Soaring fuel prices have been on the lips of many across the nation, leading the government to introduce a string of subsidies on various fuels as a measure to cushion the blow on consumer pockets. These relief measures, which include subsidies on several types of petrol, on diesel oil, and on cooking gas, have turned out to be rather costly, draining around 402.44 million baht from the government coffers every single day.
According to a source privy to the debate, the current trajectory of this financial haemorrhage could result in the subsidy fund facing a crippling deficit of up to 100 billion baht by the time the year draws to a close. A concerning prediction indeed.
But the wheels of the subsidy train had already been set in motion, and did not seem likely to slow down anytime soon. On the last day of October, the Cabinet gave the green light to the Energy Ministry’s proposition to implement price subsidies for gasohol petrol, a blend of petrol and ethanol, over a period of three months, spanning November 7 to January 31.
A couple of days later, the Fuel Fund executive committee disclosed a series of price reductions for specific fuels: Gasohol 91 was to be cheaper by 2.50 baht per litre; Gasohol 95 by 1 baht per litre; E20 and E85 petrol by 80 satang per litre. These price drops were made possible by cutting the excise tax rate and simultaneously reducing the contribution sourced from gasohol petrol sales directed towards the oil fund.
This decision, however, flung the Oil Fuel Fund into turbulence, seeing it lose about 11.19 million baht each day, and shave its daily earnings down to just 66.37 million baht. This is in stark contrast to its previous daily earnings from gasohol sales which were perched at 74.56 million baht.
A staggering fact emerged that even prior to the reduction in gasohol retail prices, the fund had been depleting by about 200 million baht per day. These were funds being used to subsidise the price of diesel oil in order to maintain its price at a steady 30 baht per litre.
Moreover, about 12.44 million baht is being sprinkled out daily to subsidise the price of LPG gas. It’s a balancing act as contributions from gasohol petrol sales come in at about 66.37 million baht daily, while simultaneously around 190 million baht goes out daily for its price subsidy.
A glance at the fund’s deficit at the start of November signaled alarming notes, standing at a significant 75.6235 billion baht – of this, 30.185 billion is attributed to oil and 45.440 billion to LPG.
The fund’s peak handicap was at a daunting 130 billion baht midway through the previous year. However, a gradual lowering of this deficit to 60 billion baht was achieved this year in June, owing to cuts made in the diesel oil subsidies.
But as these trends dictate, with constant fluctuations and the whirlwind nature of the global fuel business, how this story will unveil is anybody’s guess.
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