Thailand raises B3 diesel fuel subsidy

Effective immediately, the Energy Policy Administration Committee of Thailand, in the wake of the uprisings in Libya and the recent spike in oil prices, has approved an additional subsidy on retail diesel fuel. This decision brings the 3% biodesel-blended diesel fuel or B3 subsidy to 4 baht (13 US cents) per liter. This 50-satang per liter increase will cost the Oil Fund 217 million baht (US$7.1 million) per day or 6.5 billion baht (US$214.4 million) a month. According to Energy Minister Wannarat Charnnukul, the subsidy could deplete the oil fund within three months. The committee also approved extending the biodiesel pricing formula from February to March. The formula is based on the domestic price of palm kernels plus the refining margin of 2.25 baht (7 US cents) per liter. Under the formula, crude palm oil would cost 48.60 baht (US$5.39), below the Commerce Ministry’s reference price of 51.20 baht (US$1.69). (February 25, 2011)