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
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