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Agenda Item 10.3-Micro Eco Reform-Att A-Ann 7
THAILAND – ANNEX 7
1.
Introduction
This Annex sets out our findings in relation to the current status of implementation of the
IPP Principles in Thailand.
In relation to each Principle the current status of implementation is described. Where
possible and appropriate, we have identified potential barriers or impediments to
improved implementation of the Principles.
These findings reflect research carried out in the period January – April 2000. A wide
range of persons were interviewed in Thailand, including representatives from the
Australian embassy in Bangkok; EGAT; EGCO; foreign investors; the Ministry of
Finance; financiers; and independent consultants.
2.
Background
2.1 Recent developments in the Thai electricity sector
In 1992, the Government of Thailand announced the commencement of a policy of
encouraging a greater level of private sector participation in the generation sector of
the electricity industry. In 1994, in response to the Government’s policy, the State
owned electricity company Electricity Generating Authority of Thailand (“EGAT”)
launched an Independent Power Producers (“IPP”) program which incorporated
certain IPP projects into EGAT’s Power Development Plan which allows the
private sector to therefore construct, own and operate large scale power projects and
sell the electricity to EGAT.
The “First Solicitation” was issued on 15 December 1994 by EGAT for the
purchase of 3,800 MW of power from IPPs. The First Solicitation was divided into
two stages:
(a)
stage1, in which 1,000 MW was expected for operation within the
Year 2000; and
(b)
stage 2, in which 2,800 MW was to be available to EGAT in the period 2001
to 2002.
In April 1995, following the resolutions of the National Energy Policy Council
(“NEPC”) and the load forecast issued in June 1994, EGAT announced an increase
of the power purchase of the First Solicitation by 10%. In July 1996, EGAT
announced a further 1,600 MW increase bringing the total power purchase of the
First Solicitation to 5,800 MW.
In addition, in 1992, EGAT announced plans to purchase electricity from Small
Power Producers (“SPPs”). The maximum capacity to be purchased from each SPP
being 50 MW with the total power purchase from SPPs being 300 MW. In
November 1995 the power purchase from SPPs was increased from 300 MW to
1,444 MW and in July 1996 the power to be purchased from SPPs was increased
again from 1,444 MW to 3,200 MW. In addition, the power purchase from each
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individual SPPs was increased from 50 MW to 60 MW or up to 90 MW if the
capability and reliability of the system is acceptable.
However, like most countries in Asia, Thailand suffered economic decline as a
result of the 1997 Asian economic crisis. The decline in the Thai economy has
resulted in a decline in domestic demand for electricity. Thailand has around 17,500
MW of electric generation capacity and, in 1996, it generated approximately
82 billion kWh of electricity. The decline in the Thai economy has resulted in a
decline in domestic demand for electricity. This situation compelled EGAT to
revise its electricity demand projections. EGAT’s projections indicate that demand
for electricity from 1997-2001 will increase on average 7.3%, or 1,200 MW, per
year. Previous estimates projected annual growth rates of 8%-9%. By 2001, peak
load demand is expected to be 19,049 MW or 11% below previous estimates.1 In
response to the slower growth projections, EGAT has postponed or delayed a
number of projects including the commissioning of the third and fourth 300 MW
thermal units of the Ratchaburi power complex by 3 years to 2004 and 2005,
respectively; postponing the start up of the second 300 MW thermal unit at the
Krabi power plant from 2001 to 2005; reducing power purchases from SPPs from
3,200 MW to 2,000 MW for the period 1997-2003; delaying the next solicitation for
power purchases from IPPs from 1998 to 1999 and reducing purchases from 3
Laotian projects.2
2.2 The role of IPPs in Thailand
Currently, there are 6 IPPs that have agreements with EGAT to supply more than
5000 MW to Thailand’s national grid. 3 In addition, there are 7 IPP projects
currently planned or under negotiation in Thailand; these projects, and the parties to
those projects, are set out in Appendix A.
IPPs are part of the Thai Government’s overall policy of privatisation and the
encouragement of a greater level of private sector participation in the development
of power. EGAT believes that privatisation encourages a greater level of
competition in the choice of technology, fuel type and plant location, thus reducing
construction costs and arriving at an electricity tariff that benefits consumers.4
Following the sudden depreciation of the Baht in July 1997, IPPs were left with
projects that were no longer profitable. The IPPs originally agreed to sell power to
EGAT at prices denominated in Baht, but most of their costs and financing are in
foreign currency. However, in September 1997, EGAT agreed to absorb most of the
increased costs incurred by the IPPs as a result of the Baht depreciation and agreed
to raise the purchase price of electricity accordingly. The new terms have effectively
saved the IPPs from collapsing by reason of foreign exchange risk.
1
EIA Energy Information Administration, Thailand, U.S., January 1999 and Power in Asia,
‘Thailand/Demand/Utilities Project’, 1 November 1999.
2
EIA Energy Information Administration, Thailand, U.S., January 1999, p. 5.
3
EIA Energy Information Administration, Thailand, U.S., January 1999, p. 6.
4
Taken from the IPP Section of the Electricity Generating Authority of Thailand’s website.
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3.
Institutional and Regulatory Structures
3.1 Principle 1: Energy sector policies
3.1.1 Energy sector policies formulated to create a stable framework for
power sector reform
(a)
Clear, published and consistent energy sector policies
Domestic energy sector policies in Thailand are published and clearly
stated. The current energy policies are based upon a number of
resolutions of the National Energy Policy Council (“NEPC”) and the
Thai Cabinet. The most recent resolutions are:

NEPC resolution dated 16 September 1997 that speeded up
privatisation of the energy sector;

Cabinet resolution on 4 November 1997 which approved the sale
of shares in Electricity Generating Public Company Limited
(“EGCO”) and PTT Exploration and Production Plc;

Cabinet resolutions on 1 September 1998 and 30 November 1999
which approved the Master Plan for State Enterprise Sector
Reform (the “Master Plan”);

Cabinet resolution on 16 February 1999 that approved the
privatisation of the Ratchaburi power plant and the natural gas
deregulation program;

Cabinet resolution on 30 November 1999 which approved the
revised plan to privatise the Ratchaburi power plant by selling
shares to the Thai public as opposed to selling to strategic
investors; and

Cabinet resolution on 25 July 2000 which approved the Thailand
Power Pool and Electricity Supply Industry Reform Plan (the
“Reform Plan”). The Reform Plan was based on the final report of
a study conducted by a group of consultants led by Arthur
Andersen.5
The Master Plan
The primary document which outlines Thailand’s domestic energy
privatisation policy is the Master Plan which encompasses the
communication, water, transportation, energy and other sectors of the
Thai economy. The purpose of the Master Plan is to “provide the
framework and guidelines for reforms to effectively increase private
sector participation in the economy”.6 The Master Plan states that it is
5
This report is available on the NEPO website (www.nepo.go.th).
6
Thailand, Ministry of Finance Privatisation Master Plan, page 1. The Master Plan is available on the Ministry
of Finance website (www.mof.go.th). The paper entitled “Privatisation and Liberalisation of the Energy Sector
in Thailand” is available on the National Energy Policy Office (“NEPO”) website (www.nepo.go.th).
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to “serve as a reference document for the government, ministries,
enterprises, investors, employees and the general public as SOE
privatisation plans, and legal, regulatory and institutional reforms are
prepared, approved and implemented in the years ahead”.7
It is clear what the objectives of energy policy are. The Master Plan
states that the main objectives in promoting greater private sector
participation in the energy 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;

to reduce the investment burden of the government as well as the
private sector debt;

promote the more efficient use of energy such as that
demonstrated by SPP projects using the generation system;

to ensure power users are given the best possible services, price
levels and safety standards; and

to encourage the general public’s participation in the energy
industry development through the development of the capital
market.8
On 2 September 1998, NEPO (the national policy making body for
energy in Thailand) issued the “Privatisation Master Plan Energy Sector
Report Redraft” (“The Master Plan Redraft”). The Master Plan redraft
sets out the three stages of the proposed reforms to the electricity
industry in Thailand (the three stages of power market reform are
detailed in paragraph 3.1.2(a).
In addition, NEPO, in its publication entitled “Privatisation and
Liberalisation of the Energy Sector in Thailand” issued on 29 March
1999, listed the same set of objectives as listed in the Master Plan with
the notable addition of a sixth objective, being the development of the
capital market.
Energy policy is consistent with the other sector policies. As noted
above, the Master Plan proposes sweeping changes to most of the major
utilities. The central aim of the proposed changes to all of the other
sectors is stated in the Master Plan as being to increase private sector
participation in the economy.
7
Thailand, Ministry of Finance Privatisation Master Plan, page 1.
8
Thailand, Ministry of Finance Privatisation Master Plan, page 20 - 21.
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(b)
Environmental policy objectives
Thailand’s environmental polices are contained in:

The Enhancement and Conservation of National Environmental
Quality Act B.E. 2535 (which is the primary piece of
environmental protection legislation);

The National Environment Quality Act BE 2535 NEQA (1992);

