The Oil Fuel Fund Office (Offo) is considering revising its price subsidy programmes to focus only on groups of people who badly need help, rather than making them universal.
The agency has hired Thammasat University to evaluate its fund management since the passage of the Offo Act in 2019. The findings will be used to improve performance.
Officials want to revise some regulations under the law to bring them in line with changes in the oil and gas markets in Thailand and overseas.
One major change would involve giving subsidies only to businesses and households with limited resources, in order to better manage the rapidly diminishing fund.
Targeted recipients would include street food sellers, drivers of goods trucks and public transport operators.
The national oil and gas conglomerate PTT Plc, the country’s sole gas seller, has already adopted the targeted approach. It subsidises compressed natural gas prices only for taxi and public bus operators.
“We look forward to helping only specific groups of people in the future,” said Pornchai Jirakulpisan, head of the policy and strategy department at Offo. “This will allow us to avoid the huge debt incurred from universal subsidies, especially those granted in 2022.”
The Russian invasion of Ukraine in 2022 led to a surge in global oil and gas prices, prompting the government to spend huge sums subsidising domestic fuel prices, especially diesel, which cost the fund 130 billion baht that year.
Offo needed to seek a loan of 105 billion baht to clear its debt, but the money was only enough to pay interest of 150-200 million baht a month. The payments will run until October of this year. Offo is committed to paying the principal by November.
The fund is still financially manageable despite the huge losses incurred from subsidising domestic diesel and cooking gas prices, said Wisak Watanasap, the Offo director.
That is because a levy collected on gasoline and gasohol sales is directed to the fund.
As of Aug 2, the levy collection stood at 2.73 billion baht a month. The current diesel subsidy is 40 satang per litre, and the LPG subsidy is 4.18 baht per kilogramme, or 63 baht for a standard 15kg cylinder.
If global crude oil prices stay at $80 per barrel and the diesel reference price in Singapore is not more than $100 per barrel, the debt will be settled by 2028.