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(Bloomberg) — The Thai government is widening efforts to curb demand for fuel, as it bleeds cash fighting to keep domestic diesel prices artificially low amid surging global energy costs.
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The state-run oil fuel fund, which is now being used to subsidize diesel, is now losing more than 1 billion baht ($32 million) a day, Energy Minister Auttapol Rerkpiboon told local broadcaster MCOT on Wednesday. The government estimates accumulated losses may reach 10 billion baht by March 18, according to cabinet documents released Tuesday.
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“The government will reassess the situation, taking into account the fund’s position and global prices, to determine the most appropriate next steps,” Auttapol said. But it will continue to subsidize fuel for now, he added, noting that the fund managed debt levels of up to 120 billion baht during the early stages of the Russia-Ukraine war.
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Thailand relies heavily on imports for its energy needs, and roughly half of its oil shipments come from the Middle East, leaving the country exposed to shortages if the conflict deteriorates or prolongs. While subsidies have shielded consumers from full-price diesel and cooking gas, other fuel costs are already rising, squeezing household budgets.
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Officials today again called for calm as some farmers and others in rural areas have begun hoarding fuel, despite repeated assurances that supplies remain adequate.
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“There’s no need to panic,” Commerce Minister Suphajee Suthumpun told reporters at an event Wednesday. “If the situation drags on, we’ll roll out additional measures. We’re following the situation closely.”
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The government has suspended most oil exports to prioritize domestic needs, raised the ratio of biofuel blends to reduce crude oil demand, and mandated state workers to work from home. The Bank of Thailand and the armed forces have also adopted remote work policies for some staff.
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In terms of the fuel fund, Auttapol didn’t elaborate on what action the government may take if losses swell. Potential measures may include gradually raising diesel prices and increasing the fund’s borrowing limit.
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—With assistance from Patpicha Tanakasempipat and Suttinee Yuvejwattana.
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