Extra subsidy for diesel; Oil Fund face first deficit in 6 months

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BANGKOK, Jan 3 – Thailand’s Oil Fund will have to borrow from state-run banks after experiencing a deficit for the first time in six months at Bt103 million, according to the Energy Ministry.

Permanent Secretary for Energy Suthep Liamsiricharoen said the weakened baht at nearly Bt33 against the dollar has affected the cost of oil imports at the rate of 80 satang/litre for one depreciating baht.

He said the Energy Policy and Planning Office (EPPO) has instructed the Oil Fund to additionally subsidise diesel at 40 satang/litre, or at a total of Bt1.10/litre.

The subsidy has compelled the Oil Fund to pay an extra Bt22 million/day, from Bt136 million/day to Bt158 million/day.

As of January 1, the Oil Fund has encountered a deficit for the first time in six months at Bt103 million and it will have to seek loans from the Krung Thai Bank and the Government Savings Bank within the permitted limit of Bt30 billion, said Mr Suthep.

If the diesel price remains as it is, the Bt30 billion borrowing allowance will last only seven months, he said, expressing optimism that the financial burden could lessen in light of reduced prices of liquefied petroleum gas and fuel after winter.

The EPPO wants to maintain the diesel price at not more than Bt30/litre to avoid impacting the cost of living since diesel represents 80 per cent of transportation costs, he said.