Thailand will increase retail diesel prices starting April 5, reducing subsidies for B7 and B20 grades, resulting in prices exceeding 50 baht per litre to align with market conditions.
Key Points
- Starting April 5, Thailand will raise retail diesel prices due to the Oil Fuel Fund Management Committee’s decision to reduce subsidies on diesel grades. The B7 price will exceed 50 baht per litre, increasing transport and living costs.
- The subsidy for diesel B7 will decrease by 2.61 baht per litre, from 20.71 baht to 18.10 baht. Similarly, the subsidy for diesel B20 will drop from 22.22 baht to 19.61 baht per litre.
- As a result, the retail prices will rise by 2.80 baht per litre: B7 from 47.74 to 50.54 baht, and B20 from 42.75 to 45.54 baht. This adjustment aims to align prices with market conditions and alleviate pressure on the Oil Fuel Fund.
Price Increase Announcement
Thailand is set to increase retail diesel prices starting April 5 due to a decision by the Oil Fuel Fund Management Committee to reduce subsidies on essential diesel grades. The retail price of diesel B7 is expected to rise above 50 baht per litre, thereby exerting new pressure on both transport and living costs in the country. This decision comes amid ongoing economic challenges, with the aim of aligning fuel prices more closely with current market conditions while also managing the finances of the Oil Fuel Fund.
Subsidy Reductions for Diesel Grades
The committee has announced a 2.61 baht per litre reduction in subsidies for both diesel B7 and diesel B20. Specifically, the subsidy for diesel B7 is being reduced from 20.71 baht to 18.10 baht per litre, while the subsidy for diesel B20 will decrease from 22.22 baht to 19.61 baht per litre. Consequently, the retail price of diesel B7 will increase by 2.80 baht per litre, resulting in a new price of 50.54 baht per litre. Similarly, diesel B20 will see an increase leading to a new price of 45.54 baht per litre. These new pricing adjustments will take effect on April 5, highlighting the government’s efforts to stabilize the Oil Fuel Fund.
Financial Implications of the Decision
The rationale behind this decision is to ensure the liquidity of the Oil Fuel Fund, which has been severely tested due to ongoing subsidies amidst fluctuating market conditions. The anticipated subsidy reductions are projected to decrease the fund’s daily outflow from 1.70875 billion baht to 1.49672 billion baht, yielding a savings of approximately 212.03 million baht daily. The adjustments in diesel pricing and subsidy levels reflect a broader strategy to navigate the economic landscape while maintaining service levels and safeguarding the fund against significant financial strain.
