Diesel no higher than ฿30 per litre

Date:

The Cabinet has approved lowering the excise tax for imported diesel fuel for six months as a short-term measure to alleviate rising fuel costs in the Kingdom.

The Thai government has promised to do its best to keep the price of diesel at no more than 30 baht/litre for as long as possible, said Prime Minister Prayut Chan-o-cha at the Government House, after chairing a meeting of the National Energy Policy Committee last Wednesday.

According to Ratchada Thanadirek, deputy spokesperson for the Office of the Prime Minister, the proposed cut will apply to diesel with a sulfur content not exceeding 500 parts per million (ppm) or Diesel B10.

The aim is to shield consumers from higher energy costs due to rising global oil prices.

The current excise tax rate for diesel oil with sulphur not exceeding 0.005% is 3.44 baht per litre, while bunker oil is 0.64 baht per litre.

According to Reuters today, Brent crude was down $3.56, or 2.8%, to $124.42 a barrel, after earlier rising above $131.  On Monday, however, Brent hit $139, its highest since 2008.

The approved measure, to be implemented this month and continuing until September 15, will directly subsidize diesel costs for electricity generation. Authorities estimate that the country’s electricity cost will fall by 1 to 1.5 baht per unit.

The cut is expected to help keep energy costs in check for general living and local business operations.

Currently, Egat uses 60% natural gas to generate electricity. However, the price of natural gas continues to soar and Egat needs to use diesel and bunker oil to generate electricity.

The government recently introduced two measures to peg the price of diesel at 30 baht per litre, using the Oil Fund to subsidise the retail price of diesel, along with a cut in the excise tax on diesel by approximately half, or 3 baht per litre.

The excise tax reduction is scheduled to remain in place until May 20.

Mirko Bennardo
Author: Mirko Bennardo

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