You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

August 19, 2020

PTIT Focus: The Oil Fund Act B.E. 2562

Subscribe to Updates
Petroleum Institute of Thailand: PTIT Focus

Thailand has previously established the Oil Fund in accordance with Prime Minister’s Order No. 4/2547 on 23 December 2004 (“Order”), which required the implementation of a series of measures aimed at resolving and preventing oil shortages.

However, due to the potential impact of global fuel price fluctuations on the stability of domestic fuel prices, the Oil Fund Act B.E. 2562 (“Act”) was issued on 27 May 2019 and came into force on 24 September 2019. This upgraded the Oil Fund established under the Order, with the objective of stabilizing domestic fuel prices and preventing domestic petroleum oil shortages.

The Oil Fund established under the Act falls under the supervision of the Oil Fund Office, and it is aimed at stabilizing domestic fuel prices in the case of a fuel crisis. The Oil Fund will be operated in accordance with fund management policies determined by the National Energy Policy Council.

The Act requires the following persons to contribute to the Oil Fund: (1) a producer or a distributer of fuel, which is a refinery, for fuel that is produced in Thailand, by contributing to the Excise Department; (2) an importer of fuel into Thailand, by contributing to the Customs Department; and (3) a buyer or receiver of liquefied petroleum gas derived from the separation of natural gas that was purchased or received from a concessionaire government or the recipient of a product sharing contract, by contributing to the Department of Mineral Fuels.

Moreover, the Act also specifies that the above persons are qualified to receive a subsidy disbursed from the Oil Fund, which will be calculated in accordance with the volume of the fuel that is produced, distributed, or imported into Thailand, or the volume of liquefied petroleum gas that is bought or received.

The Act defines “fuel” as gasoline, kerosene, diesel fuel, fuel oil, similar oil, or oil for similar engines, and crude oil that is used, or may be used, as a raw material in a refinery, or to produce the aforementioned products. It also includes liquefied petroleum gas, natural gas for vehicles, or fuel that is derived from other things prescribed by the Minister. However, the term “fuel” is not inclusive of “fuels composed of biofuels”, and this may affect producers of materials that are used to produce fuels that are composed of biofuels.

The Act also specifies the transitory provisions relating to the disbursement of a subsidy for fuels composed of biofuels, by determining that subsidies disbursed from the Oil Fund for such fuels will be continued for a period of up to three years from the date on which the Act came into force. In the case where the disbursement of such a subsidy is necessary, the Cabinet may extend the disbursement period no more than two times, whereby each extension will not exceed two years. However, the Oil Fund Management Committee may announce criteria, procedures, conditions, and measures to lower the subsidy disbursements every year, with the approval of the Cabinet.

 

This article first appeared in the June 2019 edition of PTIT Focus, the Petroleum Institute of Thailand’s monthly newsletter. The article was published in both English and Thai. 

