Oil Fuel Fund to be used to maintain diesel retail price at 32 baht per litre
The Office of the Oil Fuel Fund on Tuesday resolved to use the fund’s mechanism to maintain the current diesel retail price at 32 baht per litre when the diesel excise cut expires on Thursday.
The office director, Wisak Watanasap, said the Fuel Fund executive committee on Tuesday approved the use of the fund mechanism to maintain the diesel price at the current rate.
Last week, the outgoing Cabinet resolved not to extend the diesel excise cut of 5 baht per litre, saying the matter must first be deliberated on by the next government.
During the past two years, the Prayut Chan-o-cha government has been subsidising the retail price of diesel oil through a 5-baht cut in excise tax and through subsides from the Oil Fuel Fund to hold the retail price at no more than 35 baht per litre.
Seven successive rounds of diesel tax cuts so far have cost the government 158 billion in lost revenue.
Wisak did not elaborate how the fund would manage to keep the retail diesel price at 32 baht per litre. He simply said the fund has enough liquidity to manage the price.
Currently, the fund is collecting contribution from the sale of diesel oil at the rate of 3.84 baht per litre. As a result, the office would have to use the fund to subsidise at the rate of 1.16 baht per litre if global oil prices do not go down.
He said the measures would be based on the current situation, while the global oil prices were still fluctuating and there was still a risk of rising prices.
He added that the Oil Fuel Fund was still incurring losses, but its liquidity had improved with loans and with contributions to the fund.
“The office will use its mechanism to maintain the retail price at 32 baht as long as possible until the liquidity of the fund is affected, to minimise the impact on the economy,” Wisak said.
He said the office would propose excise tax cut again after the new government takes office.
As of Sunday (July 16), the Oil Fuel Fund had a standing loss of 49.829 billion baht – 4.316 billion caused by oil price subsidy and 45.513 billion from cooking gas price subsidy.
