Government Seeks Additional Loan to Cap Diesel Price

[webfact]

 

By Natthaphon  Sangpolsit

    

BANGKOK (NNT) - The government is in the process of seeking an additional 20-30 billion baht loan to maintain a ceiling on the price of diesel fuel. The Minister of Energy said the government is also considering new measures to help those affected.

 

During a parliamentary session, Deputy Prime Minister and Energy Minister Supattanapong Punmeechaow said 20-30 billion baht would be needed to keep a cap on pump prices. Elaborating on a query raised by Pheu Thai Party MP Kittikorn Lohsoonthorn, the minister said the government has already spent around 15 billion baht from the Oil Fuel Fund to maintain diesel rates.

 

On a proposal to adjust the biofuel mixture, Supattanapong said the effort cannot proceed quickly as it affects oil palm farmers, adding that the government is now considering new measures.

 

The Thai government has placed a 30 baht per liter cap on the retail price of diesel. According to the Ministry of Energy, it is 6th or 7th highest compared to those in eight ASEAN nations, with Singapore having the highest.

 

-- © Copyright NNT 2022-02-12

 

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[Xonax]

The tax payers wil have to pay the bill any way. But by taking a loan, there will possibly be brown envelopes distributed to the involved politicians?

Edited February 12, 2022 by Xonax

[smedly]

29 minutes ago, webfact said:

The government is in the process of seeking an additional 20-30 billion baht loan

a loan - has the government run out of money

[2umich]

The interesting thing is that E85, which is 85% ethanol is rising fast for no reason, as ethanol price relatively stable. It is looks like people who use E85 pay for those who use diesel. 

[worgeordie]

Why not collect lower tax on the diesel, same result without

borrowing money , unless someone wants to skim the loans.

regards worgeordie

[ukrules]

Exactly what kind of loan are they applying for and from whom?

[KannikaP]

3 hours ago, 2umich said:

The interesting thing is that E85, which is 85% ethanol

Twice as strong as a Single Malt!

[bdenner]

Quote

The Minister of Energy said the government is also considering new measures to help those affected.

Affected by what? A reduced slice of the excise cake! Thinner brown envelopes!

Dunno what sort of creative accountancy is going on here but it certainly stinks on something.

[PETERTHEEATER]

5 hours ago, 2umich said:

The interesting thing is that E85, which is 85% ethanol is rising fast for no reason, as ethanol price relatively stable. It is looks like people who use E85 pay for those who use diesel. 

They always have. If the government needs a loan I suggest they tap the Minister of Health who should offer a competitive rate.

[digger70]

7 hours ago, webfact said:

The government is in the process of seeking an additional 20-30 billion baht loan to maintain a ceiling on the price of diesel fuel.

 

7 hours ago, webfact said:

the government has already spent around 15 billion baht from the Oil Fuel Fund to maintain diesel rates.

This sounds Fishy. why do they have toBorrow money ? al they have to do is Lower the Excise tax to lower the price at the Pump.

This  is Pure insulting Greed Taking out loans and let the taxpayer foot the bill. 

I hope all the trucks go on strike and Force the Govment to own up on their Scam.

[StayinThailand2much]

7 hours ago, Xonax said:

The tax payers wil have to pay the bill any way. But by taking a loan, there will possibly be brown envelopes distributed to the involved politicians?

That's why they can't tap into the 243 billion US$ (7.95 trillion Thai baht) foreign currency reserves...

 

Like Elon Musk going to the bank for a loan to buy a fridge.

Edited February 12, 2022 by StayinThailand2much

[Pib]

7 hours ago, worgeordie said:

Why not collect lower tax on the diesel, same result without

borrowing money , unless someone wants to skim the loans.

regards worgeordie

Yeap.  The current "excise" tax on diesel is Bt5.99 per liter.   By suspending this tax the govt could immediately lower price of diesel to Bt24.  However, lowering/suspending a tax is something governments only do as last resort...absolutely forced into it...because they know it will be very, very hard to reimpose the tax.   

Edited February 12, 2022 by Pib

[jacko45k]

On 2/12/2022 at 8:49 PM, Pib said:

The current "excise" tax on diesel is Bt5.99 per liter.   By suspending this tax the govt could immediately lower price of diesel to Bt24.

So is the price of diesel from the refinery B24/liter? Is that still the same after it is delivered to the pump? Just wondering if the Government really has the wriggle room.

[Pib]

8 hours ago, jacko45k said:

So is the price of diesel from the refinery B24/liter? Is that still the same after it is delivered to the pump? Just wondering if the Government really has the wriggle room.

Right now the "ex-refinery" diesel B7 price is a little under 23 baht.  Then add-on the Bt5.99 excise tax, VAT, Oil Fund Tax/Subsidy, Retail Profit, Wholesale profit, VAT, Retailer markup and a misc thing or two and you have the "at the pump price."   

 

But the Ex-Refinery cost + Excise Tax + Oil Fund Tax/Subsidy + a Retailer Markup/Profit (a little less than Bt2/liter) make-up the great, great majority of the cost per liter. 

 

The Oil Fund acts as either a Tax increasing the cost per liter (when the price of barrel of oil is low)  or a  Subsidy lowering the cost per liter (when the price of barrel of oil is high).    For the last 4 or so months its been acting as a Subsidy...that is the govt spending money from the Oil Fund (which is now depleted and they a borrowing money to refill it) in order to keep the cost of diesel below Bt30/liter.

 

Basically the govt only has control over the Excise Tax, Value Added Tax (VAT), and the Oil Fund Subsidy Tax/Subsidy.   The govt has depleted the Oil Fund pot of money which has been "subsidizing"" the price.   The only real significant wiggle room the govt has right now is either change/lower the almost Bt6/liter Excise Tax or continue to borrow money to top-up the Oil Fund Subsidy....which is eventually paid back thru govt taxes.

 

As mentioned earlier the govt is extremely reluctant to lower/remove the  Excise Tax  because re-imposing the excise tax later which would increase the price would probably be very hard politically...and much of the population would finally realize the govt excise tax is a major reason for cost of fuel.   

 

From the Energy Policy and Planning Office of the Thailand Minster of Energy.   Jan 2022 price "at the refinery."

http://www.eppo.go.th/index.php/en/en-energystatistics/petroleumprice-statistic

Edited February 14, 2022 by Pib