Subsidies for biofuel, originally scheduled to end this month, will be extended for another two years to promote the use of greener fuel mixes and support farmers, the National Energy Policy Committee (NEPC) said on Friday.
The subsidies will now remain in place until Sept 24, 2024, Energy Minister Supattanapong Punmeechaow said after a meeting of the committee, chaired by Deputy Prime Minister Prawit Wongsuwon.
The delay would promote the use of more environment-friendly fuels, support farmers continuously and effectively reduce compensation payments for fuels with mixes of biofuels, said Mr Supattanapong.
Previously, the Oil Fuel Fund Office (Offo) had drawn up a timetable to scale back biofuel subsidies between 2020 and 2022. However, it was unable to reduce compensation as planned and has been experiencing liquidity problems. As of July 17, the fund reported a loss of 112.93 billion baht — 74.16 billion from motor fuel subsidies and 38.77 billion for liquefied petroleum gas (LPG) used in cooking, said the energy minister.
Consequently, he said it was necessary to postpone the compensation payments for fuel mixed with biofuels for another two years. It has asked Offo to submit a new proposal for winding down compensation for cabinet consideration.
The government has spent part of the money in 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 the use of biofuels, reduce dependence on fossil fuels and help farmers earn more income.
However, the 2019 Offo Act requires authorities to end the subsidy programme as biofuels have become more popular among motorists without the need for further promotion.