Caretaker government moves to secure loan amid oil price surge

The caretaker government plans to seek consent from the Election Commission (EC) to secure a loan of an unspecified amount from financial institutions to boost the liquidity of the Oil Fuel Fund, which currently has only 40 billion baht in reserve.

Transport Minister Phiphat Ratchakitprakarn said today that the fund is spending about 12 billion baht a day to subsidise the prices of several refined oil products, including diesel, to ease the financial burden on consumers.

He said the 40 billion baht reserve is only enough to subsidise domestic oil prices for a short time as global oil prices rise as a result of the war in the Middle East.

To resolve the problem, the minister said there is a need for the government to secure a loan, with the Finance Ministry acting as guarantor.

There is a legal technicality, however, which prevents a caretaker government from entering into any contract that would bind the incoming administration, unless permission is first obtained from the Election Commission, Phiphat said, adding that waiting for the new government, which has yet to take office, before securing the loan would be too late.

The only viable option is to obtain the EC’s permission to bind the government to the loan agreement under the current extraordinary circumstances, he said, adding that the Oil Fuel Fund has previously run a deficit of up to 120 billion baht to subsidise domestic oil prices.