State urged to adjust fuel subsidy

State urged to adjust fuel subsidy

The government is being urged to adjust its energy price subsidy programme by focusing on businesses and households who are in dire need of help rather than implementing a broad subsidy.

The proposal was made on Monday by Sontirat Sontijirawong, former energy minister and co-founder of newly established Sang Anakhot Thai Party, as he wants the government to better manage the Oil Fuel Fund, now running on a low budget.

If the government becomes more selective in helping afflicted people, it would be able to save more money and use it for other necessary projects.

Authorities are using the fund to cap diesel prices at below 30 baht a litre as well as subsidise prices of liquefied petroleum gas, which is used as cooking gas, and compressed natural gas, which is also used in the transport sector.

Effective budget management is crucial as uncertainties remain in the global oil market, especially price fluctuations caused by the Russia-Ukraine war.

If the government continues to spend a huge amount of budget to support its price subsidy, it may face a negative impact on its coffer, which will eventually affect attempts to restore the economy in the long term, said Mr Sontirat.

He said the government should apply data compiled from its economic relief and stimulus packages, including the co-payment scheme, to the energy price subsidy scheme in order to better identify who really needs help to cope with the impact of the global surge in oil prices.

Mr Sontirat also suggested the authorities control domestic oil prices by asking oil refineries to reduce their ex-refinery prices without the need to always base the prices on reference prices in Singapore.

During his term as energy minister, Mr Sontirat sought cooperation from oil refineries to reduce the oil refinery margin, leading to a cut in retail oil prices by 0.5 baht a litre with no impact on SET-listed oil companies, he said.

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