The Factories Act BE 2535 (1992); and

The Hazardous Substances Act BE 2535 (1992).
In addition, the National Environmental Board has published various
environmental standards. The standards applicable to power plants are:
(a)
Atmospheric Ambient Air Quality Standards;
(b)
Water Quality Standards; and
(c)
Emission Standards for SO2, NO2 and participate.
The main thrust of this legislation is that thermal power projects with a
generating capacity greater than 10 MW, must complete an
Environment Impact Assessment (“EIA”). This is applicable to all new
projects meeting these criteria, regardless of ownership. The EIA must
study:
 the existing environment;
 the economic value estimated of all available natural or man made
resources;
 the comparative impact of the construction and operating the plant at
that particular site;
 the extent of damages that may occur; and

the mitigation measures.9
The Office of Environmental Policy and Planning (“OEPP”) and an
Expert Committee (established under the National Environmental
Board) reviews the EIA before being submitted to the National
Environmental Board (“NEB”) for final approval.
The Thailand Power Pool and Electricity Supply Industry Reform Study
by Arthur Andersen dated 1 March 2000 (“the Arthur Andersen
Report”) contains a comprehensive review of Thailand, existing
environmental laws and policies. The Arthur Andersen Report
concludes that more study needs to be undertaken on how renewable
power producers can be integrated into the competitive market with a
subsidy arrangement that is transparent, provides for efficiency
incentives and does not distort market out comes.
9
APEC, ERF, Electricity Regulatory Arrangements, Summary Submission, Thailand, April 1999.
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NEPO has a policy to provide subsidies of no more than 0.60 baht/kWh
to new renewable Small Power Producers (SPP). The source of funding,
to come from the Energy Conservation Fund, has been approved by the
government. The total generating capacity to be accepted under the
program is 300 MW. In addition, the policy to promote small renewable
SPPs by allowing them to sell power into the distribution network is
pending approval by the National Energy Policy Council (‘NEPC’).
There appear to be no effective policies in Thailand to place energy
efficiency and conservation options on an equal basis with supply-side
options, such as through all-source bidding programs.
(c)
Established legislative framework
The primary electricity laws in Thailand are:

the National Energy Policy Council Act B.E. 2535 (1992),
which establishes the NEPC and provides it with its powers and
functions which include determining the rules and conditions
for prescribing the price of energy and monitoring and
supervising the operation all other committees with energy
related functions;

the Electricity Generation Authority of Thailand Act B.E. 2501,
which establishes EGAT;

the Metropolitan Electricity Authority Act, which establishes
the MEA;

the Provincial Electricity Authority Act B.E. 2503, which
establishes the PEA;

the Energy Conservation Promotion Act B.E. 2535 (1992),
which gives NEPO certain functions and powers with regard to
energy conservation; and

the Royal Decree Organising the National Energy Policy Office,
B.E. 2535 (1992).
Section 6 of the National Energy Policy Council Act provides that the
National Energy Policy Council must “lay down rules and conditions
for prescribing the price of energy in accordance with the National
Energy Policy and the National Energy Management and Development
Plan”.
In effect, tariffs and related regulatory matters are determined by the
NEPC with advice from NEPO. These decisions are then carried out by
NEPO. Apparently, these arrangements have generally worked in the
past. However, there is no legislative basis for them to continue to
operate whilst there is private participation in the electricity sector
given that there is no general legislation relating to utility regulation
that confers powers on NEPC or NEPO to enforce tariffs.
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Thus, there is at present no comprehensive and coherent legislative
regime in place to regulate the roles, functions and responsibilities of
the various parties (government, private sector interests
government-owned utilities) in the electricity sector.
(d)
Independent regulatory body
The regulatory bodies in the Thai electricity sector are not independent.
Independence from government
All regulatory bodies are formally independent from the government
(although both EGAT and NEPO are organs of government).
Separation is achieved to the extent that EGAT and NEPO are
established under their own Acts and are separate organs of government
- see paragraph 3.1.1(c) for a list of the Acts establishing EGAT and
NEPO. However the bodies having regulatory responsibilities are not
independent from direct government control. NEPO which, as detailed
above, is the primary “regulatory body” responsible for electricity, gas
and petroleum policy, is chaired by the Prime Minister with ministers
from related Ministries as committee members and the Secretary
General of the NEPC as committee member and secretary.
Independence from industry
The entities responsible for the functioning of the sector are also
regulation are also responsible for the regulation of the sector; in other
words they are self-regulating.
(e)
Consistency among regulatory structures
When arranging the permits and authorisations, IPPs may have to deal
with both provincial government offices and central government
offices. However, provincial governments do not have a separate set of
laws or rules (provincial governments act as a branch of the central
government, administering and enforcing rules and regulations of the
central government). Thus IPPs only have to deal with one set of laws,
but two levels of government.
Given that EGAT is the utility that IPPs supply the vast bulk of their
electricity to, EGAT is the primary central government agency with
which IPPs deal. However, NEPC is responsible for the approval of
Power Purchase Agreements (“PPAs”) between EGAT and IPPs.
NEPC is also responsible for the approval of the guidelines for the
solicitation of power purchase from IPPs. Although NEPC is not
involved with the selection of IPP projects, NEPO is directly involved
with the selection and negotiation process (the approval process is
further discussed in paragraph 3.3 below).
A draft Energy Industry Act is now under consideration by NEPC and
the Cabinet. The main purposes of this proposed legislation are to
establish an independent regulatory body, comprising a National
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Energy Regulatory Commission and a National Energy Regulatory
Office, and to set up the Power Pool of Thailand.
(f)
Transparency of regulations
In general terms, the regulations in the electricity sector are transparent.
The National Assembly is Thailand’s legislative body, which comprises
the House of Representatives and the Senate. Members of the House of
Representatives are elected by popular vote. Senators are appointed by
the King upon recommendation by the Ministers in the form of the
cabinet.
Bills are introduced into the House of Representatives by either the
cabinet or ordinary members of parliament and must enjoy the support
of 20 members of the same political party. The Prime Minister presents
bills that pass both houses of the National Assembly to the King for
signature. Upon the King’s signature and publication in the Royal
Gazette, the Bill becomes law.
In addition to the passing of laws by Parliament, the King may issue
decrees in the case of emergencies. Such decrees must be submitted to
the National Assembly for consideration at the next session (or if the
decree relates to taxation within 3 days of its appearance in the
Government Gazette) but, nevertheless, the decree has the force of law
from the time it is issued by the King.
The House of Representatives may disapprove of an emergency decree
in which case the decree will lapse unless the House of Representatives
reaffirms the decree by more than one half of its total members.
Further to the emergency decrees and Acts of parliament, the executive
government has the power to issue regulations.
With regard to the development of electricity policies, as discussed
under paragraph 3.1.1(b), such policies are developed by the NEPC in
consultation with the NEPO. NEPO places its policies and plans on its
website. However, there does not appear to be a formal mechanism for
obtaining and incorporating public comment.
(g)
Equal regulatory treatment of utilities and the business sector
There are a number of fundamental differences between the way that the
public utilities are regulated and the regulatory scheme applicable to
IPPs.
Regulation applicable to public utilities only
As noted earlier, the NEPC is the government body in charge of the
supervision of all government agencies and State enterprises involved
in energy matters. In particular, the NEPC is responsible for:

the approval of wholesale and retail of tariffs as well as any
change in the automatic adjustment formula;
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
the approval of the investment plans of EGAT, the Metropolitan
Electricity Authority (“MEA”) and PEA;

the approval of the guidelines for the establishment of utility
revenue requirements;

the approval of the power purchase agreement between EGAT
and IPPs; and

the approval of the guidelines for the solicitation of power
purchased from IPPs and SPPs.
Although NEPC is not involved with the selection of IPP projects,
NEPO is directly involved with the selection and negotiation process.
It should be noted that decisions of NEPC are issued in the form of
directives. However, directions issued by NEPC only apply to
government agencies (ie EGAT, MEA and PEA) and do not apply to
IPPs or SPPs.
Technical and safety standards related to the construction, operation
and connection of the power system by EGAT, MEA and PEA are
issued by EGAT, MEA and PEA with authorities from their respective
legislation. In other words, they are self-regulated government
enterprises.
Thus, IPPs and SPPs are only regulated by the NEPC to the extent that
the NEPC is responsible for the approval of PPAs and the guidelines for
solicitation of PPAs.
Regulation applicable to private sector utilities only
The Grid Code, which prescribes:

the transmission system development planning procedures;

the transmission connection procedures;

the operating procedures;

the scheduling and dispatch procedures; and

the general condition,
is issued by EGAT and is applicable to IPPs and SPPs only.
Regulation applicable to both public and private entities
The Department of Energy Development and Promotion (“DEDP”) is
responsible for the technical and safety standards for private generators
including the IPPs and SPPs. Technical and safety standards for the sale
of power by private power producers is the responsibility of the Public
Works Department, which is part of the Ministry of Interior.
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(h)
Conclusions
Implementation difficulties

that there is no established regulatory framework under which
private utilities operate;

that apart from the Master Plan (and Master Plan Redraft) there
are no set objectives of the NEPC;

that there is no separation between the regulator and utility ie.
EGAT, MEA and PEA (all of which are government utilities)
are self regulated;

that whilst there is a limited competitive market for generation
(through the IPP and SPP application process) the government
still holds a monopoly over the supply, transmission and sale of
electricity; and

that there appears to be no private sector investment in the
transmission grid.
3.1.2 Energy sector policies formulated to facilitate competition
(a)
Policies for power sector reform and restructuring
The Master Plan Redraft sets out the proposed future structure of the
electricity industry in Thailand. In particular, the report identifies three
stages of power market reform.
Stage 1: EGAT as primary purchaser/provider (commencing from the
passage of the Corporatisation Law - 2001)
The Master Plan Redraft states that stage 1 will involve:

corporatising EGAT as a whole, with autonomous business units
operating as profit centres; and

privatising the Ratchaburi power plants, with regulatory controls
established to ensure non-discriminatory treatment of all regulators
by transmission companies.
In this stage, EGAT would retain its virtual monopoly in the bulk
purchase and supply of power, with MEA and PEA retaining their
franchise customer base (other than that which is served directly by
SPPs).
The Master Plan Redraft identifies the key attributes and issues
associated with stage 1 as:

limited private sector participation in generation providing for a
portion of the capital needs of EGAT;

long term central
responsibilities;
power
planning
under
EGAT’s
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
limited accountability or incentives to gain productivity
efficiencies, due to a lack of competition between the
generators;

no customer access to competitive power, except through SPPs;
and

introduction of an independent regulatory regime for electricity.
Stage 2: EGAT as the central supplier of power, with a gradual
introduction of wheeling (from Year 2001 to 2003)
Stage 2 of the Master Plan Redraft provides that it is intended that IPPs
will be able to sell power directly to large customers rather than directly
to EGAT.
EGAT would retain its position as central supplier of power (EGAT
will be a holding company, with a transmission operator (EGAT - T as a
subsidiary)). Other functions of EGAT will be established as profit
centres and then subsequently corporatised.
Third party access will also be gradually introduced to allow power
producers to sell directly to users, using the wheeling services of EGAT
- T and MEA’s or PEA’s distribution lines.
The Master Plan Redraft identifies the key attributes and issues
associated with stage 2 as:

