Energy policymakers are planning to end the price subsidy programme for biofuels this year after a delay of several years, says an official at the Oil Fuel Fund Office (Offo).
This means biofuels such as gasohol, a mix of gasoline and ethanol, and biodiesel, which is made by blending diesel with palm oil-derived methyl ester, will be reduced. Only certain formulas of gasohol and biodiesel will be available for sale at petrol stations.
The authorities are likely to terminate the subsidy programme in September, said the Offo official, who requested anonymity.
The government has subsidised biofuel prices for two decades to promote their use and reduce dependence on fossil fuels.
The official said gasohol and biodiesel have proven popular so a subsidy is not necessary.
Under the Oil Fuel Fund Office Act, the scheme was scheduled to be discontinued on Sept 30, 2019, but the plan was postponed because farmers who grew sugar cane and cassava, raw materials used in ethanol production, and those who grew oil palm, used to make methyl ester, were not ready.
The impact of the pandemic in 2020 and 2021 was attributed for further postponing the programme expiration.
If the government does not end the subsidy scheme this year, the law allows for another two-year delay until 2026, the official said.
If the programme is terminated later this year, motorists will have fewer fuel choices at the pump.
Motorists can continue to buy premium-grade gasoline and diesel, but in the biofuel category only gasohol 95 and biodiesel B7 will be available at petrol stations, the official said.
Gasohol 95 is gasoline mixed with 10% ethanol. The number 95 indicates the octane rating.
Biodiesel B7 is diesel blended with 7% methyl ester. Biofuels were commercially launched in 2004 by oil companies, led by PTT Plc and Bangchak Corporation Plc.
Greater use of biodiesel resulted in 70% of palm oil being supplied for methyl ester production, while up to 2 million sugar cane farmers benefited from the subsidy programme. The market value of biofuels is 120 billion baht.
The government cut the excise tax on fuel, spending money from the Oil Fuel Fund to subsidise the prices of biodiesel B7, gasohol and gasoline. The fund ran a loss of 80.1 billion baht as of Jan 8 to help the government control the retail prices of oil, according to the Offo.