Thailand eyes second refinery-margin cut as costs spike

The government is preparing a second refinery-margin cut after margins spiked to an abnormal level, in a fresh push to bring down domestic fuel prices, with a likely further cut of more than 2 baht per litre. Energy Minister Akanat Promphan said officials were now processing actual cost data from April 1-15 before submitting the new structure for review.

Margins jump triggers fresh review

The latest move follows the first intervention approved earlier this month, when the Committee on Energy Policy Administration ordered a 2-baht-per-litre cut in ex-refinery diesel prices. That measure helped lower retail diesel prices by 2.14 baht per litre from April 9 and was presented as a way to ease pressure on households without adding to subsidy costs.

Akanat said refining margins averaged as high as 15 baht per litre during April 1-15, compared with just over 7 baht per litre in March, which he described as highly abnormal. A new committee meeting is expected by April 21, with any revised rate due to take effect on April 23, after accounting for added costs such as war premiums, freight and insurance.

Oil Fund debt limits faster price cuts

The minister also addressed questions over why local pump prices have fallen only slightly even though oil prices in the Singapore market have dropped by about 20%. He said the reason lies in the Oil Fuel Fund, which built up more than 60 billion baht in debt after stepping in to cushion domestic prices during the global oil-price surge.

Although the fund’s daily payouts have now eased to around 100 million baht from more than 2 billion baht a day previously, the government says retail prices still need to be lowered gradually to preserve the fund’s stability. The message from the ministry is that further relief is coming, but it will be phased in rather than passed through all at once.