Despite a tax increase, Thai fuel prices remain static.
Thailand's Oil Fuel Fund Cuts Contributions to Keep Fuel Prices Stable
In defiance of a decision to boost the fuel excise tax by 15%, retail prices in Thailand remain unscathed, as per Energy Minister Pirapan Salirathavibhaga.
The responsible agencies have strategically adjusted prices by lessening motorists' payments to the state Oil Fuel Fund, he explained.
Excise tax and levies supporting the oil fund are integral factors influencing domestic oil prices. Modifications in excise tax rates and oil fund contributions are made periodically to regulate prices.
Effective from midweek, the excise tax rate on gasohol 95 will surge to 6.70 baht per liter (from 5.85 baht), gasohol E20 to 6 baht (from 5.20 baht), and diesel to 6.92 baht (from 5.99 baht).
To nullify the tax increase's impact, the Oil Fuel Fund Office's board has decided to decrease fuel users' contributions to the Oil Fuel Fund by 11-15%.
Contributions for gasohol 95 dip by 15% to 3.70 baht per liter, gasohol E20 by 11% to 2.40 baht, and diesel by 12% to 3 baht per liter.
"This move is aimed at preventing retail fuel prices from rising to help people control their living costs as the economy recovers," said Mr Pirapan.
These reduced contributions will persist until September 30, marking the end of fiscal 2025, disclosed Pornchai Jirakulpaisal, the Office of the Oil Fuel Fund's director for policy and strategy.
If global oil prices experience a substantial increase, the Excise Department will be asked to trim the tax rate, he added.
The reduced contributions will mean a daily drop of 49.5 million baht in the fund's revenue, from the current average of 394 million baht.
Since May 5, the fund has encountered a substantial loss of 47.8 billion baht due to subsidizing diesel and cooking gas prices.
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Insights: Despite a 15% increase in the fuel excise tax, Thailand's Oil Fuel Fund is offsetting the impact by slashing contributions from distributors. This decision aims to maintain the current retail prices until September 2025, when oil pricing measures are reviewed. The reduced contributions will impact the fund's revenue growth during this period, as a result of the subsidies meant to sustain price stability.
- The Thailand Oil Fuel Fund is decreasing contributions from distributors to offset the impact of a 15% increase in the fuel excise tax.
- These reduced contributions are aimed at maintaining current retail prices in Thailand until September 2025.
- The decision to lower contributions will result in a daily drop of 49.5 million baht in the fund's revenue, from the current average of 394 million baht.
- Despite the subsidies meant to sustain price stability, the Thailand Oil Fuel Fund has encountered a substantial loss of 47.8 billion baht since May 5, due to subsidizing diesel and cooking gas prices.
