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Hua Hin
Tuesday, February 27, 2024

Oil Fund Considers Loan for Energy Subsidies

To repay debts generated through the fund’s usage to subsidize diesel and liquefied petroleum gas (LPG) prices, the Oil Fuel Fund Office (OFFO) is contemplating seeking for a second loan of 30 billion baht ($946.6 million) in March.

OFFO was given permission by the government to apply for a loan of up to 150 billion baht in total, but the actual amount given would be decided by the Public Debt Management Office.

Krungthai Bank and Government Savings Bank lent 30 billion baht to OFFO, but they spent it all only last month. OFFO anticipates requesting a further loan based on two diesel price bands below the Singapore reference price: $110-115 per barrel and more than $150 per barrel in the worst-case scenario.

Diesel was previously set at 35 baht per liter, and LPG (used for cooking gas) was regulated at 6.12 baht per kilogram, by the government, in an effort to reduce the cost of living for homes and companies. After the EU sanctioned Russian energy exports during the Russia-Ukraine war in February, driving up global oil prices, the subsidies were put into force.

The diesel price subsidy accounts for 77.1 billion baht, while the LPG price subsidy accounts for 44.3 billion baht of the fund’s current 121 billion baht in debt. Between January and November of 2022, diesel consumption in Thailand rose 17.4 percent and LPG use up 7.1 percent over the same months in 2021.

Last month, the Energy Policy Administration Committee said that, in a bid to halt the growing cost of living, it will also continue to restrict the price of LPG at 408 baht per 15kg cylinder until the end of January.

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february, 2024