The cabinet on Tuesday approved cutting the excise tax on diesel and bunker oil used to generate electricity by the Electricity Generating Authority of Thailand (Egat) to zero in a bid to lower electricity bills for six months.
Deputy government spokeswoman Rachada Dhnadirek said the cabinet agreed to reduce the excise tax on diesel oil with sulphur not exceeding 0.005%, so-called diesel B0, as well as for bunker oil.
The approval is effective once it is published in the Royal Gazette, lasting until Sept 15 this year.
The current excise tax rate for diesel oil with sulphur not exceeding 0.005% is 3.44 baht per litre, while bunker oil is 0.64 baht per litre.
Ms Rachada said the government wants to reduce the electricity generation cost for Egat for six months, which can help lower electricity bills by 1-1.50 baht per unit.
Currently Egat uses 60% natural gas to generate electricity. However, the price of natural gas continues to soar and Egat needs to use diesel and bunker oil to generate electricity.
"The reduction will help cut consumer goods prices because it lowers electricity bills," she said.
In a related development, the cabinet also approved loans of 25 billion baht for Egat to support its liquidity between 2022 and 2024, with term loans for three years.
Ms Rachada said such loans will be not guaranteed by the Finance Ministry.
She said Egat is shouldering a high financial burden from the government's policy to help low-income earners and households with cheaper electricity bills because of the negative effect from the pandemic.
Egat also faces higher electricity generation costs because of the shortage of natural gas.
The firm needs to import natural gas for vehicles during the uptrend in energy prices, said Ms Rachada.
The government recently introduced two measures to peg the price of diesel at 30 baht per litre, using the Oil Fund to subsidise the retail price of diesel, along with a cut in the excise tax on diesel by approximately half, or 3 baht per litre.
The excise tax reduction is scheduled to remain in place until May 20.