Extension of Diesel Fuel Price-Linked Subsidy Support Until April Next Year

A gas station in downtown Seoul / Photo by Yonhap News

[Asia Economy Reporter Noh Kyung-jo] The Ministry of Land, Infrastructure and Transport announced on the 29th that it will revise and promulgate related guidelines and regulations to extend the diesel fuel price-linked subsidy for freight trucks, route buses, and taxis until April next year.

Since 2001, the government has provided fuel subsidies (fuel tax-linked subsidies) for diesel, liquefied petroleum gas (LPG), compressed natural gas (CNG), and hydrogen to reduce the burden of fuel taxes. Currently, the subsidy is paid by deducting the 2001 fuel tax amount (183.21 KRW per liter) from the current fuel tax amount. The total support amount for this year is 1.3583 trillion KRW.

In addition, considering the difficulties faced by the transportation and logistics industries due to rising international oil prices, a temporary fuel price-linked subsidy for diesel has been provided since May. When the diesel price exceeds 1,700 KRW per liter, the government compensates 50% of the excess amount. This applies to 440,000 freight trucks, 20,000 route buses, and 500 taxis, with a total subsidy amount of approximately 355 billion KRW.

The diesel price peaked at 2,158 KRW per liter in June and dropped to 1,726 KRW per liter as of the 28th of this month. However, since it remains 18.7% higher than the beginning of the year, the government decided on the 21st to extend the subsidy period through the '2023 Economic Policy Direction.' The support amount for the next four months is about 100 billion KRW.

However, since international oil prices are stabilizing, if the emergency support purpose is deemed achieved by April next year, the support will end from May.

Kim Soo-sang, Director of the Transportation and Logistics Office at the Ministry of Land, Infrastructure and Transport, said, "We expect that extending the fuel price-linked subsidy will help alleviate the short-term international oil price risks for the transportation and logistics industries," adding, "We are also exploring various ways to strengthen the industry's competitiveness in the long term."

This content was produced with the assistance of AI translation services.