Finance Ministry suggests using oil fuel fund for diesel subsidy

Picture courtesy of Bangkok Post

The Ministry of Finance has suggested utilising the Oil Fuel Fund to maintain the subsidy on retail diesel costs, asserting that the fund has adequate resources to back the government’s diesel subsidy scheme.

This advice comes from Deputy Finance Minister Krisada Chinavicharana, who iterated that the ministry is observing worldwide oil costs and the government’s revenue intake from May to June to determine whether support is still required.

“The ministry has not yet presented any propositions to the Cabinet to prolong the diesel excise tax cut of one baht per litre, which ended on April 19.

“The government is supervising the Oil Fuel Fund to manage diesel prices. The fund continues to have enough resources to back the diesel subsidy.”

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The ministry, along with the government, has to consider oil price variations in the global market, factoring in several elements and the government’s revenue intake, anticipated to surge between May and June, said Krisada.

“If the revenue intake is substantial enough, it may be feasible to continue the subsidy.”

Krisada stressed that this decision must be grounded in necessity and the outlook of the global oil market.

The Oil Fuel Fund Office (OFFO) disclosed last week that it will persist in subsidising retail diesel prices, should the government decide to terminate the diesel excise tax cut of one baht per litre. This move is intended to counter potential oil price fluctuations, as geopolitical conflicts in the Middle East are predicted to escalate global crude oil prices, according to Wisak Watanasap, the director of OFFO, reported Bangkok Post.

Watanasap did not disclose the value of any new subsidy derived from the depleting fund. The fund registered a cumulative loss of 104 billion baht (US$2.8 billion) as of April 8, after utilising 56.4 billion to subsidise diesel, gasohol, and gasoline prices, along with 47.2 billion for subsidies for liquefied petroleum gas prices.

The government’s commitment to maintaining diesel prices under 30 baht per litre resulted in a subsidy scheme using the fund that concluded on March 31.

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