11 July 2024

Energy prices will be cut immediately following the first meeting of the new cabinet, which is yet to be scheduled, said Prime Minister Srettha Thavisin after a meeting yesterday (Wednesday) to discuss fuel prices and electricity charges with outgoing Energy Minister Supattanapong Punmeechaow and M.L. Chayotid Kridakorn, chief of the economic team of the United Thai Nation party.

He told the media that the discussion covered numerous matters related to energy prices, such as the procedures for reducing electricity and oil prices, especially diesel and cooking gas.

The outgoing energy minister said that his successor, Pirapan Salirathavibhaga, will be involved in energy price cut planning.

The government’s plan is to use the Oil Fuel Fund and contributions to the fund from oil refineries to subsidise the price cuts on diesel and other fuels, cooking gas and electricity.

There are three possible ways to cut the retail price of diesel. These include the reduction of excise tax by 5 baht per litre, which will cost the government about 10 billion baht in lost revenue per month; reduction in contributions to the Oil Fuel Fund, currently from 0.81-2.80 baht per litre; and by overhauling the structure of ex-refinery oil prices. A new pricing structure is now being developed by the Office of Energy Policy and Planning.

There are four ways to cut the price of cooking gas for household use. These including injecting more money into the Oil Fuel Fund to improve its liquidity through loans; allocation of funds from the national budget; contributions to the fund from oil refineries and an increase in contributions to the Oil Fuel Fund which is, currently, subsidising every kilogram of cooking gas by 4.3973 baht.

Five short- and long-term ways exist to bring down the price of electricity. The first is for the government to provide a subsidy to households which consume less than 300 units per month and a sliding subsidy for households which use more than 500 units.

The second measure concerns the management of the natural gas supply from the Gulf for power generation, by giving priority to household consumers in a way which will not affect current electricity rates.

The third is to extend the period for the repayment of debt, amounting to 110 billion baht, owed to the Electricity Generating Authority of Thailand by the Provincial Electricity Authority and Metropolitan Electricity Authority.  The government will, however, have to help ease EGAT’s financial burden, through the issuing of government bonds to raise funds for EGAT.

The government must also speed up negotiations with Cambodia, to resolve the dispute over territory overlaps in the Gulf, so the two countries can resume natural gas exploration and exploitation.

According to the Oil Fuel Fund Office, the fund is now in the red by about 55 billion baht, as of August 27th. This includes about 44 billion baht for cooking gas and about 10 billion baht for other fuel subsidies.

The price of cooking gas is currently pegged at 423 baht for a 15kg canister until end of September.