Govt to Address Oil Fund Losses Amid Subsidy Strain

[snoop1130]

 

BANGKOK (NNT) - The Energy Ministry is set to hold discussions this week regarding the substantial losses experienced by the state Oil Fuel Fund, attributed to oil and gas subsidy programs. Despite the financial challenges, the agency affirmed that the fund's situation is still manageable. 

 

The fund, which is under the scrutiny of a subcommittee led by Lavaron Sangsnit, the permanent finance secretary, reported a loss of 84.3 billion baht as of February 9, with significant amounts spent on subsidizing oil and liquified petroleum gas (LPG) prices.

 

To mitigate these losses, the Oil Fuel Fund Office (OFFO) has been authorized to secure loans up to 110 billion baht, of which 75 billion baht has already been obtained from banks. Daily, Offo allocates approximately 200 million baht to support price subsidy schemes, particularly focusing on diesel, gasohol, gasoline, and LPG subsidies.

 

Recent drops in Platts oil reference prices have somewhat alleviated the fund's financial strain. Contributions from gasoline and gasohol users, along with a small levy on fuel oil, are measures in place to bolster the fund. OFFO continues to monitor global crude oil price fluctuations due to geopolitical tensions and economic shifts, especially concerning the Chinese economy's slowdown, which could impact global oil demand and prices.

 

By Krajangwit Johjit

 

Full story: NNT 2024-02-13

 

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[hotchilli]

13 hours ago, snoop1130 said:

The Energy Ministry is set to hold discussions this week regarding the substantial losses experienced by the state Oil Fuel Fund, attributed to oil and gas subsidy programs. Despite the financial challenges, the agency affirmed that the fund's situation is still manageable. 

Crisis what crisis... 

[spidermike007]

Not buying the nonsense. Oil prices drop significantly, and sometimes it takes weeks for gas prices to drop. Billions in profit are being earned. This kind of stuff is only for the most naive. 

[Bandersnatch]

14 hours ago, snoop1130 said:

84.3 billion baht

 

84.3 billion baht loss on oil and gas subsidy programs  - why are we subsidizing fossil fuels at all?

[jacko45k]

Just now, Bandersnatch said:

 

84.3 billion baht loss on oil and gas subsidy programs  - why are we subsidizing fossil fuels at all?

I guess they have the money to spare, and keeping down transportation and energy costs is seen as a greater benefit. After all, worrying about emissions from vehicles while every farmer, and many regular people, burn trash willy nilly, seems of little relevance.

[Mike Lister]

41 minutes ago, spidermike007 said:

Not buying the nonsense. Oil prices drop significantly, and sometimes it takes weeks for gas prices to drop. Billions in profit are being earned. This kind of stuff is only for the most naive. 

The Fuel Subsidy Fund subsidises the cost of fuel when oil prices are high and attempts to reclaim that money when prices are low by leaving prices slightly higher than they would otherwise be. One problem is that that oil prices spiked after covid and remained high, this resulted in substantial subsidies that have yet to be recouped. All the fund does is remove the peaks/spikes from the consumer prices.

 

[Srikcir]

2 hours ago, hotchilli said:

Crisis what crisis... 

Should be "the agency affirmed that the fund's situation is potentially manageable."? 

Something has to change for a different result.

Maybe rather than rushing to spot fuel subsidies for the public, invest in more reliable fuel sources that are not as price volatile. Particularly it seems during PM Prayut's 8-year regime there was a propensity to purchase fuel on the spot market rather than long term contracts. Kind of like "day trading stocks." 

 

[Mike Lister]

25 minutes ago, Srikcir said:

Should be "the agency affirmed that the fund's situation is potentially manageable."? 

Something has to change for a different result.

Maybe rather than rushing to spot fuel subsidies for the public, invest in more reliable fuel sources that are not as price volatile. Particularly it seems during PM Prayut's 8-year regime there was a propensity to purchase fuel on the spot market rather than long term contracts. Kind of like "day trading stocks." 

 

The problem is that oil is priced in USD and THB is a tiny currency that is at the mercy of the Dollar.