All eyes on new government’s energy policy and fuel price subsidy
Oil Fund deficit has soared to over THB100 billion
After PM-elect Paetongtarn Shinawatra unveiled her list of Cabinet members on Friday, analysts zoomed in on the post of energy minister to find out who will be in charge of energy-related policies, particularly the capping of diesel retail price to help reduce people’s financial burden.
The portfolio would still be held by incumbent Pirapan Salirathavibhaga from the Ruam Thai Sang Chart Party. Pirapan has held the portfolio since August 2023 when he was appointed energy minister by Srettha Thavisin. He immediately implemented the diesel cap of 30 baht, using money from the Oil Fuel Fund to subsidise the measure.
A source familiar with the matter said that before the measure was launched, the Oil Fuel Fund had a deficit of 55.09 billion baht: 10.37 billion baht from the oil account and 44.71 billion baht from the liquefied petroleum gas (LPG) account. The diesel price on August 27, 2023 was 31.94 baht per litre.
After implementing this measure for a year, the Oil Fuel Fund deficit has been mounting due to the subsidy on diesel. As of August 25, 2024, the fund is 108.55 billion baht in deficit: 61 billion baht from the oil account, and 47.55 billion baht from the LPG account.
The source said the fund subsidises both diesel and LPG by around 53.46 billion baht per year. However, there is a positive sign that the fund is now collecting around 376 million baht in contributions per day: 240 million baht from the diesel account, 126 million baht from the petrol account, and 10 million baht from the LPG account.
If the situation continues like this, the Oil Fuel Fund’s deficit would gradually decrease, said the source.
It remains to be seen if Pirapan will continue the diesel subsidy measure under the new government, and to what extent the fund deficit will increase if he does, which will be linked to current oil prices in the global market.
Analysts are also monitoring the appointment of a new director of the Office of the Oil Fuel Fund to replace Wisak Watanasap, who had completed his term on August 15. Applications for the position closes on September 21.