EGAT would face competition in the bulk purchase and supply
of power;

enhanced private sector participation in both the generation and
retail supply of electricity by permitting generators to sell
electricity directly to larger customers;

generators will be required to compete for sales to large
customers, thus enhancing the efficiency drivers on the
generation sector;

a regulatory framework will be required for transmission and
distribution pricing, this would include the establishment of an
independent regulator and implementing an incentive regulation
scheme;

an alternative mechanism for funding subsidiaries would be
implemented enabling MEA and PEA to be placed on a level
playing field with new competitors. The most likely mechanism
will be a levy on generation, which would produce a pool of
funds to be used to provide the target subsidies; and

a continued role for EGAT as the central agency for long-term
planning and system operation.
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Stage 3: Competitive wholesale power pool/introduction of retail
competition (from Year 2003 onwards)
In the long term, the Master Plan Redraft envisages that a competitive
wholesale power pool will be developed with power trading taking
place within this pool. Retail competition will be introduced initially for
certain consumers and gradually expanded to cover a wider group of
consumers. Generation companies (“GENCOs”) would bid into the
wholesale pool and be dispatched in accordance with the lowest bid
offered which satisfies demand for that period.
To implement government energy policy, such as fuel diversity, and
maintain adequate competition amongst GENCOs may require the
regulation of generators. This may entail a fuel preference in fuel
licensing or fuel allocation for pool purchase.
An Independent System Operator (“ISO”) would be responsible for
economic merit order dispatch, as well as system security and financial
settlements for bulk power purchases. The ISO will be formed as a
government corporation funded by use charges on power purchases and
sales.
Retailers (which may or may not be a combined distribution and retail
enterprise) will have non-discriminatory access to the transmission and
distribution network, with a regulated transmission and distribution
access tariff paid to the relevant network service provider.
As a transitional matter, Distribution Companies (“DISCOs”) would
retain a customer franchise base. Only large customers will be given
access to the competitive market at first. Franchises will be gradually
unwound as the market matures, and certain commercial and regulatory
issues are resolved such as vesting of PPAs and a treatment of
subsidiaries. EGAT in this stage would remain a holding company with
TRASCO (EGAT-T) as its subsidiary, hydrogenation plus minority
interest in some GENCOs and additional supporting functions.
The Master Plan Redraft notes that accomplishing the long-term
structure of the electricity supply industry will require extensive
restructuring of existing electricity entities in Thailand as follows:

generation owned by EGAT would be spun off into separate
groups of GENCOs (with the possible exception of
hydrogenation);

an ISO would be established;

PEA may be split into corporatised DISCOs (the Master Plan
Redraft notes that a future study is required to determine the
optimal structure and that the key factors to be considered are
the energy consumption in each area and the impact on the
performance of new distribution entities and their customers);
and
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
a separate supply function will be established and corporatised
either owned or independent of the DISCOs.
The Master Plan Redraft notes that the key attributes and issues
associated with the competitive electricity structure are:

private sector participation in both generation and retail supply;

competitive neutrality between state-owned and private sector
generation companies, fostering competition in bulk and retail
supply of power;

strong efficiency drivers to empower generation and retail
supply; and

market signals to replace central planning - larger customers
will have direct access to generators, new capacity will only be
added as economically justified by competitive supply and
demand relationships.
As mentioned earlier, to date, none of the reforms have been
implemented and it is unlikely that the proposed timetable will be met.
As an example of some of the problems being encountered, the sale of
the Ratchaburi power plant has resulted in strong protests being
conducted by employees of EGAT. These protests are consistent with
the ongoing opposition by state enterprise employees generally. Vested
interests range from concerns on environmental grounds to concern at
the loss of revenues to the local area.10 Nonetheless, EGAT recently
announced that the government will soon establish a wholesale trading
group to purchase and distribute electricity from IPPs, SPPs and the Lao
People’s Democratic Republic.
The Thailand Power Pool and Electricity Supply Industry Reform Study
by Arthur Andersen dated 1 March 2000 (“the Arthur Andersen
Report”) provides a workable basis for reforming the Thai power
industry by a targeted date of 2003.
Under the structure proposed in the Arthur Andersen Report, MEA and
PEA will be disaggregated into one or more Regulated Electricity
Delivery Companies (“RedCos”), non-core service businesses (NSMs)
and Network Businesses (for PEA). All but a few large consumers will
pay for their electricity (plus delivery-related services) either through
the RedCo supply company division or through a competitive retailer.
There will be a power pool consisting of an ISO/Market Operator
(“MO”) and a Settlement Administrator (“SA”). A Grid Company
(“GRIDCO”) will be independent of the ISO and, in the end,
GENCO’s.
10
David Took, Department of Foreign Affairs and Trade, Crisis Affected Asia: Recovery Prospects and
Opportunities, Thailand, 6 January 2000, p 11.
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According to Piyasvasti Amranand, Secretary-General of NEPO, the
proposed structure of the electricity supply industry has been delayed
from early 2000 to mid 2000 (probably July).
A fast track method of privatising EGAT was put forward in a
preliminary report by Arthur Andersen, which called for present and
future subsidiaries as well as business units of the state oil firm being
partially privatised while leaving the core structure of state power utility
as the state-owned enterprise untouched. This approach is meant to
overcome obstacles stalling the passing of the State Enterprise
Corporatisation Act. The Constitutional Court is still considering a
petition from opposition parties as to whether the Act violates the new
constitution. Passed into law after approval from the upper and lower
houses, the government had hoped that the Act would allow the
government to quickly restructure and privatise state-owned
enterprises.11
None of the reforms outlined in the Master Plan or suggested by Arthur
Andersen have been implemented.
(b)
Separation between generation and transmission
As noted earlier, the electricity industry is divided into the following
sectors:

generation entities: IPPs, SPPs and EGAT;

transmission, power purchase and system operation: EGAT; and

distribution and retail supply: PEA and MEA.
Whilst EGAT and the IPPs and SPPs are all separate entities, there is no
separation between generation, power purchase, transmission and
system operation to the extent that EGAT is involved in all four
functions.
At the distribution level, whilst there appears to be functional
separation between EGAT and the distribution and retail sector (even
though EGAT, PEA and MEA are all Government owned entities),
there appears to be no separation between the distribution and retail
functions of PEA and MEA. (We are unaware of whether the
distribution and retail functions are ring-fenced.)
As noted under paragraph 3.1.2(a), the Master Plan Redraft anticipates
introduction of competition that includes the privatisation of EGAT and
the separation of the transmission functions of EGAT along with the
establishment of DISCOs.
At present, apart from any tariffs and regulatory matters determined by
NEPC and licences and permits required, there is no independent
regime for third party access to the transmission grid; IPPs are only able
to access the transmission and distribution systems pursuant to their
11
Power in Asia, Thailand/Policy/Utility etc, 15 November 1999.
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PPA with EGAT and the Grid Code. However, under stage 3 of the
Master Plan Redraft, it is envisaged that a wholesale pool of electricity
will be established and GENCOs will bid into the wholesale pool and
be dispatched in accordance with the lowest bid offered which satisfies
the demand for that period. It is also envisaged in stage 3 of the Master
Plan Redraft that GENCOs will be regulated and licensed. Stage 3 of
the Master Plan Redraft also provides that the transmission system will
become a common carrier and that generators will be able to sell
directly through the use of the transmission and distribution line
services. It is proposed that an independent regulatory body will be
established to regulate the electricity supply industry.
(c)
Complementary development of transmission grids
The current policy approach to the development of the transmission and
distribution grids is unknown. All such planning is undertaken by
EGAT and it appears that EGAT will retain this role until at least stage
II of the privatisation plan. It is unknown how much development of the
transmission grid and distribution system is being undertaken.
At present, there is no private sector involvement in transmission and
distribution planning.
(d)
Autonomy, accountability and commercial operation of public
utilities
As noted earlier, none of the government enterprises (EGAT, PEA or
MEA) have been corporatised. However, in accordance with stage 1 of
the Master Plan Redraft, privatisation of EGAT will commence with
the sale of Thailand’s largest power plant in Ratchaburi. In response to
union demands, the Ratchaburi plant, still to be completed by the
Mitsui-General Electric Alliances, will no longer be sold to strategic
Thai or foreign partners, but to the general public (40 per cent) and the
EGAT employees and their provident fund (15 per cent), with EGAT
retaining the remaining 45 per cent (or more). EGAT will establish
Ratchaburi Holding PLC to assume the power plant Assets. The initial
public offering of Ratchaburi Holding is expected to take place later
this year when the company has been listed in the stock exchange of
Thailand. Revenues from the sale will be re-invested in EGAT for debt
re-financing and to enable EGAT to modernise some of its existing
power plants.
Stage 2 of the Master Plan redraft appears to anticipate the
corporatisation of MEA and PEA.
None of the government businesses are subject to performance targets.
However, as noted earlier, the Arthur Andersen Report proposes that
MEA and PEA be:
(a)
internally reorganised into RedCo, Network and NSB business
units with self contained management structures, financial
accounting, staffing etc;
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(e)
(b)
ring-fenced from the core activities to minimise the potential for
conflicts of interest; and
(c)
subject to clear performance targets in 2000 and performance
against these targes should be reviewed in 2003.
Competitive market in generation and supply
At present, there is only limited competition in the electricity generation
market. The only competition is between the various IPPs, though this
is limited given that EGAT is committed under the respective PPAs to
purchase a certain level of capacity anyway. Thus, competition in the
generation market between IPPs does not exist in any meaningful way.
With regard to the distribution and supply of electricity, MEA is
responsible for distributing and retailing electricity in Bangkok,
Nonthaburi and Samut Prakan Provinces. PEA is responsible for
distributing and supplying electricity in 73 provinces in the North,
Northeast, Central and Southern Regions of Thailand. Given that a
consumer cannot elect to purchase electricity from a retailer other than
the retailer servicing the consumer’s geographic location, there is no
currently no competition in the supply of electricity.
(f)
Cross-border interconnection
Thailand is currently progressing towards the power purchase of
electricity from:

