Egat says PTT supply monopoly should end
Bangkok Post, November 18, 2003
Lower costs would help competitiveness T he Electricity Generating Authority of Thailand (Egat) wants government approval to secure other sources of fuel for electricity production besides supplies from PTT Plc to help reduce costs.
Any change would require an existing cabinet ruling forcing Egat to buy fuel from PTT to be rescinded. If it is not, the government should find alternative measures to help lower the cost of power production, PTT executives say.
Egat currently acquires supplies of natural gas, diesel oil and other fuels from PTT at prices unilaterally imposed by the country's largest energy company.
Narong Sitasuwan, Egat's senior deputy governor for the power generation group, said the state utility wanted a decision on alternative fuel procurement before it is corporatised in January in preparation for a stock market listing.
Egat has sent its request to a committee overseeing its corporatisation, chaired by Cherdpong Siriwit, the permanent secretary of the Energy Ministry.
Fuel costs for electricity production account for 60% of Egat's total costs, in addition to 30% in investment expenditures and 10% for administration.
If fuel costs increased, they would have an effect on the overall cost of Egat's operation and some expense would inevitably be passed on to consumers, said Mr. Narong.
Last year, the government ordered Egat to freeze electricity rates but did not take action to control fuel costs, which forced Egat to absorb the extra burden without any help from PTT.
As Egat is to be privatised and still relies on fuel from PTT, it would erode Egat's competitiveness, said Mr. Narong.
If Egat could buy alternative fuels such as orimulsion and liquefied natural gas (LNG) from cheaper sources, it would help spur price competition, he said, though it did not mean that Egat would no longer buy fuels from PTT.
Egat runs 34 power plants with a total capacity of 15,035.79 megawatts. About 500 million litres of fuel oil will be used for power production this year, increasing to two billion litres next year and three billion in 2005.
Natural gas currently is priced at 150-155 baht per one million BTU (British Thermal Units) from the offshore fields in Burma and the Gulf of Thailand .
But because LNG costs 120-130 baht per one million BTU, Egat is considering using LNG as an alternative fuel in the future, said Mr. Narong. Back to Newsclippings | To top
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