Thailand extends deeper ex-refinery fuel price cuts to May 9
Thailand plans a bigger cut in ex-refinery fuel prices as officials seek to ease pump-price pressure and reduce the Oil Fuel Fund’s debt burden.
- Thailand has increased its cut on ex-refinery fuel prices from THB2 to THB5, extending the measure until May 9, 2026.
- The decision was based on high gross refining margins for oil companies, which averaged over THB14 in April.
- The funds collected from this measure will be used to reduce fuel prices and help pay down the nearly THB60 billion debt of the state's Oil Fuel Fund.
- An additional THB3 reduction is also being considered for a later date.
Energy Minister Akanat Promphan said after a meeting of the Committee on Energy Policy Administration that the committee had resolved to cut ex-refinery fuel prices by THB5, up from the previous THB2 reduction, until May 9, 2026.
He said efforts would be made to have the measure published in the Royal Gazette later that day so that it could take effect the following morning.
Another meeting would then be held to consider a further THB3 reduction.
As for the THB5 cut in ex-refinery prices, it was based on figures from April showing that gross refining margins had averaged more than THB14.
The committee allowed all six refineries to submit unusually high cost items, such as higher insurance or transport costs, for consideration so that the excess benefit could be deducted and an appropriate figure determined.
Both diesel and petrol will be considered.
Data from early April showed excess gains of THB5 billion over two weeks, and that figure is therefore being turned into a discount on diesel.
Once both rounds of reductions are combined, the differential collected from refineries will amount to nearly THB10 billion and will be used to reduce ex-refinery prices.
Part of the amount will also be used to reduce pump prices, although the size of any cut will depend on Singapore prices later that evening.
At present, Singapore diesel prices have risen by nearly THB3, but Thailand has not adjusted pump prices and is still holding them steady.
A THB5 cut in ex-refinery prices does not mean pump prices will fall by THB5.
From now on, any decision to raise or lower oil prices will avoid sharp swings.
Adjustments will instead be made gradually, and prices will not be moved up and down like in a street market.
Whatever is done must be handled properly.
Part of the money will also be used to ease the burden on the Oil Fuel Fund, which is now nearly THB60 billion in the red.
If the debt is not addressed quickly, fuel users could in the future end up paying abnormally high prices.
If the debt can gradually be repaid without further borrowing backed by the Finance Ministry, that would be positive for the fund’s financial position.
The fund is therefore being managed within the existing borrowing framework.
If borrowing is required, it will be limited to no more than THB20 billion under the Oil Fuel Fund framework, without expanding the ceiling to THB150 billion through an emergency borrowing decree that could affect the country’s standing.
In other words, the government will negotiate with oil traders to defer repayment of the fund’s debt and will try to manage the situation without borrowing simply to repay debt.
The aim is to reduce the fund’s daily loss to around THB100 million so that money will be available to repay creditors, and for now, the situation remains manageable.
“Cutting ex-refinery prices is like asking refineries to help repay this debt. You can think of it that way, because the value runs into tens of billions of baht. The current situation must be managed carefully in case there is a second blow, but if there is not, pump prices will gradually fall.”