the Lao Peoples Democratic Republic (“Lao PDR”);

the Union of Myanmar (“Myanmar”); and

the Peoples Republic of China (“the PRC”).
Purchase of Electricity from the Lao People’s Democratic Republic
On 4 June 1993, Thailand entered into a Memorandum of
Understanding (“MOU”) with the Lao PDR (“Lao PDR”) expressing
their intention to cooperate on the development of a 1,500 MW electric
power sale by Lao PDR to Thailand by the Year 2000. On 19 June 1996,
a second MOU was signed for the export of an additional 1,500 MW of
power to Thailand by the Year 2006.
In June 1999, the Lao PDR and Thailand agreed to adjust the power
purchase plan in line with EGAT’s revised Power Development Plan
1999 - 2011. The agreed dates for the power purchases have been
deferred such that 1,600 MW of power will be available for purchase by
Thailand from the Lao PDR in 2006 and 1,700 MW of power will be
available for purchase by Thailand from Lao PDR in March 2008.
In March 2000, EGAT agreed to purchase 5,354 million units from the
Nam Thuen 2 hydro project in Laos. EGAT’s power purchase
represents 95% of the capacity of the 920 MW project.
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Nam Thuen 2 is scheduled to start deliveries to Thailand in 200612
Power purchase from Myanmar
Thailand and Myanmar entered into an MOU on 4 July 1997 in which
they agreed to co-operate on the development of 1,500 MW of electric
power, for sale by Myanmar to Thailand by the Year 2010.
On 13 January 1999, Myanmar agreed to purchase 100 to 150 MW of
electricity from Thailand. It was agreed that the electricity would be
transmitted through the Thai/Myanmar transmission line
interconnection between Tak-Mae Sod-Myawaddy-Pa-an and Bago.
Thailand and Myanmar are also considering the feasibility of a
transmission interconnection between the Mae Sod substation and the
Bago substation.
Power purchase from the People’s Republic of China
An MOU between Thailand and PRC was signed in November 1998 for
a purchase of 3,000 MW from PRC by 2017. With recovery in the
domestic power demand, discussion between EGAT and the Yunnan
Electric Power began in May 2000 and has been tentatively agreed that
the purchase of power from the Jinghong project would take place in
2013 with the remaining 1,800 MW to be purchased in 2014, probably
from the Nuozhatu hydroelectric project (approximately 4,000 MW in
capacity)
(g)
Conclusions
There is effectively no competition within the electricity supply
industry in Thailand (other than the limited competition that occurs
between IPPs and SPPs).
As discussed in paragraph 3.1.2(a), the Master Plan Redraft proposes a
series of market reforms that are designed to introduce competition into
the electricity supply industry.
In particular, EGAT has stated that a wholesale electrical pool will soon
be established.
Part 4.3.2.2 of the Arthur Andersen Report recommends that existing
PPAs be incorporated into the market by establishing new institutions
called ‘PPA Traders’. The proposal involves EGAT establishing
‘EGAT DebtCo’ to whom EGAT’s obligations under the PPAs would
be transferred. ‘EGAT DebtCo’ would then use a ‘Contract Manger’
known as a ‘PPA Trader’ who would supply electricity into the pool at
the pool price. EGAT DebtCo would also charge a Competition
Transition Charge to customers which would be based upon EGAT
DebtCo’s projected need for revenue to pay stranded costs. In such a
scenario, consumers absorb any losses (or gains) in accordance with
12
Bangkok Post, 9 March 2000.
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Agenda Item 10.3-Micro Eco Reform-Att A-Ann 7
fluctuations in the pool price and the IPP would continue to receive the
revenue stream defined by the PPA
Other options include:
(a)
legislating the termination of the PPAs or deeming that the PPA
is an agreement for the supply of electricity into the wholesale
pool (this would be a very harsh step to take); or
(b)
negotiating the amendment of the PPAs such that on the
commencement of the pool, the IPP would sell its electricity
into the pool and enter into a contract for differences whereby
the Government (or the buyer) would absorb the variation
between the pool price and the price under the PPA and,
conversely, the IPP would pay the Government (or buyer) the
gains due to the pool price being greater than the price under the
PPA.
Part 4.3.2.5 of the Arthur Andersen report also recommends that any
PPAs that are entered into in the future should be of a short-term
duration and should contain provisions which explicitly allow for
adjustment upon the commencement of a competitive electricity
market.
This approach is aimed at providing a greater degree of flexibility so
that future PPAs can be transformed into alternative mechanisms, such
as Contracts For Differences, which are better aligned with the structure
of the wholesale pool. In addition, it is recommended that all future
PPAs contain a clause which provides that on the commencement of the
wholesale electricity pool, the PPA may be assigned by consent (and
that consent should not be unreasonably withheld).
The Reform Plan (based on the Arthur Andersen report) which was
adopted by the Cabinet on 25 July 2000 contains detailed proposals for
achieving competition in three stages, commencing with the enactment
of a new Energy Industry Act, and culminating in retail competition
from 2003.
3.2 Principle 2: Commercial viability of electric utilities
(a)
Commercial wholesale tariffs
The prices received by IPPs for the electricity they generate are set in
accordance with the PPA that they enter into with EGAT. The terms of the
PPAs to which the various IPPs are a party are confidential as between the
parties. It is therefore unknown whether the PPAs:

allow an adequate return on capital;

are reflective of negotiations or are imposed; or

vary as between themselves.
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Point 3 of the Proposal Instructions contained in the Request for Proposals for
Power Purchases13 states that:
“exceptions to the Model Power Purchase Agreement, if any, must be
provided with the Proposal. Exceptions will be considered, but may
result in unfavourable evaluation of the Proposal.”
It is highly likely, given the identity and commercial reputation of the
generator owners, that the PPAs do provide an adequate return on capital and
are reflective of negotiations with EGAT.
(b)
Fuel supply market
There are no regulatory instruments that prescribe the cost of inputs for IPPs
or restrict the freedom of IPPs to purchase fuel.
IPPs, which use gas as their fuel supply, purchase their natural gas from the
Petroleum Authority of Thailand, the state owned monopoly supplier of
natural gas.
IPPs that use coal as their fuel supply source their coal on a commercial basis.
It should be noted that if an IPP enters into a Fuel Purchase Agreement
whereby the IPP is required to take a Minimum Quantity of Fuel, (provided
that the terms of the Fuel Purchase Agreement are accepted by EGAT),
section 7 of the model PPA provides that EGAT will share the costs incurred
by the IPP if the IPP fails to take the Minimum Quantity of Fuel as provided
by the Fuel Purchase Agreement. However, if the failure to take the Minimum
Quantity of fuel is due to causes other than the dispatching instructions by
EGAT, then under the model PPA, EGAT is not liable to share in the costs
incurred to the IPP.
(c)
Access issues and treatment under tax regime
There appear to be no significant differences between EGAT and IPPs in
terms of the ability to access sites, fuel markets or system operation
procedures.
IPPs may, however, receive favourable treatment under the taxation regime in
Thailand. IPPs (unlike EGAT) receive an exemption from the payment of
corporate income tax (currently 30% of net profits) for the first eight years of
the project. In addition, IPPs receive an exemption from import duty on
machinery.
Under the Investment Promotion Act, BE 2520, an IPP may be entitled to
special privileges and exemptions. The Board of Investment (“BOI”), the
body that administers the Investment Promotion Act, considers whether to
grant privileges to a particular project on a case by case basis based upon
criteria and according to set criteria Investment Promotion Zones.14
13
As part of Request for Proposals for Power Purchases (bid solicitation process) from IPPs, EGAT provides a
bundle of materials including a Model PPA. See paragraph 5.3 for a discussion of pricing under the Model PPA.
14
Board of Investment, Thailand, BOI Policies and Criteria for Investment Promotion, Announcement No.
1/1993, pp. 71-73.
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Set out below are the BOI Investment Zones: 15



15
Projects located in Bangkok, Samut Prakan, Samut Sakhon, Pathum
Thani, Nonta Buri and Nakhon Pathom, (Zone 1)

No tax exemption or reduction on machinery, except projects
which export not less than 80% of total sales or locate their
factories in industrial estates or promoted industrial zones.
Such projects will receive a 50% import duty reduction on
machinery which is not included in the tariff reduction
notification of the Ministry of Finance (Notification No.
C13/25533) and is subject to import duty greater than equal to
10%.

No corporate income tax exemption, except for projects that
export not less than 80% of total sales and locate their factories
in industrial estates or promoted industrial zones, in which
case a three-year exemption will be granted.

Exemption of import duty on raw or essential materials used in
export products for a period of one year for projects exporting
at least 30% of total sales.
Projects located in Samut Songkhram, Ratchaburi, Kanchanaburi,
Suphanburi, Angthong, Ayutthaya, Saraburi, Nakhon Nayok,
Chachoengsao and Chonburi (Zone 2)

50% import duty reduction on machinery which is not
included in the tariff reduction notification of the Ministry of
Finance (Notification no. C13/2553) and which is subject to
import duty greater than or equal to 10%.

Corporate income tax exemption for 3 years extendable up to 7
years, for projects that locate their factories in industrial estates
or promoted industrial zones.

