Risks of subsidies rising. With rising global inflation, the government is actively maneuvering  all available tools to ease the impact of rising energy prices. In Thailand, the government’s as  well as public focus is on (1) diesel pump prices, (2) LPG prices (for cooking), and (3) electricity  tariffs. After the reform in 2015, subsidy burdens (mostly from NGV and LPG) were transferred  to the government, with oil companies able to earn market prices. 

Rules in place but final decisions are likely to be politically driven. The government  is using the Oil Fund to subsidise diesel and LPG. The Fund has turned to deficit and will  start to borrow in order to fund the shortfall. With higher pressure financially, the  government has kept a close eye on profitability of oil companies, especially the SOEs. In  our view, the longer the period of high oil prices, the higher the risk of government  intervention for state-owned energy company, PTT. We have started to see subsidies being  rolled back at PTT, although marginally.