The cabinet on Tuesday approved a draft executive decree to allow the Finance Ministry to guarantee the loan repayment and borrowings worth up to 150 billion baht of the Oil Fuel Fund Office.
Deputy Prime Minister Wissanu Krea-ngam said the new executive decree aims to increase the liquidity of the state Oil Fuel Fund and cope with rising oil and natural gas prices.
Mr Wissanu said after the cabinet's approval, the next step is to submit the draft emergency decree to the Office of the Council of State and be published in the Royal Gazette.
After that, the draft will be sent to parliament for vetting.
"During the consideration procedure, the Oil Fuel Fund is unlikely to secure any new loans and we have already discussed at cabinet meetings that the borrowings should not be made in haste and there is no need to borrow such a massive amount as proposed," said Mr Wissanu.
Finance Minister Arkhom Termpittayapaisith said on Tuesday the amount of the borrowing by the Oil Fuel Fund is pending consideration.
A source from the cabinet meeting who requested anonymity said Deputy Prime Minister and Energy Minister Supattanapong Punmeechaow explained to the cabinet's meeting that the new decree is necessary because the Oil Fuel Fund has explored several ways to boost its liquidity and talked with several financial institutions to help provide loans to ease the fund's liquidity crunch.
However, the talks have yet to be concluded as the financial institutions need the office to provide a clear plan of debt serviceability.
More importantly, the continuous rise in oil and gas prices has led the Oil Fuel Fund, which has been mainly used to subsidise diesel and liquefied petroleum gas prices, to suffer losses of more than 100 billion baht.
Deputy permanent finance secretary Theeraj Athanavanich said earlier in May the Oil Fuel Fund has enough credibility for financial institutions to extend its loans to boost liquidity, enabling it to subsidise the domestic oil price.