Democrats say Thai energy policy must be improved
'The state enterprises must serve the public'POST REPORTERS
Energy policies in Thailand need to be revamped, with regulatory powers separated from existing state monopolies and "windfall taxes" imposed on operators to help ease public impact, according to Abhisit Vejjajiva, the leader of the Democrat Party. He said past and present policies by the current caretaker government had resulted in distortions in electricity and energy prices and excess charges for consumers.
"We understand the market mechanism, but we also see that the entire structure must change. This government has built up monopolies that lack governance and has caused the energy problem to get worse and worse," he said.
The Democrat Party wants PTT Plc, the state-owned energy conglomerate, to increase its dividend payouts to help compensate for losses incurred by the State Oil Fund for the government's fuel subsidy programme run in 2004-05.
Mr Abhisit told the Bangkok Post that by raising PTT's dividend payments, the government would then be able to cut the current two baht per litre on retail fuel sales now charged for payment to the State Oil Fund.
He insisted that this would have no impact on PTT's financial position or investment plans, and would be a one-time measure aimed at addressing the current distortions in the market built up by caretaker prime minister Thaksin Shinawatra's government.
"If the company pays out a higher dividend then this could be used to offset losses of [the State Oil Fund]," he said.
If the Democrats led the next government, PTT's gas pipeline operations would also be separated from the listed company.
"This was actually a stipulation in PTT's prospectus during its initial public offering,"Mr Abhisit said.
Separating out the gas pipeline operations would potentially help reduce electricity charges by reducing the fees charged by PTT to the Electricity Generating Authority of Thailand for gas sales.
PTT's initial prospectus stated that the pipeline network was to allow third-party access and be regulated by the Finance Ministry as a national asset.
Mr Abhisit denied claims that the Democrat Party favoured renationalisation of PTT, a concept that has unnerved many investors given the company's huge share in the Stock Exchange of Thailand.
"We are not looking to do anything that was not originally planned for PTT," he said.
"But our policy isn't to use state enterprises to boost the stock market. The state enterprises must serve the public, and the capital market is a tool in helping them achieve that goal."
Egat's privatisation was stopped by the Administrative Court last year, partly due to the government's failure to separate the transmission grid and other assets gained through expropriation from the agency prior to listing on the SET.
Mr Abhisit said the Democrat Party would move forward with Egat's privatisation only once an independent power regulator was established and the power transmission grid separated to remain under state ownership.
"We will not privatise any state enterprise or support a monopoly falling into private ownership," he said.
"The question is, are we using state enterprises for the national interest?"
The Democrat Party also believed that it could reduce LPG (liquefied petroleum gas) prices for households through market reforms and by imposing a windfall tax on producers.
He said producers had gained huge profits of as much as eight baht per kilogramme by arbitraging the difference between ex-refinery prices of $315 per tonne and world gas prices.
"This windfall should be reduced and used to help stabilise local cooking-gas price. The government has the right to fight for equality," Mr Abhisit said.
PTT officials declined to comment on the Democrat Party platform, but securities analysts questioned whether the policies would only introduce new distortions in the market.
"Gas pipeline separation would have minimal impact on PTT as it charges a mere 20 baht per million BTU (British Thermal Units), and has the entire off-take from these pipelines," commented one analyst.
One option that could be more realistic was to renegotiate purchase agreements for fields that were not operational, he said.
"If it was that easy, I think the present government would have done it already. Oil and gas prices, along with refinery margins, are basically calculated based on regional and global prices, not local," one analyst said.
"It is the excise tax and municipal taxes that are the only ones that can be sorted out," the analyst added.