Authorities to discuss Oil Fuel Fund management

Authorities to discuss Oil Fuel Fund management

An attendant refuels a motorbike in Bangkok.
An attendant refuels a motorbike in Bangkok.

Authorities will meet within this week to discuss the state Oil Fuel Fund's huge loss incurred by oil and gas subsidy programmes though its financial status remains manageable, says a source at the Energy Ministry.

A subcommittee managing the fund, chaired by permanent finance secretary Lavaron Sangsnit, is preparing to discuss the direction of the fund, according to the source who requested anonymity.

As of Feb 9, the fund posted a loss of 84.3 billion baht, with 37.8 billion baht spent to subsidise oil prices and 46.4 billion baht subsidising liquified petroleum gas (LPG).

The Oil Fuel Fund Office (Offo) is authorised to request a loan totalling 110 billion baht to support the fund. So far up to 75 billion baht has been granted by banks.

"We still have enough cash for the fund to serve as a buffer against energy price fluctuations," the source said.

But because a large part of the fund is needed for price subsidy schemes, officials are required to look for ways to better manage and support the fund.

Offo averages spending of 200 million baht a day to support price subsidy programmes, with most of the money, some 68-70 billion baht a day, subsidising diesel.

Gasohol, gasoline and LPG prices are also subsidised by the fund.

As of last Friday, the authorities paid 4.62 baht a litre to subsidise diesel prices and 5.33 baht a kilogramme to subsidise LPG prices.

The drop in the Platts oil reference prices in Singapore last week reduced the financial burden of the fund, the source said.

To support the fund, gasoline and gasohol users are required to contribute 0.16-8.88 baht a litre to the fund while fuel oil users contribute 0.06 baht a litre.

Offo is monitoring the impact of geopolitical conflicts in the Middle East and Eastern Europe that could drive up global crude oil prices and, at the same time, is keeping watch on the Chinese economy which is expected to slow down, which could decrease global crude oil prices.

Crude oil prices, based on Texas Intemediate, Brent and Dubai reference prices, rose to between US$76.8-80.9 per barrel last Friday.

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