Diesel subsidy to end, prices may rise as fuel fund bleeds red: source
With the Oil Fuel fund in the red about 100 billion baht from subsidising the diesel price, measures are being drafted by the Oil Fuel Fund Office (OFFO) to propose to the Energy and Finance ministries to help ease the burden on the fund.
Among the measures under consideration are raising the cap on the retail price of diesel from today’s 30 baht per litre, and increasing an excise tax cut on diesel fuel from the current 1 baht per litre, a news source familiar with the matter said on Tuesday.
The 30-baht cap on diesel fuel was implemented last September to alleviate the population’s financial burden. The measure is subsidised by the Oil Fuel Fund and has been extended every three months. It is set to expire on March 31 with no further extension.
The OFFO estimates the fund’s deficit would cross the 100-billion-baht mark around that deadline, prompting it to find solutions to ease its burden.
Diesel fuel is a vital commodity in the industrial and transport sectors.
If a diesel cap raise is approved, said the source, the retail price of diesel fuel would likely go up in steps of 0.5 or 1 baht each time, in a bid to minimise public impact.
The Oil Fuel Fund’s status report as of March 17 revealed that it is 96.72 billion baht in deficit. Of that, 49.33 billion baht is from the oil account and 46.9 billion baht from the liquid petroleum gas (LPG) account.
OFFO has an expectation that the proposed measures will be approved as soon as the price cap measure ends. The fund is due to pay back its first parcel of debt at 30 billion baht in November of this year.
