Finance Ministry to push for another round of diesel excise subsidy
The Finance Ministry plans to urge the Cabinet to continue subsidising excise on diesel oil for another two or three months, so retail prices can be stopped from rising.
A Finance Ministry source said on Monday that the ministry will try to make the Cabinet understand that another round of reducing excise will help lower the cost of living for people while easing the burden on the Oil Fuel Fund. The subject will be put on the weekly Cabinet meeting agenda on Tuesday.
The current subsidy runs out on January 20 and the next round will be the sixth if the Cabinet decides to extend it. The subsidy extension will also mean that the Finance Ministry will lose about 20 billion in revenue.
Finance Minister Arkhom Termpittayapaisith said the subject is still under consideration and he can’t say how long the measure will be extended and by how many baht the price of diesel will be reduced.
“We will have to take into account the current situation and other factors. Though the global price of oil has gone down, Thailand’s diesel price refers to Singapore’s price,” Arkhom said.
Meanwhile, the Finance Ministry source said the Cabinet will be asked to choose between a 3-baht reduction for three months or a 5-baht reduction for two months now that the oil price crisis has started easing.
The source added that the Oil Fuel Fund also has plenty of options to manage its liquidity now that the Finance Ministry has confirmed its plan to borrow 110 billion baht.
Moreover, the source said, the fund has started collecting revenue from the sale of oil.
The source said it is highly likely that the Cabinet will opt for a 2-baht reduction for two months as the Singapore reference price for diesel is still high.
If the Cabinet extends the subsidy for a sixth time, then the government stands to lose up to 120 billion baht from diesel excise collection, which may not bode well for its financial status in the long run.
For fiscal 2022, the Excise Department’s total revenue came in at 531 billion baht, about 93.54 billion baht or 15% below target.
The five earlier diesel excise reductions and the government’s loss in revenue are as follows:
• February 18-May 20, 2022: 3 baht (18 billion baht loss)
• May 21-July 20, 2022: 5 baht (18 billion baht loss)
• July 21-September 20, 2022: 5 baht (20 billion baht loss)
• September 21-November 20, 2022: 5 baht (20 billion baht loss)
• November 21-January 20, 2023: 5 baht (20 billion baht loss).
