Lower diesel subsidy possible by next month

Lower diesel subsidy possible by next month

A motorbike and pickup refuel at a PTT petrol station in Bangkok. (Photo: Nutthawat Wicheanbut)
A motorbike and pickup refuel at a PTT petrol station in Bangkok. (Photo: Nutthawat Wicheanbut)

The government may continue with the diesel subsidy programme beyond April to help consumers struggling with inflation, but the subsidy would be limited, according to Energy Minister Supattanapong Punmeechaow.

Mr Supattanapong said on Tuesday the government may help subsidise the diesel price, but at more than half of the price above 30 baht per litre.

The government, using the state Fuel Oil Fund, as of Tuesday subsidised the diesel price at 11.21 baht per litre as part of its aid measures to freeze the retail price of diesel at 30 baht per litre until the end of this month.

Domestic diesel consumption totals about 65 million litres per day, 1.4 million of which are premium diesel.

The cabinet on March 29 approved revoking the subsidy for premium diesel used in luxury cars, effective from April, in a move to save on budget expenses.

The cabinet previously approved lifting the borrowing limit on March 15 for the state Fuel Oil Fund to allow for management flexibility, a move that offers the government more room to cope with surging fuel prices caused by the Russia-Ukraine conflict.

"In May, the government will possibly subsidise more than half of the diesel price above 30 baht per litre," said Mr Supattanapong.

"The management committee handling the state Oil Fund and the Energy Ministry have been assigned to find additional assistance measures to help consumers."

He said the government is expected to settle on a borrowing plan for the state Oil Fund within this month, while the Energy Ministry has asked the Finance Ministry to help issue "a letter of comfort" to assure financial institutions lending to the Oil Fund that its debt is regarded as public debt and the government will guarantee repayment.

As of April 17, the Office of the Fuel Fund reported the state Fuel Oil Fund was 50 billion baht in the red.

In a related development, Prime Minister Prayut Chan-o-cha said the government has been closely monitoring a sharp rise in goods and energy prices, which are causing hardships for the public.

Gen Prayut vented his growing concerns about the issue, particularly for low-income earners who are suffering from higher expenses.

He said the government pledges to implement additional measures to ease living costs for the public, and the government may consider additional borrowing if the situation worsens.

Gen Prayut said the government is also considering whether to extend the "Khon La Khrueng" co-payment subsidy scheme, which is scheduled to end this month. He said a major consideration is whether the measure can effectively boost domestic spending.

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