Fuel tax cut proposed as rising prices drain Oil Fund
The Energy Policy and Planning Office (EPPO) has proposed cutting the fuel tax to reduce pressure on the Oil Fund.
EPPO director Wattanapong Kurowat said the urgent proposal was sent to the Energy Ministry after the global oil price rose to nearly US$87.50 per barrel.
"We have to discuss this issue with the Finance Ministry as soon as possible," he said.
He added that the Finance Ministry had previously rejected a proposal to cut oil tax by up to two baht from the current level of Bt5.99 per litre.
Oil Fund director Wisak Watthanasap wants the energy and finance ministries to agree on reducing fuel excise tax quickly as the rising oil price is draining the fund's liquidity.
Wisak said about 6 billion baht in subsidies is flowing out from the Oil Fund each month. Despite being given permission to borrow 20 billion baht in January, the fund can only maintain retail fuel prices at their current level for a few months, he added.
“So cutting oil excise tax would help reduce cash outflow.”
The Energy Ministry forecasts that prices will drop in March as energy usage declines, but Wisak said international politics would trigger volatility in the global price, impacting fuel prices in Thailand.
The Federation of Thai Industries this week voiced concern that global oil prices may reach US$100 a barrel.
Wisak said banks would submit loan proposals to the Oil Fund before the end of January and the debt would be repaid within three years.
Krungthai Bank, Government Savings Bank and Kasikorn Bank have contacted the Oil Fund office to request additional information.
The Oil Fund was 8.78 billion baht in the red as of January 16. The fund is currently paying out 6.5 billion baht each month – 4.6 billion baht to subsidise the diesel price and 1.9 billion baht to subsidise the LPG price.