The Finance Ministry plans to provide loan guarantees worth up to 30 billion baht to the Oil Fuel Fund in the first phase of the fund's plan to bolster liquidity, says a ministry source who requested anonymity.
The source said the fund is in talks with financial institutions to seek a loan. As of Oct 2, the fund posted hefty losses of 124 billion baht from subsidising domestic oil and gas prices.
The executive decree that took effect on Oct 5 allows the ministry to provide a guarantee for loan repayment and borrowing by the fund worth up to 150 billion baht, aiming to prop up the fund's liquidity and help it cope with rising domestic energy prices.
Under the decree, the fund will have to take out the loan within one year after the decree comes into force.
The source said the cabinet approved the Public Debt Management Office (PDMO) to provide a guarantee of up to 30 billion baht for the first stage to the Oil Fuel Fund.
The office has included this amount in its debt management plan for fiscal 2023.
PDMO will consider reviewing its 2023 debt plan to include the remaining guarantee of 120 billion baht.
If the Oil Fuel Fund needs to borrow more, the Energy Ministry will have to propose to the cabinet more borrowing every time it is required, said the source.
The fund has struggled to access loans from financial institutions to shore up its dwindling liquidity because the institutions are concerned the fund's heavy losses and volatile global energy prices could affect its debt repayment.
The source said the ministry has not considered whether to extend the expiry date of the government's measure to reduce the diesel excise tax from Nov 20.
"The ministry will have to take into consideration the fluctuating global oil price," said the source.
"If the price falls, it might not be necessary to extend the measure."
The cabinet on Sept 13 approved the extension of the measure by another two months to end on Nov 20.
The measure cut the diesel excise tax by 5 baht per litre.