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INFRASTRUCTURE & INVESTMENT
NUNTAWUN POLKUAMDEE
The Finance Ministry and the Securities and Exchange Commission are considering a new public utilities fund structure to help raise funds from the privatisation of state assets.
But the concept is certain to be controversial, considering the heavy public opposition to privatisation.
Consumer activists successfully petitioned the Administrative Court to halt the privatisation of the Electricity Generating Authority of Thailand in 2006. PTT Plc, the listed state-owned oil-and-gas giant, was forced to return its gas network to the state under a similar consumer challenge with the court.
Sources familiar with the Finance Ministry plan acknowledge that a public utilities fund would certainly attract opposition from anti-privatisation activists together with criticism that the government was seeking to raise off-budget funds through the capital markets.
Fueling suspicion is the fact that the SEC announced last Wednesday that it would accept public comment, but without any clear stipulation about its objectives, and only until Sept 15.
''Yes, Thailand's utilities infrastructure needs further development, and one obstacle in its development has been limitations in funds,'' one source said.
''But there should be better explanation about the concept itself. At the very least, there needs to be some reassurances to the public that this isn't a backwards privatisation through a fund.''
Pravej Ongartsitttigul, a senior assistant secretary-general of the SEC, denied that the public utilities fund concept was aimed at indirectly privatising state utilities or raising off-budget funds.
He said several local fund managers had petitioned the SEC for permission to establish the fund structure, adding that the concept was in line with development policies set by the regulator.
It remains uncertain what type of assets a public utilities fund would be able to invest in or whether assets would be purchased on a freehold basis or under a long-term lease.
The SEC has indicated that a public utilities fund could invest in a project or business related to electricity, water, power, roads, telecoms or airports.
The fund itself could take on liabilities of up to 10% of the net asset value, and would be subject to shareholding limits for foreign nationals as well as restrictions on the size of individual holdings.A fund, which would have to have a minimum of 250 unitholders, could invest directly up to 90% of net assets or up to 75% in shares or securitised assets.
Pichit Akrathit, the president of MFC Asset Management, said his company was interested in the idea.
''MFC already has investments in alternative energy projects, which is quite similar to a utilities fund,'' he said. ''We see this as a way of raising funds for development without putting a burden on the government budget.''
Dr Pichit said such funds, invested for the long term and generating stable returns, would also be attractive to foreign investors.
Jotika Savanananda, managing director of TMB Asset Management, also expressed support for the concept.
''A public utilities fund would be quite interesting, I think. But the SEC has yet to clarify the terms for the fund,'' she said.
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