Plug pulled on diesel cap
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Plug pulled on diesel cap

30 baht per litre 'too costly to keep': govt

Motorists refuel their vehicles at a petrol station on Nawamin Road in Bangkok. (Photo: Varuth Hirunyatheb)
Motorists refuel their vehicles at a petrol station on Nawamin Road in Bangkok. (Photo: Varuth Hirunyatheb)

The government has appealed for public understanding over its decision to lift the 30-baht-per-litre diesel price cap next month.

Prime Minister Prayut Chan-o-cha said on Tuesday he is ready to listen to alternative proposals from members of the Land Transport Federation of Thailand (LTFT) at Government House today after signalling an end to the subsidy from May 1.

Gen Prayut said the Fuel Oil Fund which had been pumping in cash to keep the price down is now severely depleted while loans sought to support the fund have also run out.

"People should understand the limits of the government's capacity to help. The increase in the price of diesel will have an adverse impact on people and lead to inflation. Now is the time for everyone to cooperate and the government is ready to take care of people," Gen Prayut said.

LTFT chairman Apichart Prairungruang said haulage industry representatives will formally lodge their opposition to the removal of the cap at Government House on Wednesday and ask the government to come up with measures to ease the plight of those affected.

Deputy Prime Minister and Energy Minister Supattanapong Punmeechaow on Tuesday explained that from May 1, the government will still help subsidise the diesel price, but to a lesser extent.

"The retail price of diesel is now at 40 baht per litre. The amount that is beyond the 30-baht cap is 10 baht per litre. If the government subsidises half of the price above 30 baht a litre, the new cap will be 35 baht per litre.

"The Energy Ministry will monitor the situation to ensure that price rises happen gradually. We will not do an immediate jump to 35 baht per litre as people will be in trouble.

"The permanent secretary for energy will consider how much the government can subsidise -- maybe 31, 32 or 33 per litre. It will gradually increase. Therefore, the government will subsidise more than 50% by using money from the Oil Fund,'' Mr Supattanapong said.

Asked if it is possible to adjust the diesel price in line with the benchmark international rate, Mr Supattanapong said: "Not quite. If the government has the resources, we will continue to help. We are still in recovery."

He said the government will need three months to assess the situation before deciding whether to allow the domestic price to fall in line with global prices.

Mr Supattanapong also urged the private sector to help by reducing production costs rather than raising consumer prices.

As of April 19, the government, through the state Fuel Oil Fund, subsidised the diesel price at 11.21 baht per litre as part of an aid pledge to freeze the price at 30 baht per litre until the end of this month.

Domestic diesel consumption totals about 65 million litres per day, 1.4 million of which are premium diesel.

The cabinet on March 29 approved revoking the subsidy for premium diesel used in luxury cars, effective from April, in a move to save on budget expenses.

The cabinet previously approved lifting the borrowing limit on March 15 for the state Fuel Oil Fund to allow for management flexibility, a move that offers the government more room to cope with surging fuel prices caused by the Russia-Ukraine conflict.

As of April 17, the Office of the Fuel Fund reported the state Fuel Oil Fund was 50 billion baht in the red.

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