Exemption of import duty on raw or essential materials used in
export products for a period of one year for projects exporting
at least 30% of total sales.
The remaining Provinces plus Laem Chabang Industrial Estate
(Investment Promotion Zones or Zone 3).

Exemption of import duty on machinery.

Corporate income tax exemption for 8 years.

Exemption of import duty on raw or essential materials used in
export products for a period of 5 years for projects exporting at
least 30% of total sales.

75% reduction of import duty on raw and essential materials
used in production for domestic sales for five years, renewable
Board of Investment, Thailand, BOI Policies and Criteria for Investment Promotion, Announcement No.
1/1993, pp. 73-73.
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on an annual basis, provided that raw or essential materials
comparable in quality are not being produced or are not
originating within the kingdom in sufficient quantity to be
acquired for use in such activity.
The BOI may also grant special privileges are granted as follows:

reduction of corporate income tax by 50% for 5 years after the
exemption period;

double deduction from taxable income of water, electricity, and
transport costs for 10 years from the date of first sales; and

deduction from net profit of 25% of the costs of installation or
construction of the IPPs’ infrastructure facilities.
The Board has identified projects in the following five areas to be priority
activities:
(d)

Basic transportation systems;

Public utilities;

Environmental protection and/or restoration;

Direct involvement in technological development; and

Basic industries.
Foreign ownership and control
Foreign ownership and control of IPPs is permitted. However, the bidding
company must be a limited company organised and registered in Thailand.
The business of generating and selling electricity does not fall with any of the
restricted businesses under the Alien Business Act B.E. 2542 (“the Alien
Business Act”) and consequently alien participation in an IPP is not restricted.
The Land Code prohibits ownership of land by aliens. However, an alien
company may enter into and register a real property lease for up to 30 years. If
the IPP is 49% or less owned by aliens (and therefore not an alien entity), the
IPP is permitted under the Land Code to either lease or own the land on which
the Project will be located. However, regardless of the ownership structure of
the IPP, it is anticipated that the IPP will not own the property.
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(e)
Conclusions
The individual PPA under which the IPP operates largely determines the
regulatory environment for IPPs. There is no standard commercial
environment for IPPs which includes “across the board” performance targets
or policies to provide for a competitive and stable market in fuel supply.
However, the reform proposed by the Master Plan Redraft, if executed, will
address most of these issues. Nevertheless, as discussed under Principle 1,
one of the issues to be addressed in the progress to a wholesale market is
imposing market “behaviour” forces and market prices on IPPs that currently
operate under a long term PPA. See Principles 1 and 10 for a discussion of
how this issue may be addressed.
3.3 Principle 3: Regulatory framework and process for IPP approvals
(a)
Consistent regulations and approvals processes
Before a power producer is allowed to produce and sell electricity in
Thailand, the documents and/or licenses/permits that must be obtained are:

a PPA with buyers and/or EGAT;

a permit by the Department of Industrial Works, Ministry of Industry
to operate a power plant;

an EIA Report by the Environmental Policy and Planning Office,
Ministry of Science, Technology and Environment;

a concession to operate an electricity business issued by the Public
Works Department, Ministry of Interior (concession is valid for
twenty-five years);

a permit to produce controlled energy issued by the Energy
Development and Promotion Department, Ministry of Science,
Technology and Environment;

a certificate of boiler safety issued by the Industrial Safety Division,
Department of Industrial Works, Ministry of Industry;

a permit to connect to EGAT’s system issued by EGAT; and

a permit to sell electricity issued by the Public Works Department,
Ministry of Interior.
Normally, it takes one to two years to obtain all of the above
permits/approvals. It may take longer if the project is encountering opposition
from non-government organisations.
(b)
Regulation and approval processes
There appears to be some degree of overlap in the approval process between
various levels of Government. For example, a permit is required by the
Department of Industrial Works, Ministry of Industry to operate a power plant
and a permit is required to produce controlled energy issued by the Energy
Development and Promotion Department, Ministry of Science, Technology
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and Environment. A further permit is then required by the Public Works
Department, Ministry of Interior to sell electricity.
Whilst a variety of regulatory approvals are required by an IPP, EGAT, as part
of the Request for Proposal (“RFP”), provides a comprehensive list of permits
and approvals required by an IPP. Accordingly, there should be minimal
impact on administration costs.
(c)
Published guidelines
There are published guidelines as to the permits required for a power project,
including details of the relevant approving authorities and the scope of their
jurisdiction. Guidelines regarding the individual permits are available from
the relevant issuing Departments (it is unknown whether such guidelines
consistently detail the scope of the relevant Department’s jurisdiction). In
addition, the RFP package produced by EGAT in each solicitation includes
very comprehensive information on connection costs, preferred fuels,
preferred sites, mandatory requirements, environmental quality standards and
regulations, applicable legal and regulatory issues and government permits
and licences and authorisations required.
(d)
Incorporation of pre-approvals in tender process
It would appear that no consideration has been given to incorporating in
tender processes mechanisms for granting pre-approvals of projects put out to
bid. The most recent EGAT solicitation contained no mechanism for granting
pre-approvals of projects put out to bid. There is nothing to indicate that
EGAT has considered the incorporation of such a process.
(e)
Presence of central coordinating agency for approvals
Apart from the role played by EGAT when issuing Requests for Proposals,
there is no central agency where all approvals may be granted or coordinated.
There are no apparent barriers to the creation of such an agency other than that
the market is not established in such a way whereby entry into the market is
coordinated by one agency.
The Master Plan Redraft contemplates the establishment of an independent
regulator. Provided that the independent regulator is not also responsible for
system operation, the independent regulator may be an appropriate body to
coordinate the approval of applications by IPPs for access to the wholesale
electricity market.
(f)
Conclusions
Principle 3 is satisfied to the extent that there is a clear path by which IPPs
may apply for a PPA to sell electricity to EGAT. There are a number of other
approvals and licenses that must be obtained, yet there is nobody to
coordinate this process.
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The process could be made speedier, more consistent and transparent if a
significant number of necessary permits and approvals could be channelled
through, or facilitated by, a central co-ordinating agency.
4.
Tender/Bid Processes and Evaluation Criteria
4.1 Principles 4,5,6,7 and 8: Tender/Bid Processes and evaluation criteria
(a)
Tendering approach and evaluation
Approach to tendering
“Tendering” is done in the form of a RFP. The RFP is a document provided to
bidders which contains:

a Model PPA which specifies the operating characteristics, tariff
structure, developments connection arrangements, construction
schedule, contract milestones, liquidated damages, force majeure, etc
relating to the purchase by EGAT of capacity and electrical output
from an IPP plant;

guidelines, terms and conditions and instructions regarding the
preparation and submission of proposals along with the proposal
evaluation criteria; and

the Grid Code, which identifies the connection procedures, power
plant operation and that IPPs are subject to merit order dispatch..
The RFP also contains information on connection costs, preferred fuels,
preferred sites, mandatory requirements, environmental quality standards and
regulations, applicable legal and regulatory issues and government permits
and licences and authorisations required.
Evaluation
Evaluation criteria are published. As noted above, the RFP also contains the
evaluation criteria. Evaluation is based upon a scoring structure with a
maximum score of 1000 points. The points are composed of Price and Non
Price Factors.
(i) Price Factors
Price Factors make up a maximum score of 600 points. Scoring is based upon
the present value of levelised generation costs. Using the “Short Form Life
Cycle Model (“SFLCM”) to calculate generation costs per kWh based on a
bidder’s proposed pricing in terms of:

Availability Payments;

Fuel Costs;

Operation and Maintenance Costs; and

Connection Costs.
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Assumptions with regard to the project generation costs are:

the cost escalation factor - for fuel and operation and maintenance
costs;

the capacity factor:


80% for the annual energy charges; and

available hours for Availability Payments accepted at 92% for
combined cycle plants and 88% for coal fired plants; and
the foreign exchange rate:

major currencies each with sensitivity assumptions; and

proportions of currency indexed proposals converted to Baht
for SFLCM analysis.
(ii) Non Price Factors
A maximum of 400 points is awarded for Non-Price Factors. These include:

Project Development Progress (0 - 110 points);

Sponsor's creditworthiness and finance ability (0 - 70 points);

bidder’s experience (0 - 70 points);

fuel (0 - 40 points);

site (0 - 60 points); and

exceptions to the Model PPA.
Pre-qualification process
Apart from the bid security (see below), there is no specific pre-qualification
process.
Size of bid security
Bid security of 500 Baht per KW must be submitted at a time of submission or
proposal. The bid security is valid for 18 months.
(b)
Conclusions
With regard to the tender bid process the following difficulties are
anticipated:
 whilst the IPPs are required to prepare an EIA, the evaluation scoring
model and assumptions do not include consideration of environmental
concerns;
 the bidding process is not a public process and there is no published
timetable or independent scrutiny (it appears that the only bodies involved
in the bid process are government bodies and external consultants); and

there is no pre-qualification of bidders mechanism.
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5.
Power Purchase Agreements (PPAs) and Associated Tariff
Structures
5.1 Principle 9: Retail tariffs
(a)
Nature and structure of retail tariffs
Tariff structure
The retail electricity tariffs in Thailand are controlled by NEPO and require
prior approval from the NEPC and final acknowledgment from cabinet.
Retail electricity tariffs are divided into seven groups as set out below:
Residential
Applicable to electricity used in dwellings, monasteries and churches of any
religion (including compounds) though a single watt-hour. The charges are
divided into two categories, namely:

charges not exceeding 150 kWh per month; and

consumption in excess of 150 kWh per month.
Small general service
Applicable to electricity used for business, industrial, state enterprises,
government industrial institutions or others (including compounds) with a
maximum 15-minute integrated demand of less than 30 kW through a single
wattmeter.
Medium general service
Applicable to the electricity used for business, industrial, state enterprises,
government industrial institutions or others (including compounds) with a
maximum 15-minute integrated demand of at least 30 kW but less than 2,000
kW, and average consumption in the last 3 consecutive months not exceeding
355,000 kWh is a two part tariff (demand/energy). This tariff includes
non-industrial government institutions that have an average consumption in
the last three consecutive months exceeding 250,000 kWh per month through
a single demand meter.
Large general service
Applicable to the electricity used for business, industrial, government
institutions, state enterprises or others (including compounds) with a
maximum 15-minute integrated demand of 2,000 kW and over or average
consumption in the last 3 consecutive months exceeding 355,000 kWh per
month through a single demand meter use Time of Use Tariff (“TOU”).
There are two forms of TOUs:

