Thailand Oil Fund considers new loan to cover subsidies on energy prices

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The cabinet has previously granted OFFO the ability to request a total loan of up to 150 billion baht, but the amount to be granted will be determined by the Public Debt Management Office while the OFFO’s first loan of 30 billion baht, which was granted by Krungthai Bank and Government Savings Bank, was used up last month.

The Oil Fuel Fund Office (OFFO) is considering applying for a second loan of 30 billion baht ($946.6 million) in March in order to pay off debts incurred through the use of the fund to subsidize diesel and liquefied petroleum gas (LPG) prices.

The cabinet has previously granted OFFO the ability to request a total loan of up to 150 billion baht, but the amount to be granted will be determined by the Public Debt Management Office.



OFFO’s first loan of 30 billion baht, which was granted by Krungthai Bank and Government Savings Bank, was used up last month. The additional loan that OFFO plans to request is based on two diesel price ranges under the Singapore reference price: $110-115 per barrel and more than $150 per barrel in a worst-case scenario.

The government had previously capped the price of diesel at 35 baht per liter and fixed the price of LPG, used as cooking gas, at 6.12 baht per kilogram to ease the cost of living for households and businesses. The subsidies were put in place after the Russia-Ukraine conflict in February and the EU imposed sanctions on energy exports from Russia, causing a surge in global oil prices.



The fund is currently 121 billion baht in debt, with 77.1 billion baht being attributed to the diesel price subsidy and 44.3 billion baht attributed to the LPG price subsidy. Diesel and LPG consumption in Thailand increased by 17.4% and 7.1% respectively between January and November of 2022, compared to the same period the previous year.



The Energy Policy Administration Committee announced last month that it would also continue to cap the price of LPG at 408 baht per 15kg cylinder until the end of January in an effort to slow the rising cost of living. (NNT)