BANGKOK — The Thai government will allow retail fuel prices to rise gradually from Wednesday while maintaining heavy subsidies on standard diesel to cushion the impact on consumers, Deputy Prime Minister and Transport Minister Phiphat Ratchakitprakarn announced at Government House on Tuesday morning.

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The minister confirmed that both petrol and diesel prices would begin increasing incrementally from Wednesday onward, marking a shift in the government’s approach to managing fuel costs amid ongoing strains on the Oil Fuel Fund. The diesel price will rise by less than one baht per litre on Wednesday morning and will be capped at 33 baht per litre, with the government set to decide on the precise increment on Tuesday evening.

Mr Phiphat noted that diesel had previously been priced at 34.94 baht per litre during the tenures of two former governments. “We will gradually increase the price towards that point,” he stated, indicating a measured approach to returning prices to market levels while avoiding sudden shocks to consumers and businesses.

In a move aimed at supporting key economic sectors, the government will supply B20 diesel to the agriculture, industrial and transport sectors at a rate four to five baht per litre cheaper than B7 diesel, according to the minister. This targeted subsidy is designed to assist industries that rely heavily on fuel while managing overall subsidy costs.

The Oil Fuel Fund Office reported on Monday that the fund is currently subsidising high-speed diesel by 20.36 baht per litre, gasohol 95 and 91 petrol by 9.73 baht per litre, gasohol E85 petrol by 2.28 baht per litre, and gasohol E20 petrol by 11.06 baht per litre. These substantial subsidies have placed significant strain on the fund’s financial position.

The government will let retail fuel prices rise gradually from Wednesday, but will heavily subsidise the pump price of standard diesel.

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Mr Phiphat disclosed that the Oil Fuel Fund stood approximately 12 billion baht in deficit as of Monday, with the caretaker government committed to capping the fund’s losses at 40 billion baht. Should the installation of a new government be delayed and the Finance Ministry be unable to secure an immediate loan for further price subsidies, the caretaker government would seek permission from the Election Commission to provide special financial support to help manage fuel prices throughout the country.

Addressing concerns about fuel availability, the transport minister reassured the public that Thailand has adequate fuel reserves for 96 days of use based on current consumption levels. He explained that recent shortages at local petrol stations resulted primarily from delivery logistics struggling to meet rising demand rather than any fundamental supply shortage.

According to Mr Phiphat, there are approximately 20,000 small, independent petrol stations operating nationwide. Shortages at these outlets have led to much higher demand at the roughly 10,000 petrol stations operated by major brands, causing some to temporarily close when pumps ran dry while awaiting deliveries.

He reaffirmed that Thailand would not face fuel shortages and revealed that the government is prepared to purchase crude oil from Russia if necessary to ensure a secure supply. This statement follows previous assurances from oil industry leaders that Thailand possesses adequate refining capacity to meet domestic demand.

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The gradual price increases reflect the government’s attempt to balance fiscal responsibility with consumer protection as global energy prices continue to fluctuate and subsidy costs mount.

-Thailand News (TN)