petrol from Bt6.50 to Bt6 per litre and 91-octane petrol from Bt5.20 to Bt4.70. The Oil Fund’s levy on gasohol 95 will drop from Bt1.30 to 80 satang. The measure also means that gasohol 91 will be subsidised by the Oil Fund to Bt1.50 per litre, up from Bt1, while E20 subsidy will increase to Bt1.80 from Bt1.30. Subsidy for E85 is maintained at Bt12.70 per litre.
Chainoi Puenkosum, acting director of Energy Fund Administration Institute (Public Organisation), said the Oil Fund would continue to suffer further losses if the global oil price does not decline as it still has to continue to subsidise cooking gas until the government decides to float the price.
Much of the Oil Fund’s losses stem from subsidies on liquefied petroleum gas (LPG) and natural gas for vehicle (NGV).
Arak admitted that the government has yet to be able to float cooking gas prices this year as expected, as this would hit household users and industrial operators. Thailand has imported 110,000 tonnes of LPG per month, on top of 480,000 tonnes produced locally.
