Oil Fuel Fund’s burden could be offset by proposed rise in diesel cap
The Office of the Oil Fuel Fund is preparing to propose raising the government’s cap on the retail price of diesel oil from 30 to 32 baht per litre to ease the fund’s overwhelming debts, a news source familiar with the matter told the Nation on Tuesday.
The 30-baht cap on diesel has been implemented since September last year 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.
The source said the measure, which costs the Fund more than 10 billion monthly, has raised the Fund’s deficit to almost 100 billion baht. This has also caused concerns among the banks that have lent money to the fund, which are shouldering an interest burden of nearly 200 million baht per month.
The decision to raise the cap is however dependent on the Energy Minister Pirapan Salirathavibhaga, said the source, adding that other measures may also be considered to reduce the impact on consumers.
The source added that the situation regarding the price of diesel could worsen after April 19, when the three-month measure of cutting the excise tax on the fuel by one baht per litre will expire. The cut, which also aims to reduce diesel’s retail price, is expected to cost the government some 6 billion baht in tax revenue..
The source said it is highly unlikely that the Energy Ministry will extend the measure for another three months, as it too has a revenue collection target that needs to be met.
The Oil Fuel Fund’s status report as of February 18 revealed that it has total assets worth 29.33 billion baht and 119.21 billion baht in debts, rendering the fund 89.88 billion baht in deficit. Of that figure, 43.27 billion baht is from the oil account and 46.6 billion baht from the LPG account.
