The National Energy Policy Council on Friday approved the state Oil Fund to borrow 30 billion baht to subsidise retail diesel prices.
Kulit Sombatsiri, permanent secretary at the Ministry of Energy, said the first batch of borrowing worth 20 billion baht will be secured in January next year and the second batch worth 10 billion baht will be secured later once oil prices rise further.
Mr Kulit said the ministry would ask the cabinet to approve the borrowing criteria for the first batch and propose the Public Debt Management Office include the borrowing in the government's public debt plans.
The borrowing will be used to subsidise retail diesel oil prices now capped at not more than 30 baht per litre.
On Oct 4, the Energy Policy Administration Committee approved a cap on diesel prices of 30 baht per litre starting from Oct 11 until the end of the month to help reduce living costs for consumers.
The Oil Fund now stands at seven billion baht.
According to Mr Kulit, the government expects oil prices are likely to drop next year because Opec continues to increase oil production.
In a related development, the council also yesterday approved reducing contributions to the Energy Conservation Fund to 0.005 satang per litre for one year (2022), from 10 satang now.
It also allowed the contribution to the Energy Conservation Fund to stay at 0.05 satang per litre between 2023 and 2024.
The Energy Conservation Fund was established in 1992 to provide financial support for the implementation of energy efficiency and renewable energy projects. The fund was sourced from a tax on all petroleum sold in the country.
The fund has been disbursed through a number of economic and financial mechanisms, including grants, subsidies, tax incentives, a feed-in premium for renewable energy and the energy efficiency revolving fund.
