Oil fund deficit headed towards THB100 billion amid high global price
The Oil Fuel Fund would see its accumulated deficit reach 100 billion baht by April due to high fuel prices and volatile geopolitical risks, an informed source at the Energy Ministry said on Thursday.
The fund has been spent on subsidising diesel prices – at 5.30 baht per litre at present, up by 0.73 baht from 4.57 baht per litre previously.
Due to higher diesel prices in the global market over the past few days, the fuel fund needs an average of 375 million baht per day to subsidise diesel prices in the domestic market. As a result, an average of 11 billion baht is required every month.
The government has a policy of capping diesel price at 30 baht per litre, but the price of the oil has continued to increase, currently ranging from US$105-110 per barrel.
The source said that given the allowable budget, the policy of keeping diesel prices at no higher than 30 baht per litre, which will expire on March 31, could be extended to no later than April.
“The Energy Ministry now has to find a solution or there will be problems in May,” the source said, adding that a clear-cut measure must be devised sometime in March or April.
The fuel fund was launched after the global oil crisis in 1977 to prevent fuel price fluctuations in the domestic market. In recent years, the fund’s monthly revenue of 1.7 billion baht from the sale of petrol and liquefied petroleum gas (LPG) has been offset by the cost of subsidising the high diesel prices.
The high price of diesel has been blamed on fluctuations in the world market and the volatile geopolitical situation in many parts of the world, including the ongoing war between Russia and Ukraine and mounting tension in the Red Sea, a key transportation route for oil.
As of February 11, the Oil Fuel Fund was 87.8 billion baht in the red – a deficit of 46.6 billion baht in the LPG account and a loss of 41.2 billion in the oil account — according to the source.
The fund can still borrow 30.3 billion baht to be spent on subsidising diesel, as per the loan ceiling of 150 billion baht set by the previous government. However, the source said it would be difficult for the fund to borrow more money as financial institutions, including state-run banks, demand proof of revenue to guarantee its loan application.
