Fuel fund vows to keep diesel prices low
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Fuel fund vows to keep diesel prices low

Fund's financial status has been improving

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Fuel nozzles for diesel at a PTT petrol station on Sukhumvit Road. (Photo: Somchai Poomlard)
Fuel nozzles for diesel at a PTT petrol station on Sukhumvit Road. (Photo: Somchai Poomlard)

The Oil Fuel Fund Office (Offo) will continue to keep domestic diesel prices at less than 33 baht per litre after the current subsidy scheme ended on Thursday, as its financial status has improved following a drop in global oil prices.

The debt-ridden fund's losses fell in fiscal 2024, as less money was allocated from it to subsidise domestic diesel prices.

Offo will consider using the fund itself and plans to further subsidise diesel prices, though it will not ask the cabinet to renew the subsidy programme, according to media reports.

"We will maintain the stability of retail diesel prices at less than 33 baht per litre," said Pornchai Jirakulpisan, head of the policy and strategy department at Offo.

"But this policy depends on changes in global oil prices that may affect the fund's liquidity."

The fund's financial outlook began to improve in August, with the fund gaining revenue worth 7-9 billion baht a month.

This led to lower losses, which tallied more than 99 billion baht as of Sept 29, down from 112 billion baht on July 28.

The 99.1 billion baht losses are comprised of 51.6 billion baht stemming from the diesel price subsidy programme and 47.4 billion baht from subsidising liquefied petroleum gas (LPG) prices.

"With the current financial status, we expect to settle debt owed to financial institutions by September 2028," said Mr Pornchai.

Offo plans to start paying 139 million baht to its creditors in November. The amount covers only the principal.

"We will then increase the principal payment each month, but this excludes interest worth 250-300 million baht monthly," said Mr Pornchai.

He attributed better liquidity to the decrease in global crude oil prices in fiscal 2024, running from Oct 1 last year to Sept 30 this year. Average oil prices were US$81.6 per barrel based on Dubai reference prices, a drop from $83.4 per barrel in fiscal 2023.

Diesel prices also fell to $102 per barrel from $112.9 per barrel, thanks to the economic slowdown in China resulting in lower oil demand on the world market.

"But diesel prices remained high as they exceeded $100 per barrel, mainly due to the prolonged Russia-Ukraine war and the Israel-Hamas disputes," said Mr Pornchai.

The government has capped the LPG price at 423 baht per 15-kilogramme cylinder.

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