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Regulatory Reform and Competitiveness in Thailand
By: Sakda Thanitcul
single authority to manage and administer private contractors and concessionaires. In essence, the authorities may be SOEs, without regulatory functions or direct provision of services or construction, which serve to oversee transportation units that cannot be fully privatized because they are natural monopolies or because social objectives require governmental financial support or other involvement. These authorities, however, would not retain regulatory or operational responsibilities.
Operations The provision of services will be predominantly be the responsibility of the private sector, as existing entities and services are privatized and new service providers enter the model markets. Modal agencies will contract out services requiring ongoing financial support and will oversee services with social concerns, either via a regulatory authority or contractual oversight. Subsidization, where justified for social objectives, may be achieved through government support of underlying infrastructure capital costs, passed on in the form of below-cost charges for infrastructure access, capital grants and loans for major equipment (i.e., buses).
(d) Energy Sector
A gradual evolution has been taking place within the energy sector that has at its foundation enhanced private sector participation. To date, this has occurred primarily in the form of a comprehensive Independent Power Producer (IPP) program and the facilitation of privately owned distributed generation facilities under the Small Power Producer (SPP) program. Competitive markets play a part in the refining and distribution of petroleum products and the exploration of gas.
The main objectives in promoting greater private sector participation in the sector are to:
-Increase competition in the energy industry to bring about more efficiency within the industry and the provision of adequate energy at reasonable prices for consumers.
-Reduce the investment burden of the government as well as the public sector debt
-Promote the more efficient use of energy such as that demonstrated by SPP projects using the cogeneration system
-Ensure power users are given the best possible services, price levels and safety standards
-Encourage the general public's participation in the energy industry development though the development of the capital market.
Proposed Market Structure
Power Sector The transition stages and future structure of the Electricity Supply Industry are as follows :
StageI : Electricity Generating Authority of Thailand (EGAT) as primary purchaser/provider
Period : Starting from the passage of the Corporatisation Act to 2001
Stage II : EGAT as a central supplier of power, with gradual introduction of wheeling
Period : From 2001-2003
State III : Competitive wholesale power pool/introduction of retail competition
Period : From 2003 onward
The long-term structure will be consistent with the competitive model implemented in many countries around the world. The competitive model provides for competitive generation companies (GENCOs), which compete both in a power pool as well as having individual bilateral contracts with major customers. An independent system operator (ISO) allows for a competitive power market. It is important, however, that the ISO does not own generation, and that it functions as an independent referee over the competitive generation process. As the ISO will not have asset ownership, potential and perceived conflicts of interest will be avoided. The transmission company will be owned and maintained by a separate company from the ISO. The transmission company will be regulated by the national regulator because it is a natural monopoly, and regulation will ensure open access as well as reasonable tariffs. The distribution companies (DISCOS) will have geographical responsibility for distributing power within sections of Thailand.
Since distribution under this model is a natural monopoly, the regulation of access and tariff levels will also be set by the national regulator. The retail supply function can be achieved by DISCOs or by independent supply companies.
Natural Gas Sector The future structure for the Gas Supply Industry should follow the competitive model currently being implemented in many countries around the world. The competitive market model will provide reliable and efficient supply of energy to consumers.
--Separation of PTT's Gas Transportation and Trading Functions.
- Accounting or legal separation of PTT's gas transmission pipeline function from its gas trading function is a pre-condition to promote competition. Full legal separation to a corporatized entity would be preferable to facilitate transparency and regulation.
--Third Party Access
- The establishment of third party access to gas transmission pipelinesis
mean of facilitating the development of competition in the gas supply. The provision of access to these facilities by third parties on fair terms and conditions will allow end users to purchase gas from upstream producers, or continue to purchase the bundled service of gas transmission and supply from the pipeline owner. Currently, the issue and possible use of Third Party Access is under review. Additional analysis on this and other possible options is required
Oil Sector The Thai oil industry operates in a liberalized and competitive market and has significant private capital participation in refining and distributing petroleum products. The pricing of refined oil is under free market conditions. PTT is the one of key players in oil refinery and trading with operations in refining, retail distribution, and oil international procurement. PTT also has a number of passive investments in a number of energy related activities, including minority interests in oil refineries, petrochemical plants and international joint ventures. This portfolio strategy needs to be reconsidered in order