TOU with peak, partial peak and off peak period apply to original
customers before the new TOU came into effect in January 1997; and
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
new Time of Day (“TOD”) with daily peak and off peak periods for
Monday-Saturday and Sunday being off peak applies to all new
customers and original customers who would prefer TOU than TOD.
Specific business service
Applicable to electricity used for hotels, guesthouses or other facilities
offering lodging to customers (including compounds) with a maximum
15-minute integrated demand of at least 30 kW through a single demand
meter.
Government institutions and non-profit organisations
Applicable to government institutions or those established by the Local
Administration Act with average consumption in the last three consecutive
months not exceeding 250,000 kWh per month, and to non-government
organisations offering free-of-charge service and places holding religious
ceremonies (including compounds) through a single watt-hour meter. Not
applicable to state enterprises, embassies or office buildings of international
organisations.
Agricultural pumping service
Applicable to government agricultural agencies, officially recognised farmer
groups, agricultural cooperatives of farmers operating water pumps for
agricultural pumping through a single watt-hour meter.
Nature of tariffs
Tariffs to a large extent reflect the economic costs of supply and provide for a
financial return.
The basic principle of Thailand’s pricing policy covers three main factors:

to provide utilities with sufficient revenue requirement;

to reflect marginal cost; and

to serve certain social objectives particularly the support of the rural
electrification program.
Under the existing retail tariff structure the revenue required of the utilities is
based on an 8% return of the revalued asset. The overall tariff reflects almost
90% of the marginal cost. The main distortion in the retail tariff structure is
the cross subsidiary received by residential customers that use less than 150
kWh/month.16 The tariff for this group of customers is approximately 20% of
marginal costs. Given that these customers are mainly in the PEA areas and
the tariff structure is uniform throughout the country, there exists a cross
subsidiary from MEA to PEA through the difference in the bulk supply tariffs,
which they buy from EGAT.
16
APEC Working Group, APEC Energy Regulators Forum - Electricity Regulatory Arrangements, Thailand,
April 1999, p 8.
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To maintain this uniform tariff policy, EGAT’s bulk supply tariff to PEA is
much lower than that charged to MEA as the costs of supplying electricity to
PEA are higher. The bulk supply tariff to MEA and PEA that is currently
applied comprises a flat energy charge. Without a demand charge or a
variation depending on time use, the tariff does not reflect the costs of supply
and is therefore inadequate to give correct signals to the distribution utilities
to improve their load factor, load shape and the power factor of foster quality
of services and energy conservation.17
Three forms of retail tariff are used in Thailand. These are:

energy charges alone which apply to residential, small general service,
government and agricultural pumping customers;

energy plus demand charges which apply to medium and certain large
general services; and

TOD which apply to approximately 1,300 of the largest users whose
demand exceeds 2,000 kW or whose energy consumption exceeds
355,000 kWh per month.
In 1992, the government put in place an Automatic Adjustment Mechanism,
which adjusts the retail tariffs in line with changes in costs of fuels and
uncontrolled costs of the three utilities (including value added tax and the cost
of the Demand Site Management Program)18.
The retail and wholesale tariff structure is reviewed by the government every
4 to 5 years. Following the review in 1994/1995 the government decided to
adjust the wholesale tariff by narrowing the differential between prices EGAT
sales to MEA and PEA. It was also concluded there was no need to adjust the
average retail tariff because charges, fuel costs and certain types of costs
outside the control of the three utilities are able to automatically pass through
without seeking approvals from the government.19
The tariffs only appear to deal with community services obligations to the
extent that there is a cross subsidiary received by residential customers that
use less than 150 kWh/month.
Transparency
Tariffs are transparent. In January 2000, PricewaterhouseCoopers released its
final report “Review of Electricity Power Tariffs - National Energy Policy
Office of Thailand”.20 The Report contains a detailed review of the tariff
levels, structure and adjustment mechanisms.
17
APEC Working Group, APEC Energy Regulators Forum - Electricity Regulatory Arrangements, Thailand,
April 1999, p 8.
18
APEC Working Group, APEC Energy Regulators Forum - Electricity Regulatory Arrangements, Thailand,
April 1999, p 8.
19
APEC, ERF, Electricity Regulatory Arrangements, Summary Submission, Thailand, April 1999.
20
The Report is available on the NEPO web site (www.nepo.go.th).
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(c)
Conclusions
It is proposed that the new tariff structure will be implemented by the end of
2000. If so, the tariff structure recommended by Pricewaterhouse Coopers
should reflect what might occur in light of more competitive arrangements
that are planned for the electricity supply industry. However, the proposed
tariff structure continues to provide for a certain level of cross subsidisation
and, as such, is not purely reflective of the economic cost of supply.
5.2 Principle 10: Transition to competitive markets
(a)
PPA tariff structures that promote competition
The actual terms of concluded PPAs are confidential and, therefore,
unknown. It is unlikely that these PPAs expressly make provision for the
introduction of a competitive wholesale market.
However, as noted earlier, the tariff structure is composed of two parts
namely:
(a)
a capacity charge; and
(b)
an energy charge.
This structure is consistent with merit order dispatch (which is prescribed by
the Grid Code) allowing EGAT to meet demand at the lowest cost by bringing
generators on stream in order of marginal cost. They would to that extent be
consistent with competition between generators. At present, a wholesale
electricity pool does not exist. However, Stage III of the Master Plan Redraft
contemplates the establishment of a wholesale electricity pool.
Longer-term impact of traditional PPAs on the development of competitive
markets
The primary disadvantages of PPAs on the development of competitive
markets are:

that the PPA ‘locks in’ assumptions regarding funding costs and other
fixed costs which may change over the life of the contract;

that the take or pay capacities committed to under the PPA may not be
easily incorporated into a power pool which is traded on a daily basis;
and

the incurring of wasted costs for which the IPPs would have to be
compensated if the PPA were to be unwound to facilitate the
wholesale electricity pool.
See discussion under Principle 1 regarding how PPAs may be dealt with in the
transition to a competitive market.
(b)
Conclusions
It appears likely that the existing PPAs do not contain an agreed mechanism
for allowing for transition to a competitive wholesale market. The PPAs do
provide for amendment by agreement to include provision for transition to a
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wholesale market (see recommendations under Principle 1 for a discussion of
suggested amendments to the Model PPA). However this could be
time-consuming and difficult.
5.3 Principle 11: Allocation of risks
(a)
Allocation of risks under PPAs
The primary risks associated with a PPA are:

construction/completion risks in the development/construction
phases;

‘market risk’, the risk that EGAT may not purchase all of the
electricity or will not purchase the electricity at a reasonable price;

foreign exchange risk, the risk of an adverse movement in interest
rates;

a lack of inputs required for production (ie. unavailability of fuel,
water, electricity, raw materials etc);

changes in fuel prices;

a lack of management capability, that is, the inability to ensure that the
project is operated correctly;

changes in law;

a ‘force majeure event’, that is, the risk of natural disasters, acts of
God etc;

governmental force majeure event or change in law risk, that is, the
risk of a fundamental change in the legal or regulatory environment;

‘credit risk’, that is, the need to ensure continued support of creditors;

“political risk”;

the risk of a ‘termination event’ occurring, that is, the risk that the
agreement may be terminated by EGAT; and

a lack of Sovereign support, that is, the project needs the support of
the government.
Risks borne by government
The precise terms of the individual existing PPAs are unknown. Nevertheless
the Model PPA provides that:

market risk is borne by EGAT to the extent that EGAT is obliged to
make capacity payments regardless of whether dispatch occurs;

foreign exchange risk is borne by EGAT to the extent that EGAT
adjust the availability payments and other non-price matters (see
paragraph 5.1(e) for further details); and

fuel risk is borne by EGAT to the extent that EGAT accepts the risk of
interruption in the supply of natural gas; and
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
political risk and change in law risk is borne by EGAT.
Changes in law and certain political risks (such as the expropriation or
compulsory acquisition of the IPP facility or any material assets or rights of
the generator) are defined as force majeure events and result in the obligations
of the affected party being suspended or excused to the extent of the force
majeure. It should be noted that section 14.1 of the Model PPA provides that
during any force majeure, EGAT shall not be obliged to make Availability
Payments to the IPP. However, in the event of a ‘Governmental Force
Majeure’ (which includes the expropriation or compulsory acquisition of an
IPP facility or material assets or rights of a generator), EGAT must make
Availability Payments at a rate based upon an average of the Availability
Payment made during the 6 months preceding the applicable Governmental
Force Majeure.
(b)
Conclusions
The risks are, generally, allocated under the Model PPA to the party that is
most able to manage them. However, it is unknown how flexible EGAT may
be when negotiating the allocation of risk. These negotiations are highly
confidential and remain so.
Current provisions under the Model PPA are adequate to ensure this principle
is met. No reform seems to be necessary.
6.
Financing and its implications
6.1 Principle 12: Regulatory, taxation and foreign exchange regimes
(a)
Transparency of taxation regime
Thailand imposes a uniform corporate tax rate of 30% of net profits on
companies. However, IPPs enjoy an exemption from the payment of
corporate tax for the first eight years of the project. In addition, IPPs receive
an exemption from import duty on machinery.
(b)
Conversion of local currency to foreign currency
Efficient and reliable processes are in place for the conversion of local
currency to foreign currency. The Exchange Control Act B.E. 2485 (A.D.
1942) governs all matters concerning foreign currency. Generally speaking all
foreign currency matters require the permission of the Bank of Thailand.
However, in 1990, exchange restrictions were relaxed and many transactions
no longer require the approval of the Bank of Thailand.
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(c)
Restrictions on the availability and transferral of foreign exchange
There are restrictions on the availability of foreign exchange, and its ability to
be transferred overseas. If an IPP borrows money from abroad and needs to
remit foreign currency back to its lender, the IPP may purchase foreign
currency from a commercial bank and seek approval to send the foreign
currency overseas. The primary requirements are that the IPP displays a copy
of:
(d)

