Energy Minister Narongchai Akrasanee has unveiled a master plan to develop the energy sector next year now that the government has ended the liquefied petroleum gas (LPG) subsidy.
He sought to clarify the direction of the industry at a seminar in Bangkok on Wednesday entitled "Thailand Energy Policy and Direction" hosted by Chulalongkorn University and attended by more than 800 representatives of the energy sector and related businesses.
Narongchai: Can't let damage mount
"Energy prices have been used as a tool for political gain over the past decade. We must solve it now and cannot let the damage mount," said Mr Narongchai.
The government has been working on restructuring energy prices by changing taxable rates and levies to the state Oil Fund for each type of fuel in a bid to foster fairness for fuel users.
It is also floating the prices of LPG and compressed natural gas.
"The next step will be adjusting tax and the fund levy for petrol and diesel to the same level," said Mr Narongchai.
The price gap between gasohol and diesel now averages three baht a litre.
The board of directors of PTT Plc, appointed by the National Council for Peace and Order before the current government was set up, has set a key policy that it needs to spin off oil refining and gas pipelines.
The PTT board is keen to ease tension between activists and the energy conglomerate.
Activists led by former senator Rosana Tositrakul have accused PTT of damaging the country by intentionally controlling major shares in all energy sectors including oil refining and natural gas pipelines.
In the first half of next year, it will complete a plan to spin off its shares in oil refinery companies including Bangchak Petroleum Plc (BCP) and Star Petroleum Refining Co (SPRC).
BCP is likely to be finalised first since negotiations with a share buyer started months ago, while the listing plan for SPRC on the Stock Exchange of Thailand could take time while PTT selects a financial adviser.
PTT's plan to let its gas pipeline business be operated by a new company is expected to be finalised in the second half of next year.
Mr Narongchai said the first southern coal-fired power plant operated by the Electricity Generating Authority of Thailand (Egat) would be part of the ministry's plan.
"The 800-megawatt Krabi coal-fired power plant will be the pioneer in our plan to cut reliance on costly natural gas," he said. "Construction will start by the end of next year despite the strong protests."
Thailand also plans to develop coal-fired power plants in Songkhla and Rayong provinces with capacity of 1,000 MW each.
The ministry will not allow small producers to invest in gas-fired cogeneration due to its low cost efficiency and economy of scale. It will grant licences only to independent power producers and Egat.
For renewable energy, priority will be given to waste-to-power, biomass and biogas projects.
The government's support for solar farms may reduce because they require vast land plots and may encroach on agricultural areas. Equipment and technology are also imported.
Wind farms have lower potential than expected. The target for generation from wind farms was set at 1,800 MW in 2010, but operations now provide only 300 MW.
Next week, Mr Narongchai will discuss the revision of feed-in tariffs for renewable energy projects next year.
Wind and solar projects have much shorter working hours than around-the-clock electricity generated by waste. The cost of technology is also higher.
The ministry will set up a new committee to oversee energy-saving campaigns in the private sector.
"Energy-saving promotion has been quite slow over the last six months, so next year we may start a new campaign," said Mr Narongchai.