The ruling Liberal Democratic Party is calling on the government to raise the limit of its subsidy for oil wholesalers to over ¥25 per liter from the current ¥5.
The request is included in a set of emergency proposals to tackle soaring crude oil prices that the LDP submitted to industry minister Koichi Hagiuda and Chief Cabinet Secretary Hirokazu Matsuno on Friday.
A focal point is whether the government can secure the financial resources needed to expand the subsidy program, as its budgeted funds could run out before the end of fiscal 2021 on March 31.
After receiving the proposal, Hagiuda told reporters that “there are various options” and that he will consider what steps to take “flexibly.”
Matsuno told a news conference that the government will “cooperate closely with the ruling bloc and speed up work to devise concrete measures.”
The oil subsidy program was activated in late January. The amount of subsidy, set based on gasoline and crude oil prices, reached its limit of ¥5 per liter in just two weeks from its activation due to faster-than-expected rises in crude oil prices.
In the proposals, the LDP requests the government to revise the program so that oil wholesalers will be able to receive more assistance than can be provided under the so-called trigger provision for emergency curbs on gasoline prices.
The provision, currently suspended, would allow the country to temporarily cut the gasoline tax when gasoline prices surge. If activated, the measure could give a tax reduction effect of around ¥25 per liter.
With fears growing that the ¥89.3 billion set aside for the subsidy program may run out by the end of next month, the LDP is calling for the use of reserve funds for fiscal 2021.
A senior LDP official says that there should be several hundred billion yen left in the reserves. But it is uncertain how much of the money can be used for tackling soaring crude oil prices.
A senior industry ministry official said that the ministry “will consider expanding the subsidy program only as a way to prepare for possible further escalation of tensions over Ukraine.”
The LDP is also asking the government to extend the program, currently slated to expire March 31.
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