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Questions over pace of reformSuspicion is mounting that the pace of reform in the power generation industry is losing momentum, although the way is clear for privatisation of the Ratchaburi plant Boonsong Kositchotethana Concern is mounting that the departure of Thailand's top energy regulator, Piyasvasti Amranand, will jeopardise the sweeping reforms of the electricity industry that he has long supported. He stepped down on May 28 after completing his term as secretary-general of the National Energy Policy Office. Immediately, senior officials of the Electricity Generating Authority of Thailand (Egat) began to show signs of holding up his liberalisation efforts. Egat governor Viravat Chlayon said there was not enough time to put the power pool, a key part of the reform programme, in place in 2003 as planned by Nepo. "We should be more cautious and not be in such a hurry since we are dealing with a complex issue which is totally new to us," he said, though denying that the state power utility was obstructing the reform process. Nepo had not come up with the market rules and other relevant details for the power pool, he said, adding that no new power generation concerns might join the industry in time to ensure healthy competition. Mr Viravat's comments appear to reflect the views of some Egat directors who met on May 19 to discuss the power pool issue. Dr Piyasvasti was called to explain the issue to the Egat board but was then asked to leave the room and had no chance to answer any questions, insiders said. Several top executives of Egat, satisfied with the status quo, seemed to be playing games with their board and Dr Piyasvasti by not allowing him the opportunity to answer questions, giving the board only their own view, the sources said. "They (Egat executives opposed to change) may be able to hold the line for a month or two," said Dr Piyasvasti, 47, who has been working on liberalising the industry for the past 14 years. "I don't think we should extend the (power pool introductory) date beyond 2003. We should now do everything possible and, if there are problems warranting delays, we can adjust the date. He said the target date might seem ambitious but could be met. "Certainly, there is enough time to accomplish the goal if you intend to do so." Though he has stepped down as Nepo chief, Dr Piyasvasti has already received a mandate from Savit Bhotiwihok, PM's Office minister in charge of energy matters, to continue working on power supply reform policy until the end of September. Dr Piyasvasti said he would try to ensure that phase-two preparation and technical and legal frameworks supporting reforms were in place or under way by September or October. At the same time, he is waiting for the cabinet to approve the initial master plan for power supply industry reforms including the electricity pool. The process involves drawing up power market rules, grid codes and regulatory frameworks for the establishment of independent operators. A draft bill for energy undertakings is to be completed in September. The reforms will break up long-standing state-run power monopolies, separate power generation and transmission operations, establish a power pool to create a competitive environment among power producers and retailers, and give consumers a choice of power suppliers. Also on the agenda is a new power tariff structure which, according to a study by PricewaterhouseCoopers (PWC), an international consulting firm, would result in an overall 2% reduction in tariffs. The new structure is to be ready in September. It should have been prepared by now but was delayed by difficulties in discussions with the country's three state-owned power utilities. The general election and possible change of government expected by year-end are not expected to affect the process of power industry reforms, according to Dr Piyasvasti. The reforms are already state policy under the overall master plan for restructuring state enterprises. Generally, there has been an acceptance of the reforms by members of the power industry, especially the management of Egat whose labour union is quietly easing its opposition. Dr Piyasvasti said the Thai power pool should be ready for an experimental run in 2002 before full operations start in 2003. However, power industry executives are sceptical about achieving the target in the absence of strong reformer such as Dr Piyasvasti. "Okay, he'll continue to spearhead the works for another three or four months but what happens to his unfinished work later is anyone's guess. I don't see anyone with the calibre, determination and clout to match Dr Piyasvasti," said an executive of an independent power producer. Demand increases Electricity consumption gathered pace after three sluggish years in line with 4-5% economic growth. Demand hit a three-year high of 14,918 megawatts on April 5. Total energy consumption in the first quarter of this year surged 7.48% from the same period last year to 23,633.96 gigawatt hours, according to figures from Egat. The April 5 peak was 412 megawatts higher than the previous peak on May 8, 1997 when the record was 14,506.3 megawatts. The main reason for the sharp increase was hot weather, officially recorded in Bangkok at 35.8 degrees Celsius at 2 pm on April 5, largely because of air-conditioning. Bangkok and its adjoining provinces of Nonthaburi and Samut Prakan account for almost half of the country's electricity consumption. Higher tariffs
The automatic tariff adjustment, technically known as Ft, one of the three components of the tariff structure, was increased to 61.52 satang per kilowatt hour for the April-July period, up 5.20 satang from the previous four months. The increase in Ft reflects higher costs of various fuels caused by the rise in world oil prices. But Dr Piyasvasti said the increase should not have any significant impact on the 8.6 million residential consumers, who constitute 65% of the country's total number of power users. For instance, those who use an average of 56 kWh per month would see their bills increase by only about 2.91 baht per month. According to Nepo, fuel oil rose to US$5 per barrel to $27, and diesel oil by $3 a barrel to $29. The prices of fuel oil and diesel oil used in the Ft calculation in the previous four-month were $22 and $26 respectively. Other developments - Thailand signed a memorandum to buy electricity from Laos' largest hydropower project, Nam Thuen 2, beginning in 2006 at an average tariff of 4.219 US cents per kilowatt hour. The pact, signed on May 26 in Vientiane, confirmed the heads of agreement for 25 years of power supply, settled a few weeks earlier by Egat and the Nam Thuen 2 Electricity consortium led by Electricite de France after years of protracted negotiations. Egat and the consortium expect to finalise details of the power supply agreement in a few months so that the full agreement can be signed in December. That will set into motion the US$1-billion scheme to build the 920-megawatt project in central Laos. - On April 5, Cambodia signed a basic accord that will pave way for the Electricity Generating Plc, a partly Thai state-owned power firm, to export electricity from Thailand to its Cambodia. Phnom Penh wants the company to look at developing a transmission system to supply power to three provinces _ Siem Riep, Battambang and Banteay Manchey. Maximum delivery is estimated at 100 megawatts, although a supply of 20 megawatts is envisaged initially. - Good progress has been made on the much-vaunted attempt to privatise the huge gas-fired Ratchaburi power house, as the Egat labour union has called off its opposition. Egat will now sell the Ratchaburi plant for 56,719 million baht, a price derived by averaging the valuations conducted by American Appraisal and Brooke International, two of four international appraisers commissioned for the task. The price is 3.12% higher than Ratchaburi's book value of 55,000 million baht. The price will be quoted for a stake in the plant's operator, Ratchaburi Electricity Generating Holding Co (REGH), a company now wholly owned by Egat. In October, 40% of the company's shares will be offered ton the public and the company will be listed on the Stock Exchange of Thailand. Egat will keep a 45% stake in Ratchaburi, while 15% pf the shares will be provided to Egat employees and their provident fund at a par value of 10 baht. |
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