Thailand: Government to cap diesel price

• The government will cap the diesel price at THB30 per litre as part of efforts to ease the impact from increasing world oil prices.
• The Energy Ministry announced the move on 22 May 18, saying world oil prices have fluctuated greatly for two months. The price of Dubai crude rose USD15.30 (THB490) per barrel on 19 May 18 to cost more than USD77.
• The spike in the crude oil price resulted in the price of diesel in Southeast Asia soaring by about USD17 to USD93.24 per barrel. This resulted in the price of diesel in Thailand jumping by THB3.82 per litre in one day.
• As a result, the Energy Ministry will use the State Oil Fund to cap the diesel price at not more than THB30 per litre until the development of B20 fuel reaches commercial viability. As of 22 May 18, the local diesel price had reached THB29.79 per litre, he said.
• B20 is an alternative fuel created by mixing regular diesel, with 20% of biodiesel produced by agriculture products. The selling price of B20 will be THB3 a litre lower than regular diesel.
• In Thailand, diesel is the main fuel for the transport and manufacturing sectors. The higher fuel price will force up the cost of services and production.
• Under the scheme to ease fuel price impacts, the State Oil Fund will subsidise 50% of the price increase. For example, if fuel prices increase THB1, the fund will cover THB0.5, said Mr Siri.
• In the worst-case scenario, if the price of Brent crude reaches USD90 per barrel, the diesel price reference in the Southeast Asian market will increase to USD105 per barrel. In such a case, the State Oil Fund which remains at THB30bn can subsidise the local diesel price at 50% for 10 months, he said.
• Still, the minister, said it is expected that B20 fuel will be commercially viable in early Jul 18. As a result, public transport operators will not be allowed to increase fares to cover increasing fuel costs.
• The Energy Ministry will table the subsidy plan and seek its endorsement from the Committee on Energy Policy Administration this week.
• The diesel price in Thailand was capped from 2011 to 2014, but this ended when the Prayut Chan-o-cha administration took office following the coup. The cap was lifted by then Energy Minister Narongchai Akrasanee.
• On 21 May 18, Commerce Minister Sontirat Sontijirawong said the ministry is studying the production cost structure, especially for products that are reliant on oil and LPG, and has assigned responsible authorities to closely monitor the product and food prices.

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