Related Professionals

Industries

Energy

Location

RELATED INSIGHTS​ 

June 4, 2024
As Vietnam continues its rapid economic development, the demand for sustainable and reliable energy sources has never been more critical. Solar power has emerged as a key component of Vietnam’s strategy to diversify its energy portfolio and reduce its carbon footprint. Recent developments of the regulatory framework governing solar power projects in Vietnam, as discussed below, highlight the country’s commitment to renewable energy and its efforts to create a conducive environment for solar power investments. Objectives for the Development of Solar Power Projects On May 15, 2023, the Prime Minister issued Decision No. 500/QD-TTg, approving the National Power Development Plan for 2021-2030 with a vision to 2050 (“PDP VIII”). Following this, on April 1, 2024, the Prime Minister promulgated the Implementation Plan for PDP VIII (“Implementation Plan”). These documents underscore Vietnam’s commitment to promoting renewable energy, particularly solar. They emphasize self-production and self-consumption of solar power, the development of rooftop solar systems, and the promulgation of the direct power purchase mechanism. The integration of solar power with battery storage is also encouraged, contingent upon economic viability. PDP VIII sets ambitious capacity targets for solar power. By 2030, the capacity is projected to reach approximately 12,836 MW, accounting for 8.5% of the total power capacity. This includes 10,236 MW from concentrated solar power and 2,600 MW from self-production and self-consumption solar power. By 2050, the capacity is expected to rise to between 168,594 MW and 189,294 MW, representing 33.0-34.4% of the total power capacity. Additionally, PDP VIII and the Implementation Plan list 27 solar power projects, totaling 4,136.25 MW, slated for implementation after 2030. However, these projects may be advanced under self-production and self-consumption arrangements. Draft Decree on Direct Power Purchase Agreements On April 15, 2024, the Ministry of Industry and Trade (“MOIT”) released a draft decree on direct power
Read More
June 3, 2024
Nearly a year after Vietnam’s issuance of its National Power Development Plan for 2021-2030, with a vision to 2050 (“PDP VIII”), the Prime Minister issued Decision No. 262/QD-TTg dated April 1, 2024, approving the Implementation Plan for PDP VIII (“Implementation Plan”). Among other contents, the Implementation Plan sets forth the list of prioritized power source projects through 2030, and the capacity of renewable energy sources through 2030, as detailed below. Prioritized Power Source Projects through 2030 The Implementation Plan lists out six types of power source projects prioritized for development through 2023 according to the capacity approved under PDP VIII. They include: Domestic gas-fired power (14,930 MW) LNG-fired power (22,400 MW) Coal-fired power (30,127 MW) Cogeneration power using residual heat, blast furnace gas, and by-products of technological lines in industrial facilities (2,700 MW) Hydropower (29,346 MW) Pumped storage hydropower (2,400 MW) With respect to each type, the Implementation Plan provides details of projects by location and their operational progress. Such information is set out in Schedule III of the Implementation Plan. For power source projects not included in this list, the provincial People’s Committees will consult with the Ministry of Industry and Trade (“MOIT”) and relevant agencies on compliance with the planning prior to appraisal and issuance of in-principle investment approval. Renewable Energy Projects through 2030 The Implementation Plan allocates the capacity of the following renewable energy sources by locality/region: Offshore wind power (6,000 MW) Onshore wind power (21,880 MW) Hydroelectric power (29,346 MW) Biomass electricity (1,088 MW) Electricity produced from waste (1,182 MW) Rooftop solar power for self-production and self-consumption (2,600 MW) Battery storage (300 MW) With respect to each renewable energy source, the Implementation Plan provides a list of certain renewable energy projects through 2030, including the expected life cycle of the projects, and the allocated capacity
Read More
April 29, 2024
On November 4, 2021, Cambodia’s Ministry of Mines and Energy (MME) issued a Prakas No. 0305 on Management of the Steam Energy Subsector within the Energy Sector. The prakas aims to regulate steam energy operations, and requires companies wishing to develop, build, install, or operate steam energy to apply for a steam energy license. As this is the first prakas regulating steam energy operations in Cambodia, all relevant companies operating in steam energy must apply for a steam energy license with the MME. Prakas 0305 discusses permits for three types of activities: Development, Construction, Installation, and Operation of Steam Energy. Companies wishing to develop, build, install, and operate steam energy production facilities must first apply for a permit from the MME. Steam Energy Service Provision. Companies wishing to develop, build, install, and operate steam energy for the purpose of supplying steam energy to consumers must apply for a permit for steam energy service provider in addition to a permit for development, construction, installation, and operation of steam energy. Two-in-One Steam Energy and Electricity Production. Companies wishing to develop and operate both steam energy and electricity production activities must also apply for a permit for two-in-one steam energy and electricity production. Companies operating without the necessary permits are subject to a daily fine of KHR 400,000–4,000,000 (approx. USD 100–1,000). In addition, they may face other penalties, including: An order to halt business activities; Permit suspension; Permit revocation; Judicial action; and Other legal measures as the MME deems fit. For more information on regulations and requirements for steam energy licenses in Cambodia, please contact Tilleke & Gibbins at [email protected].
Read More
January 25, 2024
Thailand’s Department of Mineral Fuels (DMF) has developed a framework to regulate carbon capture and storage (CCS) and related activities by introducing “carbon business” to the draft amendment to the Petroleum Act B.E. 2514 (1971). CCS involves the capture, treatment, transport, and underground storage of carbon dioxide produced from industrial power generation. The captured carbon can be used to enhance oil recovery, converted into fuel such as methane or DME (dimethyl ether), or converted to higher-value products. In Thailand, various companies have carried out CCS feasibility studies. Carbon Business and Licensing Under the draft amendment to the Petroleum Act, “carbon business” is defined as exploration for purposes of carbon storage or compression of carbon into carbon storage, while “carbon” is defined as carbon dioxide in the state of gas or supercritical fluid generated as a byproduct or captured from other sources and transported for storage. Any concessionaire, product-sharing contractor, or service contract holder that has been granted permission to explore for or produce petroleum under the Petroleum Act can apply for a carbon business license from the director-general of the DMF with the approval of the Petroleum Committee. Licenses are also available to any other parties who meet the eligibility criteria to be prescribed later by a ministerial regulation. Licenses for these parties will be allocated through competitive bidding according to procedures to be announced by the minister of the Ministry of Energy (MOE). In granting a license, the minister of the MOE and the director-general of the DMF will consider the geological suitability of carbon storage, storage systems, surrounding areas of carbon storage, risk of carbon leakage and movement, environmental impacts, and the applicant’s financial potential and ability in environmental management. Responsibilities of Carbon Business Operators Carbon business operators are required to monitor and inspect their installations, structures,
Read More