Thailand Subsidies

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Q 16 Thailand–$.438 billion spent on fossil fuel subsidies in 2016

Increased awareness by the government about the revenue drain caused by fossil fuel subsidies has helped spark a decline since 2011 in subsidy spending. A 2014 news report by the Asian Correspondent revealed Thailand’s fossil fuel subsidy allocations. To reflect upon the annual subsidy allocations for 2011, 2012 and 2013; former Energy Minister of Thailand Piyasvasti Amranand argues, “Thailand’s junta should remove fuel subsidies that have cost $15.6 billion over the past three years to free up funds for crucial infrastructure projects.” Piyasvasti Amranand also emphasized the increased government spending on fossil fuel subsidies like diesel and LPG. With respect to the annual spending trends for diesel subsidies, Amranand suggests, “Diesel subsidies have led to a loss of over 100 billion baht in annual revenue. Data from OECD and other sources highlights that in 2013, oil subsidies were around USD $2160.7 billion, electricity subsidies were USD 326.1 billion, Natural Gas subsidies were USD 627.9 billion, coal subsidies were USD 160.8 billion and total subsidies were USD 3275.5 billion. In 2014, fossil fuel subsidies were on a decline as oil subsidies were USD 1601.7 billon, natural gas subsidies were USD 363.4 billion, coal subsidies were USD 77.7 billion and total subsidies were USD 2042.8 billion. In 2015, fossil fuel subsidies decreased even further as oil subsidies were USD 708.3 billion, natural gas subsidies were USD 188.0 billion and total subsidies were USD 896.3 billion.

The decrease in fossil fuel subsidies from 2013 to 2015 is the result of policy reforms. One such reform was established on December 3, 2014, when the Energy Policy Administration Committee of Thailand approved the removal of a seven-year LPG subsidy. Another key reform the Thailand government implemented was the removal of Certified Natural Gas (CNG) subsidies as CNG was heavily subsidized. During 2014 and 2015, the government raised the price of CNG by around 4% to 10% and eventually floated the price in 2016. As an outcome, the CNG price is at par with the market price, which fell to around 12.55 baht or USD 0.36 in January 2017. Finally, to reduce Natural Gas for Vehicles (NGV) subsidies, NGV prices were raised in October 2014, which increased from 1 baht per kg to around 11.5 baht per kg.

From the above paragraphs, it is evident that in recent years Thailand is moving towards the right direction in terms of reducing fossil fuel subsidies. However, long-term policies for phasing-out fossil fuel subsidies are yet to be adopted.

Learn More

To learn more about the expenditures for fossil fuel subsidies in 2014 please visit:
https://asiancorrespondent.com/2014/07/not-all-are-energy-subsidies-are-equal/#4AUdpjipBzLKqb7F.97

To learn more about the 2017 IEA and OECD Data about annual fossil fuel subsidies in Thailand from 2013, 2014 and 2015 please visit:
https://www.iea.org/media/statistics/Subsidies20132015.xlsx

To learn more about the removal of the 7-year subsidy on LPG and CNG subsidy removal please visit:
https://www.iea.org/publications/insights/insightpublications/TrackingFossilFuelSubsidiesinAPECEconomies.pdf

To learn more about fossil fuel subsidy reforms in Thailand please visit the report by Asian Development Bank at: https://www.adb.org/sites/default/files/publication/175455/fossil-fuel-subsidies-thailand.pdf