the loan agreement; and

the documentation showing the initial sale of foreign currency and
purchase of Baht.
Protection against exchange rate changes
There is protection against exchange rate changes. Following the adjustment
of currency exchange system from basket of currency to managed Baht float
in 1997, EGAT:
(e)

introduced the Tariff Adjustment Mechanism (TAM), an indexed
adjustment of certain portions of the availability payments with a base
exchange rate 27 Baht to 1 USD; and

modified certain non-price matters, i.e. equity ownership structure,
installed capacity, commercial operation date, etc.
Conclusions
There is a clear and simple taxation regime and there appears to be no
impediment to:

the ability to convert local revenues into foreign currency; nor

the transferability of foreign currency,
both of which are essential to the facilitation of private investment in the
power sector.
In addition, following recent amendments to the PPAs, as referred to above,
EGAT now takes a portion of the foreign exchange risk.
Although some restrictions do exist, overall the present foreign exchange
regime is adequate to meet this principle. No reform seems to be necessary.
6.2 Principle 13: Security over project assets
(a)
Legal framework for creating security over project assets
The legal framework for creating security over project assets in favour of
lenders includes step-in rights and rights to assign (as security). Section
23.4.1 of the Model PPA provides that either party may assign its rights and
obligations under the PPA with the consent of the other party and the other
party must not withhold consent if it can be demonstrated to the reasonable
satisfaction of the other party that the assignee has adequate legal, financial
and technical ability to perform the obligations of the assignor.
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Section 23.4.4 of the Model PPA also provides that section 23.4 does not
apply to assignment by the IPP of its right, title and interest in the PPA by way
of security in favour of a financial institution. Thus, an IPP doe not require the
consent of EGAT when assigning or creating a security interest over the any
right, title or interest in the PPA.
Furthermore, section 12.3.1 of the Model PPA provides that the
step-in-rights, exercisable by EGAT following an Event of Default by the
IPP, are subject to the right of the Lenders under the Financing Documents.
Thus, the PPA does not prevent a Lender from assuming operational
responsibility for an IPP (if provided for in the Financing Documents).
(b)
Conclusions
Whilst there is nothing in the PPA to prevent the taking of a security interest
or the exercise of step-in rights, the lenders need to be aware that, in practice,
the exercise of such rights may be difficult if the IPP is not properly licensed.
It may be necessary to ensure that the licences and permits granted to the IPP
are transferable to the lender. This would involve the entry into direct
agreement between licensees and lenders.
Lenders are also exposed to the risk of licences being revoked or not renewed
or being made subject to conditions. Lenders may wish to seek to have their
position recognised on the licence by the licensor so that they are advised in
advance of any proposal to modify or revoke the licence and given an
opportunity to remedy the cause for the proposed action on the part of the
licensor. A direct agreement will resolve this problem.
In each case, lenders need to be aware of the limitations of their security and
to ensure that their security is structured so that it is as effective as possible
within the constraints of the PPA and the Thai licensing and permit
framework. The exercise of step-in rights is a difficult issue. It can only be
achieved by difficult and expensive negotiations driven by lenders.
6.3 Principle 14: Bankability of IPPs
(a)
Project structure providing determined income stream
The existing PPAs are confidential documents. While some information has
become generally available, the precise terms of the PPAs remain
undisclosed. From the information available to us, principally the Model
PPA, we understand that the income stream of the IPPs is protected by the
terms of the PPAs as follows:
Term
Section 10.1 of the Model PPA leaves the term of the PPA blank. Thus,
presumably, the term may be subject to negotiation. However, most PPAs are
for a term of 20-25 years, which, from a lender’s perspective, would generally
be more than sufficient for the repayment of the loan.
However, it should also be noted that section 12.1 provides that the IPP may,
by notice in writing to EGAT, terminate the agreement if:
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
EGAT defaults on the payment of any amount due and payable to the
IPP under the PPA, and the default continues unremedied for more
than 30 days after the IPP gives written notice of the default to EGAT;

EGAT dissolves or liquidates, (other than voluntary dissolution or
liquidation as part of a reconstruction);

EGAT makes a general assignment of the PPA or any of its rights
under it or of its interest in the IPP’s power plant for the benefit of its
creditors; or

EGAT enters insolvency proceedings and is adjudicated bankrupt
under any insolvency law as a debtor.
Section 12.2 of the Model PPA also provides that EGAT may, by notice in
writing to the IPP, terminate the PPA if:

the IPP defaults in the payment of any amount payable under the PPA
and the default continues unremedied for more than 30 days after
EGAT gives notice of the default to the IPP;

the IPP’s power plant is destroyed or damaged (including in
connection with any force majeure) to such an extent as to be
incapable of generating electricity and, prior to any material works
being carried out by the IPP to remedy the damage, it is agreed
between the parties or, in the absence of such agreement it is
determined by an expert in accordance with section 15 that it is
unlikely that the IPP’s power plant will be restored to at least 75% of
the Contract Capacity within 24 months of the date of which such
destruction or damages occurs;

the IPP dissolves or liquidates, other than voluntary dissolution or
liquidation as part of a reconstruction or reincorporation;

the IPP makes a general assignment of the PPA or any of its rights or
its interest in the power plant for the benefit of its creditors;

the IPP enters insolvency proceedings and is adjudicated bankrupt
under any insolvency law as debtor;

the IPP fails to comply with or operate in accordance with any
material provision of the PPA; or

the IPP fails to commence Commercial Operation by the scheduled
Commercial Operation Date.
Whilst the rights of termination of each party appear to be reasonably similar,
the PPA makes it clear that EGAT’s rights to terminate the PPA are in
addition to the IPP’s liability to EGAT for liquidated damages. Indeed, the
PPA makes it clear that following any termination of the PPA, EGAT may
exercise any rights or remedies it has at law, including compensation for
monetary damages, injunctive relief and specific performance. No such
similar statement is made with regard to the IPP.
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Section 14.4 also provides that, following 60 days notice in writing, either
party may terminate the Agreement if a Force Majeure (other than a
Governmental Force Majeure) remains unremedied for more than one year.
Responsibilities during construction
Section 2 of the Model PPA generally provides that the IPP undertakes to
construct, test and commission the power plant and associated systems and
EGAT undertakes to construct, test and commission the New Transmission
Facilities required to connect the IPP’s power plant and associated systems to
EGAT’s System.
Terms of purchase
Section 6.1 of the Model PPA provides that the IPP is entitled to receive
energy charges related to the electricity dispatched. Schedule 3 sets out the
calculation of the energy charge. Section 6.1 also provides that neither:

operations carried out without a dispatch instruction; nor

dispatched operations not carried out,
shall receive a payment in accordance with Schedule 3.
Section 4.1 also provides that the IPP is entitled to receive Availability
Payments from EGAT calculated in accordance with the provisions of
schedule 2. In other words, the IPP is entitled to receive payments in respect
of the Availability of the IPP’s power plant and associated systems (while in
compliance with the Contractor Operating Characteristics) regardless of
whether EGAT takes the available capacity.
Pricing formula
The energy charge is based on the energy charge equations set by EGAT that
essentially covers both ‘fixed’ and variable costs.
EGAT has separated the energy charge payments into two components.
These are:

a payment to cover variable fuel costs (“Fuel Payment”); and

a payment to cover variable operation and maintenance costs
(“VOMP”).
The payments are calculated in accordance with allowances agreed in the
PPA. The allowances are expressed in Baht per unit of output (kW hours) or
time (hours).
The Availability Payment is set in accordance with Schedule 3 of the Model
PPA for the contract year (as defined in the Request for Proposals) and the
hours that the IPP is available. In essence, the Availability Payment is a
take-or-pay obligation imposed on EGAT such that the IPP may recover its
capital/fixed costs regardless of the electricity produced.
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Penalties for non-delivery of power
Section 14 of schedule 2 of the Model PPA details the penalties for
uninstructed reductions in the MW output. The penalty applied is intended to
reflect the additional costs incurred to the system for:

the additional cost of providing operating reserves due to significant
losses of generation output; and

