Business

Thailand’s ERC Considers 31% Electricity Tariff Hike Amid Lower Fuel Costs

Published

2 months ago

November 10, 2024

The Energy Regulatory Commission (ERC) in Thailand is weighing a potential increase in the electricity tariff by 26-31%, starting next year, to address existing financial burdens. While the proposed hike may seem surprising given anticipated decreases in fuel costs, the commission cites significant debt obligations owed to the Electricity Generating Authority of Thailand (EGAT) and PTT Plc as primary reasons for this consideration.

Thailand’s ERC Considers 31% Electricity Tariff Hike Amid Lower Fuel Costs

Background: The Current Power Tariff and Financial Challenges

The current electricity tariff in Thailand stands at 4.18 baht per kilowatt-hour and is valid until December 31, 2024. This rate has helped stabilize electricity costs for households and businesses but has led to financial strain on EGAT and PTT due to past subsidy programs and the sale of natural gas below market prices.

Natural Gas Dependency in Thailand’s Power Generation

Approximately 60% of Thailand’s electricity is generated from natural gas, sourced domestically and through liquefied natural gas (LNG) imports. While LNG spot prices are expected to drop by US$0.2 (6.84 baht) per million British thermal units, this slight reduction may not significantly impact overall electricity costs due to outstanding debt obligations.

Proposed Tariff Increase Options to Address EGAT’s Debt

The ERC has presented three tariff adjustment options for public feedback, aiming to balance the financial health of EGAT and the affordability of electricity for Thai households and businesses.

Option 1: A 31% Tariff Increase to 5.49 Baht Per Unit

This option proposes a substantial 31% hike, which would raise the tariff to 5.49 baht per kilowatt-hour. By adopting this rate, EGAT could fully repay its 85.2 billion baht debt by April 2025 and address an additional 15 billion baht in gas sales debt.

Option 2: A Moderate 26% Increase to 5.26 Baht Per Unit

Under this plan, the tariff would be adjusted to 5.26 baht per kilowatt-hour, allowing EGAT to clear its primary debt without covering the entire gas sales deficit. This increase would help the ERC meet immediate financial obligations without causing as much strain on consumers as the first option.

Option 3: Maintaining the Current Tariff of 4.18 Baht Per Unit

The third option would keep the tariff at its current level of 4.18 baht per unit, alleviating pressure on consumers. However, this choice would allow EGAT to repay only 15 billion baht of its outstanding debt, leaving a significant portion unpaid.

Public Opinion and Consultation on the Proposed Tariff Hike

The ERC is conducting a public opinion survey on its website to gauge feedback on these proposed tariff options. The survey will be open until November 22, with responses informing the final decision on the new tariff rates for January to April 2025.

Secretary-General’s Take on Debt and Tariff Stabilization

Poonpat Leesombatpiboon, ERC Secretary-General, emphasized the need for a balanced approach. He stated that while reducing the power tariff would benefit consumers, the commission must prioritize the long-term stability of Thailand’s power infrastructure and address the debts owed to both EGAT and PTT.

The Road Ahead: Balancing Consumer Costs and Energy Stability

As Thailand moves towards a cleaner, more cost-efficient energy system, the ERC’s upcoming decision will likely have wide-reaching effects on consumers and the energy sector alike. With options ranging from moderate increases to maintaining current rates, the ERC faces the challenge of balancing financial recovery with economic stability.

Conclusion

Thailand’s Energy Regulatory Commission’s decision on the electricity tariff hike will impact businesses, households, and the overall stability of the country’s energy system. With mounting debts from past subsidies and obligations to key energy players like EGAT and PTT, the ERC must carefully consider the tariff adjustments to address financial needs while keeping electricity accessible.

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.