The Ukraine-Russia conflict has led to rising global oil prices, raising concerns the Finance Ministry will have to inject additional funds to keep the retail price of diesel below 30 baht a litre, says a ministry source who requested anonymity.
The government already introduced two measures to peg the price of diesel below 30 baht per litre, using the Oil Fund to subsidise the retail price of diesel at 3.79 baht per litre, along with a cut in the excise tax on diesel by approximately half, or 3 baht per litre.
One estimate has the reduction in the excise tax, scheduled for enforcement until May 20, costing the Excise Department 5.7 billion baht per month, accounting for a total of 17.1 billion over the three-month period.
The source said these two measures resulted in a current diesel price of 28-29 baht per litre.
Without the two measures, the diesel price would have surged to 35 baht per litre as the global price now stands at around US$100 per barrel, said the source.
If the global oil price hits $120 per barrel, the retail diesel price in Thailand would have soared to 40 baht per litre if the two measures were not in place, the source said.
The source said if the government wants to continue pegging the price of diesel below 30 baht per litre, the Oil Fund needs to provide additional funds for the subsidy and a further cut of the diesel excise tax is needed.
The government could allow the price of diesel to rise above 30 baht per litre, meaning less of a subsidy from the Oil Fund and a lower excise tax cut to support the price, the source said.
The cabinet recently approved the Oil Fund borrowing an additional 30 billion baht as part of measures to deal with the rising price of diesel.
The cabinet might need to revise the Oil Fund law to raise the fund's borrowing limit from the current level of 40 billion baht, the source said.
