BANGKOK — The National Energy Policy Committee has resolved to cut ex-refinery prices of refined oil products from six domestic refiners by five baht per litre, a significant increase from the previously planned two-baht reduction, in a bold move aimed at reining in what authorities have described as excessive industry profits, Thai PBS World reported.

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The price cut, effective from tomorrow until May 9, will be followed by an additional three-baht reduction, though Energy Minister Akanat Promphan has made clear that the five-baht cut does not necessarily mean pump prices at service stations will automatically decrease by the same amount. The measure must first be published in the Royal Gazette before it becomes legally binding.

Speaking after the committee meeting, Akanat explained that the ex-refinery price cut is possible because the Gross Refining Margin for April now averages 14 baht per litre, a level he described as excessively high. The committee discovered that Thailand’s six oil refiners have gained a combined windfall of approximately 10 billion baht from elevated margins, including five billion baht in the month of April alone. The five-baht cut is intended to claw back some of those excess profits for the benefit of consumers and the national Oil Fuel Fund.

However, the minister cautioned that service station prices could either be reduced for motorists or the savings could be used to ease the mounting debt burden of the Oil Fuel Fund, which currently carries losses of about 60 billion baht. He warned that if the fund’s debt burden is not curbed sooner rather than later, consumers may eventually have to pay more for oil products as the fund’s ability to subsidise prices diminishes. The ministry envisions cutting the fund’s daily losses from an estimated 2.6 billion baht to approximately 100 million baht, a dramatic reduction that would require both the refining margin cuts and additional financial measures.

Thailand's oil refining sector is facing renewed pressure as diesel price controls and rising financial losses threaten to erode profitability, according to a research note by CLSA.

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In a significant shift in policy direction, Akanat stated that in the future, pump prices will not jump by five or six baht per litre at a time, as has occurred previously during periods of volatility. Instead, prices will increase gradually, providing consumers with more predictability. However, he confirmed that the Singapore oil price reference will still be used as a benchmark to determine domestic oil prices, meaning Thailand remains tied to regional market fluctuations.

The energy minister also disclosed that the ministry will seek government consent to secure a 20 billion baht loan to boost the financial standing of the Oil Fuel Fund. He claimed that this loan is not related to the 500 billion baht loan that the government plans to negotiate from domestic sources for broader economic stimulus purposes, but rather is specifically targeted at stabilising the fund’s operations.

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The decision represents one of the most aggressive interventions in Thailand’s fuel market in recent years, reflecting the government’s determination to shield consumers from rising energy costs while also addressing the structural weaknesses of the Oil Fuel Fund. For motorists, the impact remains uncertain: prices at the pump may fall, stay the same or rise, depending on how retailers and the fund respond to the ex-refinery cuts. For the six refiners now facing a five-baht reduction in their margins, the era of windfall profits may be coming to an abrupt end. And for the Oil Fuel Fund, drowning in debt, the cuts offer a lifeline—but whether it will be enough to keep the fund afloat remains an open question.

-Thailand News (TN)