the start up cost involved in resynchronising the unit, if the unit has
desynchronised.
A penalty is also applied for the uninstructed reduction in the reactive power
of the Unit.
Finally, a penalty is also implied for failure to provide spinning reserve.
The penalties applied by EGAT under the PPA are risks to the IPP income
stream, but are also matters that the IPP ought to be able to minimise
procedurally and via insurance.
Force majeure
Section 14.1 of the Model PPA provides that a party’s obligations under the
agreement are suspended for the period of a Force Majeure event. Force
Majeure Event is broadly defined under section 14.1 as circumstances beyond
the reasonable control of the affected party.
Section 14.2 provides that the party suffering an event of Force Majeure must
give reasonable notice as soon as reasonably practicable following he
occurrence of the Force Majeure event.
As discussed in paragraph 5.3(a), section 14.1 of the Model PPA provides that
during any force majeure, EGAT is not obliged to make Availability
Payments to the IPP. However, in the event of a ‘Governmental Force
Majeure’ (which includes the expropriation or compulsory acquisition of an
IPP facility or material assets or rights of a generator), EGAT must make
Availability Payments at a rate based upon an average of the Availability
Payment made during the 6 months preceding the applicable Governmental
Force Majeure.
Section 14.3 provides that neither party is relieved of its obligations under the
Agreement due to increased costs or adverse economic consequences that
may be incurred through the performance of the party’s obligations. Section
14.3 also provides that obligations what are required to be completely
performed prior to the occurrence of the Force Majeure are excused due to the
Force Majeure.
Finally, section 14.4 provides that, following 60 days notice in writing, either
party may terminate the Agreement if a Force Majeure (other than a
Governmental Force Majeure) remains unremedied for more than one year.
The Force Majeure provisions generally cover the standard occurrences that
are beyond the control of the IPP. The events not covered by the Force
Majeure provisions (events caused by an IPP), would be risks that the IPP
ought to be able to insure against.
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(b)
Creditworthiness and track record of all parties
It is unknown whether IPPs (or their financiers) are able to obtain financial
information regarding purchasers (EGAT) with whom they are entering into a
PPA.
It is difficult to ascertain the perception of EGAT’s creditworthiness is
unknown. However, as described below, NEPO has stated that financial
institutions retain some significant concerns about the future capacity of
EGAT to service its debt obligations.
It should be noted that, as far as we are aware, there is no provision in the PPA
(or any other agreement) which provides a guarantee by the Thai Government
of the obligations of EGAT.
With regard to the obligations of the IPP, schedule 12 of the Model PPA
contains a template letter of guarantee by the Commercial Bank in Thailand in
which the Commercial Bank in Thailand agrees to unconditionally and
irrevocably guarantee as primary obligor the payment to EGAT of the
prescribed amount in the event that the obligations of the IPP during the
Development Phase are not fulfilled by the IPP. The letter of guarantee also
gives EGAT the right to claim a penalty, damages, liquidated damages or any
expenses for which the IPP may become liable to EGAT under the contract.
In addition, the Government (that is, NEPO and EGAT) has been providing a
number of Letters of Comfort to the IPPs and potential financiers in the
following areas:
(c)

EGAT’s financial performance;

Government’s policy regarding retail tariffs;

General government support on IPP policy; and

Government policy regarding the scaling down in EGAT’s investment
plans to cope with the lower power demand and uncertainties.
Support from international lending agencies
NEPO, in its publication entitled Privatisation and Liberalisation of the
Energy Sector in Thailand, issued on 29 March 1999, states that the main
concern of the financial institutions in providing financing is related to the
ability of EGAT to uphold its commitment under the PPAs as EGAT’s
financial position could deteriorate if:

the economic slow down causes significant slow down in power
demand growth resulting in a very high level of reserve margin of the
system; or

the government, due to political reasons, does not allow EGAT to
adjust the retail power tariff.
It is unknown what form this support takes, but it is probably in conventional
form.
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(d)
Commercial and political risk insurance
It is unknown what commercial insurance is available in Thailand. It is
probably reasonably available in accordance with international best insurance
practices.
(e)
Conclusions
There is no provision in the Model PPA (or any other agreement) which
provides a guarantee by the Thai Government of the obligations of EGAT.
6.4 Principle 15: Development of domestic capital
(a)
IPP financing techniques
There is relatively little capital available in the domestic market for these
projects.
At least one IPP has entered the domestic capital market to raise finance.
EGCO partly financed its debts with local currency bonds at fixed interest
rates.
(b)
Policies to encourage the development of domestic capital markets
The Stock Exchange of Thailand (“SET”) was established in 1974 and lists a
range of equity and debt instruments including securities, ordinary shares,
preferred shares, bonds and debentures, warrants and covered warrants and
unit trusts.
As discussed in paragraph 3.1.1(a), one of the objectives of the Master Plan
Redraft is the encouragement of the general public’s participation in the
energy industry through the development of the capital market. It is unknown
how this policy is being implemented.
(c)
Conclusions
The domestic capital market appears to be well developed and provides
limited opportunities for domestic investment in the electricity sector.
The main difficulties for the capital market are:

developing both domestic and international investor confidence in the
market; and

fluctuation in the value of the Baht and its impact on international
investments.
Whilst the Government has taken a position of promoting participation of the
general public in the energy sector through the development of the capital
market, it is unclear what polices the Government is employing to achieve
this aim.
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Appendix A
IPP projects currently planned or under negotiation
Independent Power (Thailand) Company Limited (to be called ‘IPT’)
Commitment: To supply 700 MW of electricity to EGAT.
Plant Location: Sri Racha, adjacent to the Thai Oil refinery on the Eastern
Seaboard of Thailand.
Plant Configuration: The combined cycle plant consists of two gas turbine
generators (each has a 230 MW capacity), and one 240 MW steam turbine
generator.
Total investment of the plant: 9.6 billion Baht (approximately US$270 million).
Ownership: 56% by Thai Oil Company, 24% by Unocal of the United States and
20% by Westinghouse Electric (now Siemens) of the United States.
The generators are to be designed and supplied by Westinghouse.
Project Status: The facility started commercial operation on 15 August 2000.
Tri Energy Company Limited (“TECO”)
Commitment: To supply 700 MW of electricity to EGAT by July 2000.
Plant Location: Ratchaburi Province, approximately 100 kilometres southwest
of Bangkok.
Plant Configuration: Natural gas-fired combined cycle facility. General Electric
of the United States will supply two gas turbines and one steam turbine.
Total investment of the plant: Estimated at more than US$400 million.
Ownership: 37.5% by Banpu Gas Power Limited of Thailand, 37.5% by Texaco
(Thailand) Energy Company of the United States and 25% by Edison Mission
Energy of the United States.
Equipment/Engineering Procurement Contractor: General Electric and Black &
Veatch.
Turbines supplied by General Electric.
Project Status: The facility started operation on 1 July 2000.
Eastern Power & Electric Co, Ltd (“EPEC”)
Commitment: To supply 350 MW of electricity to EGAT by July 2002.
Plant Location: Gateway City Industrial Estate, Cha Choeng Sao Province,
approximately 50 kilometres east of Bangkok.
Plant Configuration: Natural gas-fired, combined cycle power plant.
Ownership: 60% by GMS Power Company of Thailand, 28% by Marubeni
Corporation of Japan and 12% by China Development Industrial Bank Inc of
China.
Equipment/Engineering Procurement Contractor: ABB of Switzerland.
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Project Status: EPEC has selected ABB of Switzerland as the EPC contractor for
construction of its power plant. To comply with the new Thai constitution, EPEC
held a public hearing on 17-18 June 2000. EPEC plans to begin construction of
its plant in May 2000, and to test run the plant by March 2002.
Bo Win Power Co, Ltd
Commitment: To supply 713 MW of electricity to EGAT by April 2002.
Plant Location: Bowin District of Chonburi Province, about 100 kilometres east
of Bangkok.
Plant Configuration: Natural gas-fired, combined cycle power plant.
Ownership: 50% by H-Power Company of Thailand and 50% by Tractebel of
Belgium.
Equipment/Engineering Procurement Contractor: ABB of Switzerland.
Project Status: To be constructed. ABB of Switzerland is the EPC contractor for
construction of the power plant.
Gulf Power Generation Co, Ltd
Commitment: To supply 367 MW of electricity to EGAT by October 2003 and
an additional 367 MW by April 2004.
Plant Location: Bo Nok District, Prachuab Khiri Khan Province in Southern
Thailand.
Plant Configuration: Two coal-fired power generating facilities of 367 MW
each,.
Total investment: US$800 million.
Ownership: 60% by Gulf Electric of Thailand, 40% by Edison Mission Energy
of the United States.
Equipment/Engineering Procurement Contractor: Joint venture of Black &
Veatch and Mitsui.
Project Status: As a result of the environmental impact assessment, the company
plans to install a Fabric Filter (a dust precipitator) and a cooling tower. Gulf
power is awaiting the final approval for a US$150 million loan from the US
Export Import Bank and a US$270 million loan from the Japan Bank for
International Cooperation (“JBIC”). To comply with the Thai Constitution, a
public hearing on the project was held on September 10-12, 1999. To date, as the
Thai Government has not found a solution to the opposition from the
non-government organisations (“NGOs”), the start of construction of the plant is
pending.
Union Power Development Co, Ltd (“UPDC”)
Commitment: To supply 700 MW of electricity to EGAT by October 2003 and
an additional 700 MW by January 2004.
Plant Location: Hin Krut District in Prachuab Khiri Khan Province in Southern
Thailand.
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Plant Configuration: Two units of 700 MW coal-fired generating facilities, using
imported coal from Australia as fuel.
Total Investment: US$1.2 billion.
Ownership: 34% by Tomen Power Singapore Pty Ltd (a Japanese company),
28% by Consolidated Electric Power Asia Ltd of British Virgin Island, 28% by
Fortum Group of Netherland, and 10% by Union Energy Company of Thailand.
Project Status: UPDC is awaiting final approval from the JBIC for a US$593
million loan, from other Japanese banks for another US$198 million loan, and
from local banks for a US$137 million loan. The company submitted an
environmental impact assessment report to the Office of Environmental Policy
and Planning of Thailand for consideration and revised the report twice. To date,
the Office of Environmental Policy and Planning has not been satisfied with the
report and instructed UPDC to revise the report again. A public hearing on the
project was held on February 24-25, 2000 at Prachaub Kiri Khan Province’s City
Hall. The start of construction of the plant is pending.
BLCP Power Limited
Commitment: To supply 673.25 MW of electricity to EGAT by October 2005
and an additional 673.25 MW by February 2006.
Plant Location: Map Ta Phut, Rayong Province in Eastern Seaboard of Thailand.
Plant Configuration: Two units of 673.25 MW.
Proposed investment: US $3.6 billion.
Ownership: 47.5% by Banpu Gas Limited of Thailand, 47.5% by PowerGen
Holding of the United Kingdom and 5% by Loxley Public Company of Thailand.
Equipment/Engineering Procurement Contractor: Mitsubishi.
Project Status: BLCP has selected Mitsubishi as EPC contractor. The company is
doing an environmental impact assessment for the project.
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