Business

ERC Considers 31% Electricity Tariff Increase Despite Drop in Fuel Costs

Published

2 months ago

November 9, 2024

The Energy Regulatory Commission (ERC) is contemplating a significant hike in Thailand’s electricity tariff, potentially increasing costs for households and businesses by as much as 31%. Despite forecasts of lower fuel costs, the ERC’s decision will address financial losses tied to previous subsidies, aiming to stabilize the electricity system.

Key Factors Behind the Proposed Tariff Increase

The Current Tariff and Expected Adjustments

The current tariff, at 4.18 baht per kilowatt-hour, remains in place until December 31. The ERC has launched an online survey to gather public opinion, and the results will influence the final rate to be announced for the January-April 2025 billing period. The potential rate changes aim to address financial strains on the system, particularly debts accrued by the Electricity Generating Authority of Thailand (EGAT) and PTT Plc.

EGAT’s Financial Strain and the Subsidy Program

EGAT incurred considerable losses due to earlier price subsidy programs, which kept electricity costs low. The debt to EGAT and PTT has grown due to their sales of natural gas below market rates, an effort that previously helped stabilize electricity prices for Thai consumers but has now led to a heavy financial burden.

The Impact of Natural Gas Prices on Power Costs

Natural Gas as Thailand’s Primary Energy Source

Natural gas, which constitutes around 60% of Thailand’s power generation, is sourced both locally and through LNG imports. While the LNG spot market prices are expected to dip slightly, this decrease will have limited impact on overall electricity bills due to the need to recover past financial losses.

Potential for Increased Domestic Gas Production

There is potential to increase gas production from the Gulf of Thailand, which could be more cost-effective than importing LNG. However, the debt owed to EGAT and PTT hampers the ability to lower tariffs, keeping pressure on consumer electricity costs.

Three Proposed Options for Adjusting the Electricity Tariff

Option 1: A 31% Increase

Under the first option, the ERC proposes a 31% increase, raising the tariff to 5.49 baht per unit. This option would allow full repayment of EGAT’s 85.2 billion baht debt by April 2025 and settle gas sales debt of 15 billion baht, easing financial pressure on the energy sector.

Option 2: A 26% Increase

A more moderate 26% increase would bring the tariff to 5.26 baht per unit, allowing the ERC to settle only the debt owed to EGAT. This option would address some financial strains while being less burdensome to consumers than the full increase.

Option 3: Maintaining the Current Tariff

The third option would maintain the current rate of 4.18 baht per unit, benefiting consumers in the short term. However, this option would only permit partial repayment of 15 billion baht to EGAT, leaving a significant portion of the debt unresolved and potentially impacting the long-term stability of the electricity system.

Public Input and the Path Forward for Thailand’s Energy Sector

The ERC is inviting the public to share their views on these three options through its website, with feedback open until November 22. The decision will likely reflect a balance between consumer affordability and the financial health of Thailand’s energy infrastructure.

Conclusion: Balancing Affordability and Energy Stability

As Thailand navigates the challenge of rising electricity costs, the ERC’s final decision will be crucial. Balancing the need for financial stability with consumer affordability, this tariff decision could shape the future of the nation’s energy landscape and the economic well-being of Thai households and businesses.

Ref- Thaiger

Business

Thailand Commits to Becoming an AI Learning Hub

Published

3 weeks ago

December 5, 2024

Wadi

Ministers Announce Plans for AI Governance Collaboration

Thailand is dedicated to advancing global trust in artificial intelligence (AI) governance and establishing itself as a learning hub for AI through collaboration with UNESCO, according to Prasert Jantararuangthong, the Minister of Digital Economy and Society (DES). This initiative aims to enhance the ethical application of AI technologies while fostering skilled professionals in the field.

Goals for AI Workforce Development

The Ministry of Higher Education, Science, Research and Innovation (MHESI) has set ambitious goals to increase the number of AI-skilled workers by adding 30,000 engineers over the next three years. This plan includes generating 100 AI innovations valued at 40 billion baht and promoting AI adoption across 600 agencies nationwide.

Significant Increase in AI Adoption Rates

According to the AI Readiness Measurement 2024 report by the Electronic Transactions Development Agency and the National Science and Technology Development Agency, AI adoption plans among Thai organizations have reached 73.3%, reflecting an increase of nearly 20 percentage points year-on-year. This surge indicates a growing recognition of the importance of AI in various sectors.

Hosting the UNESCO Global Forum on AI Ethics

On Wednesday, the DES Ministry, MHESI, the Education Ministry, and UNESCO announced their partnership to host the 3rd UNESCO Global Forum on the Ethics of AI 2025, themed “Ethical Governance of AI in Motion.” This event is scheduled to take place from June 24 to 27, 2025, in Bangkok and will serve as a platform for knowledge exchange and collaboration on AI governance.

Commitment to Ethical AI Implementation

Prasert emphasized that Thailand’s commitment aligns with UNESCO’s AI Readiness Assessment framework, which is recognized globally. The country has recently introduced key frameworks such as the AI Governance Guideline for Executives and the Generative AI Governance Guideline for Organizations. These resources aim to ensure responsible and transparent implementation of AI at all organizational levels.

Multilateral Collaboration for Developing Countries

The upcoming forum is expected to foster multilateral collaboration and build AI governance capacity in developing countries. It highlights Thailand’s dedication to global trust in AI governance while positioning itself as a leader in ethical AI practices.

Integration of AI Technologies Across Industries

Suphachai Jaismut, vice-minister for MHESI, stated that Thailand is prepared to integrate AI technologies across various industries, driven by a commitment to advancing research and development (R&D). This integration is crucial as Southeast Asia’s digital economy continues to grow rapidly.

