The Oil Fuel Fund Office (Offo) expects to delay a plan to end the biofuel subsidy for two years to give sugar cane, cassava and palm famers more time to manage their output.
The government has spent part of the Oil Fuel Fund to subsidise prices of ethanol, made from sugar cane and cassava, as well as palm oil-derived methyl ester to promote use of environmentally friendly biofuels, reduce dependence on fossil fuels and help farmers increase revenue.
However, the 2019 Offo Act requires authorities to end the subsidy programme after biofuels become more popular among motorists without the need for further promotion, said Offo chief Wisak Watanasap.
The government is scheduled to stop subsidising biofuel prices on Sept 30, but the law authorises it to consider postponing the date for two years to 2024, with the possibility of another two-year delay to 2026.
There is time for the Offo board, the National Energy Policy Council and the cabinet to consider the matter before the deadline, said Mr Wisak.
He was speaking after recent visits to an ethanol production factory in Kalasin and a palm oil manufacturing facility in the South, where he found factory operators and farmers are unprepared if the government stops the subsidy.
Biofuels -- ethanol and methyl ester -- were commercially launched in 2004, with production mainly coming from PTT Plc and Bangchak Corporation.
The subsidy helped increase palm oil consumption, with 70% of the total used to make methyl ester to mix with diesel.
More than 2 million sugar cane growers benefited from the scheme.
Ethanol, which is blended with unleaded gasoline, reduced imports of crude oil by 12 billion litres, worth 175 billion baht.
Biofuels, with a market value worth 10 billion baht a year, helped cut carbon dioxide emissions by 35 million tonnes over the past 17 years.
According to the Offo, the subsidy is still needed as sales of gasohol E20, a mix of 20% ethanol and 80% unleaded gasoline 95, as well as biodiesel B10, a mix of 10% methyl ester and 90% diesel, are not steady enough to make them primary fuels for motorists.