Oil Fund scraps 1-baht discount

Oil Fund scraps 1-baht discount

Fuel prices to rise by 50-60 satang per litre as tensions ease

A PTT station on Vibhavadi Rangsit Road. The one-baht discount was meant to reduce fuel costs during the long holiday.
A PTT station on Vibhavadi Rangsit Road. The one-baht discount was meant to reduce fuel costs during the long holiday.

The Energy Ministry yesterday announced the end of the one-baht discount on eight types of motor fuel, saying US-Iran military tensions were likely to ease and pose little threat to the stability of oil prices.

From today on, retail prices for the eight fuels will rise by 50-60 satang per litre.

The ministry's Oil Fund board approved terminating the discount of one baht per litre during the New Year period that ran from Dec 26 to today.

The one-baht discount was meant to reduce fuel costs for Thais during the long holiday.

Under the support measure, the fund reduced levy collections from users of benzene and gasohol E10 and increased subsidies for gasohol E20, E85 and biodiesel.

As a result, the fund had higher expenses of 2.79 billion baht during the 16-day period. The fund reported to the board that the balance was 37.08 billion baht as of Jan 9.

The fund has two accounts: the oil account with cash of 42.3 billion baht and the cooking gas account with a deficit of 5.22 billion baht.

"The fund resumes the one-baht normal rate for levy collections and subsidies from Saturday on," said Energy Minister Sontirat Sontijirawong, who chaired the board meeting. "The ministry has concluded that the tensions will end with US economic sanctions against Iran, but the worst-case scenario as expected will not happen."

Crude oil prices have been little affected by the tensions, Mr Sontirat said, and prices will now decline.

"The rise in tensions last weekend pushed the Dubai oil price up to US$69 per barrel at the beginning of the week from $64 previously, but the improved situation brought the price down to $63 per barrel a few days later," he said. "This decrease in oil prices can offset local retail prices after ending the discount period, so prices will increase only 50-60 satang per litre."

Mr Sontirat said the Oil Fund's expenses have declined to 101 million baht per month because gasohol E20, E85 and biodiesel are still subsidised by the fund.

Before the board made its recent decision, the ministry had discussed with PTT Plc, the national oil and gas conglomerate, the possibility of a crude oil supply shortage and the repercussions of geopolitical conflicts on crude oil resources in the Middle East.

Mr Sontirat said the ministry is monitoring the global crude oil market and its response to US-Iran tensions in order to prepare for future incidents and situations.

"The board's meeting discussed many options to tackle expected uncertainties, but we have yet to use those plans because global oil prices have eased up with no impact on local retail prices," he said.

Two fuel retailers, PTT Oil and Retail Business Plc and Bangchak Corporation Plc, notified buyers that fuel prices will increase by 50-60 satang per litre from today.

Three biodiesel types rise by 50 satang per litre: B7 at 27.89 baht, B10 at 25.89 baht and B20 at 24.39 baht. Premium diesel increases by 50 satang to 31.74 baht per litre.

Gasohol E10 rises by 60 satang per litre, with gasohol 91 at 26.48 baht and gasohol 95 at 26.75 baht. Gasoline E20 and E85 also increase by 60 satang per litre to 23.74 baht and 19.69 baht per litre. Premium benzene rises 60 satang to 34.16 baht per litre.

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