Addressing Challenges in the Digital Economy

While advancements in AI infrastructure are promising, challenges such as the digital divide and job displacement due to automation remain significant concerns. Xing Qu, deputy director-general for UNESCO, emphasized that building peace through education, science, and culture is vital in an era where AI increasingly influences societies and economies.

Business

Thailand to Finalise Free Trade Agreement with EFTA by January 2024

Published

4 weeks ago

December 1, 2024

Ashley Wings

Thailand is preparing to finalise a landmark Free Trade Agreement (FTA) with the European Free Trade Association (EFTA) by January 2024. The agreement marks Thailand’s first FTA with a European trade bloc and is expected to bolster exports, attract investments, and enhance Thailand’s position in the global economy.

EFTA Partnership: A Milestone in Thailand’s Trade Strategy

Who Are EFTA Members?

The EFTA comprises Switzerland, Norway, Iceland, and Liechtenstein, offering Thailand access to lucrative European markets.

Commerce Minister Pichai Naripthaphan highlighted the FTA’s importance, describing it as a pivotal step for economic growth and trade expansion.

“This is Thailand’s inaugural FTA with a European bloc, setting a precedent for modern trade standards and sustainable development goals,” said Pichai.

Comprehensive Scope of the Agreement

What Does the FTA Cover?

The FTA includes 15 broad areas designed to modernise trade relations and foster sustainable development. Key areas include:

Trade in Goods
Rules of Origin
Investment Opportunities
Trade Facilitation
Intellectual Property Rights
Sustainability and SMEs Development

Future Expansion Opportunities

The FTA is seen as a stepping stone toward future trade agreements with other significant partners, including the European Union, advancing Thailand’s global trade ambitions.

Economic Impact of the Thailand-EFTA Trade Partnership

Surging Trade Figures

Between January and October 2023, trade between Thailand and the EFTA exceeded US$10 billion, accounting for 2.03% of Thailand’s global trade and reflecting a 23.22% year-on-year growth.

Key Thai Exports and Imports

Exports to EFTA: Jewellery, watches, canned seafood, machinery, cosmetics, and rice.
Imports from EFTA: Gems, gold, pharmaceuticals, scientific equipment, and fresh seafood.

The agreement is expected to further diversify and increase Thailand’s trade portfolio.

Next Steps: Approval and Implementation

High-Level Signing at WEF Davos

The FTA will be presented to the Thai Cabinet for approval before its official signing at the World Economic Forum (WEF) in Davos, Switzerland, in January 2024. Prime Minister Paetongtarn Shinawatra and Commerce Minister Pichai will attend the signing ceremony.

Ratification and Rollout

Following Parliamentary approval, the agreement will be ratified, paving the way for implementation and significant contributions to Thailand’s GDP growth.

A Strategic Vision for Thailand’s Future

The Thailand-EFTA Free Trade Agreement aligns with Prime Minister Paetongtarn Shinawatra’s vision of positioning Thailand as a global trade hub. By establishing this partnership, Thailand is set to achieve:

Increased export opportunities
Enhanced foreign investment
Strengthened trade ties with Europe

As the January deadline approaches, Thailand’s first European trade agreement symbolizes a bold step toward economic transformation, underscoring its commitment to modernisation, sustainability, and global collaboration.

Business

Thai Airways Secures 44 Billion Baht to Propel Post-Rehabilitation Future

Published

4 weeks ago

December 1, 2024

Ashley Wings

Thai Airways International (THAI) has secured approximately 44 billion baht through a share rights offering, marking a significant milestone in its recovery journey. The move is set to bring the national carrier closer to exiting its court-supervised debt restructuring process and resuming stock trading by mid-2025.

Thai Airways is offering 9.82 billion new shares to existing shareholders at 4.48 baht per share. This capital infusion represents the final phase of its restructuring, aimed at ensuring financial stability and market re-entry.

“This marks a critical step before the airline resumes operations as a publicly traded entity,” said a Cabinet source.

Government’s Role: Strategic Investment Without State Enterprise Status

Maintaining a National Flag Carrier

The Thai government has announced plans to increase its investment in Thai Airways while ensuring it does not revert to a state enterprise.

Current Stake: The Finance Ministry holds 47.9% of THAI shares.
Post-Restructuring: The ministry, the Vayupak Fund, and the Government Savings Bank will collectively own around 40% of the airline.

“This structure ensures Thai Airways remains a national flag carrier while avoiding direct state control,” confirmed Finance Minister Pichai Chunhavajira.

Debt Conversion and Shareholder Dynamics

Debt-to-Equity Swap Secures Creditor Support

Thai Airways’ creditors have agreed to convert approximately 53 billion baht of debt into equity as part of the rehabilitation plan. This move aligns with THAI’s efforts to stabilize its financial position.

The Council of State approved the recapitalization as a legitimate component of the restructuring process.
Despite debates over the Finance Ministry’s voting rights during the creditor meetings, officials clarified that the debt-to-equity swap remains incomplete, allowing the ministry to retain creditor status.

Path to Recovery

THAI is expected to exit rehabilitation by February 2025.
The airline plans to resume stock trading by May 2025, paving the way for a return to the public market.

Broader Implications for Thai Airways

Strengthened Financial Position

The successful share rights offering bolsters Thai Airways’ financial resilience, ensuring the airline’s ability to navigate post-rehabilitation challenges.

National Pride and Strategic Vision

The government’s balanced approach highlights its commitment to preserving Thai Airways’ status as a national carrier while encouraging operational independence.

Soaring Toward a Brighter Future

Thai Airways’ 44 billion baht share rights offering symbolizes its steady progress toward financial recovery and operational excellence. With strong government support and strategic restructuring, the airline is poised to regain its position as a leading player in the global aviation market by 2025. This pivotal moment underscores THAI’s resilience and its importance to Thailand’s economic and cultural identity.