New energy subsidy being devised

New energy subsidy being devised

Diesel cap depends on global situation

Vehicles are being refuelled at a petrol station in Bangkok last month. (Photo: Varuth Hirunyatheb)
Vehicles are being refuelled at a petrol station in Bangkok last month. (Photo: Varuth Hirunyatheb)

The Energy Ministry will aim to cap the retail price of diesel at no more than 35 baht per litre until the end of this month as it waits for new energy price subsidy measures to be approved, permanent secretary for energy Kulit Sombatsiri said on Tuesday.

But this price cap could only be done if international diesel prices don't go beyond US$108 per barrel or crude oil prices don't surpass US$120 per barrel, Mr Kulit said.

Private and public stakeholders are finalising proposals which will contribute to new energy price subsidy measures, which are expected to be submitted to the cabinet for consideration by next week, Mr Kulit said.

These new measures will replace the current ones, due to expire between around the middle of this month and the middle of next month, he said. This decision-making process involves several factors including the gross refining margin (GRM) that is being negotiated to be lowered to help consumers, he said.

"If diesel prices had been left without any intervention, they would have become about 45 baht per litre by now," Mr Kulit said.

Due to issues related to diesel price subsidies, the Oil Fund is expected to be close to 100 billion baht in the red by the end of this month, he said.

A request to borrow 20 billion baht more from the fund to finance the new energy price subsidy programmes is expected to be known by the end of this month as well, he said.

The new measures should be rolled out sometime next month, Mr Kulit said.

The Ministry of Finance, Bank of Thailand, National Economics and Social Development Council and the Energy Ministry are assessing the impact of global oil prices, said Energy Minister Supattanapong Punmeechaow. As part of that, Mr Supattanapong said they are considering approving new measures to help Thai consumers cope with high energy prices.

Asked if there still is room for the government to borrow further, the minister said there is but the question is not about the government's willingness to borrow more or not but whether it is suitable to incur further debt.

Prime Minister Prayut Chan-o-cha, meanwhile, said the cabinet on Tuesday discussed the GRM, which is now up to 8 baht per litre and could be lowered to help bring the retail oil prices further down.

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