Pornchai Wisuttisak Admitted as a lecturer in law at Law faculty, Chiangmai University, Thailand

1. Competition law and sectoral regulation on Thai energy sector: A review and the forward development plan PornchaiWisuttisak Admitted as a lecturer in law at Law faculty, Chiangmai University, Thailand PhD Candidate and casual tutor, School of Business Law and Taxation, University of New South Wales, Australia CUTS International conference on Reviewing the Global Experience with Economic Regulation: A Forward Looking Perspective- New Delhi on April 18-20, 2011

2. Thailand Country: Overview • Region : South East Asia • Population: 66.51 million • Area: 513,115 sq km ( India has territory at nearly 3.3 million sq km) • GDP per capita: approx US $8.2billion

3. Synopsis of the presentation • 1. Thai energy sectors : Liberalisation and market reform • 2. Problems on Thai Competition law and Energy sector regulation • 3. Plan for reform on competition law and sectoral regulation: the short and long term proposal

4. 1. Thai energy sectors: Liberalisation and market reform • 1980s policy on liberalization of utilities, including energy • Establishment of National Energy Policy Office(NEPO) • NEPO set up the plan on liberalization and corporatization of government owned utilities in energy sector • Electricity • Oil and gas

5. Liberalisation on electricity sector • Permitting private participant of SPP and IPP • Establishment of two large IPPs are Electricity Generating Company Limited (EGCO) and Ratchaburi Electricity Generating Holding Public Co., Ltd (RATCH) • The two IPPs still under control of Electricity Generation Authority of Thailand (EGAT) ( SOE)

6. Master plan electricity liberalization

7. Cancelation of the Master Plan • Taksin’s government tried to liberalise electricity without a structural change • The plan created uncompetitive electricity market and deriving state monopoly market power to privatised EGAT • The plan was then challenged by the Federation of Thai consumers in the Supreme Administrative court case

8. Liberalisation on oil and gas sector • NEPO also proposed plans to liberalise gas by deregulation of the gas sectors and privatisation of the Petroleum Authority of Thailand (PTT) • The set framework was mainly focus on the open and disintegration of gas pipeline and distribution

9. Master Plan for Oil and Gas liberalization

10. Inconsistency of implementation • The government implemented the PTT corporatisation without, steps 1) and 2) • Implement only 3) by corporatisation PTT via IPO in Thai Stock market • PTT monopoly of gas and oil market after the corporatisation • Challenged in the Supreme administrative court case

11. Supreme Administrative Court decisions • EGAT corporatisation case • Revocation of EGAT corporatisation • Reasons - there is the possibility on uncompetitive market condition after the EGAT corporatisation • Inequality on business competition • PTT corporatisation case • Not necessary to revoke the Royal decrees on corporatisation of PTT • Separation of state assets of land and gas pipelines from PTT Plc • Cancel transferring of the state authoritative power to PTT Plc

12. Monopoly gas supply Gas is the major sources of electricity generation Currentenergy market structure

13. Thai Electricity generation in 2008 Renewable energy1.4% Import coal 8.2% Oil1.0% Gas 70.0 % Lignite12.6% Hydro4.7% Diesel 0.2 % Import from Laos 1.6% Import from Malaysia 0.3 % Source: EPPO, 'Summary of the Conference Proceeding on the Thai electricity Development Plan' (Paper presented at the Thai Electricity Development Plan 2007-2020 (Translated from Thai language) 2007). 13

14. National plan on sources of electricity generation Million 5% 3% 2% 2% 10% 10% 9% 2% 9% 2% 8% 15% 2% 16% 7% 17% 3% 18% 7% 3% 6% 19% 6% 6% 15% 3% 7% 11% 6% 2% 7% 11% 2% 7% 7% 2% 8% 8% 10% 6% 5% 9% 10% 9% 9% 8% 8% 10% 11% 11% 11% 60% 63% 61% 62% 69% 68% 65% 61% 69% 73% 70% 69% 67% 4% 4% 4% 3% 3% 3% 3% 3% 3% 2% 2% 2% 2% ปี Source: EPPO, 'Summary of the Conference Proceeding on the Thai electricity Development Plan' (Paper presented at the Thai Electricity Development Plan 2007-2020 (Translated from Thai language) 2007).

15. Electricity generators’ market shares • EGAT hold majority share of two largest IPP(Ratchaburi Electricity Generating Holding PCL and Electricity Generating Company Limited ) EGAT15,021.0 MW 50.3% IPP12,151.6 MW40.7% Source: RATCH (2009) Ratchaburi Electricity Generating Holding Public Company Limited (RATCH) annual report 2008. RATCH p 60 and EGCO (2009) Corporate Presentation Quarterly Financial Results Ended 31 March 2009. EGCO p 5 Import from Malaysia 300 MW 1.0% SPP2,079.1 MW7.0% Import from Laos 340 MW 1.1% Source: EPPO, 'Summary of the Conference Proceeding on the Thai electricity Development Plan' (Paper presented at the Thai Electricity Development Plan 2007-2020 (Translated from Thai language) 2007).

16. PTT Business chains in oil and Gas

17. 2. Problems on Thai Competition law and Energy sector regulation • Thai competition law • Thai Energy sector regulation

18. Problems on Thai competition law • Institution problems on Thai competition law • Influence from government and business lobby • Financial constraint • Lack of expert • Lack of coordination with sectoral regulation

19. Problems on Thai competition law( cont) • The Competition law exemption and limited role on energy sector • EGAT, MEA, PEA, and PTT, Pcl are SOEs

20. Problems on Thai Energy regulation • ERC institution • Energy regulation and the Conflict between supporting SOEs and promoting market competition • Lack of rule for open to access to essential facilities or third Party access on electricity infrastructure

21. Problems on Thai Energy regulation (cont) • ERC institution • ERC structure and research on energy sector mostly relies on private sector • Lack of regulatory capacity for monitoring electricity grid • No clear line of authorities in reviewing and setting tariffs • Face with politically strong SOEs http://www.erc.or.th

22. Problems on Thai Energy regulation (cont) • Conflict between supporting SOEs and promoting market competition • section 7(3) of Energy Industry Act states that ERC has to promote competition in the energy industry and prevent abusive use of dominance in the energy industry • section 8(5)states that ERC has to support and maintain SOEs as monopoly enterprises

23. Problems on Thai Energy regulation ( cont) • No access to essential facilities in the Energy Act

24. 3. Plan for reform on competition law and sectoral regulation • Short term plans • ERC action on market competition • Build public recognition on competition law • Advocacy between competition law and the sector regulation

25. Long term strategy • Establishment of National Competition Council • Reform on Thai Energy sectoral regulation • Reform on Thai competition law • Establish formal and effective work coordination between competition law and sectoral

26. Conclusion • Inappropriate liberalization • Current uncompetitive structure under SOEs monopoly • Problems on Thai competition law • Problems on Energy regulation • Short- term plan • Long- term plan

27. धन्यवाद Thank you KobKhunKrub PornchaiWisuttisak Contact No. +61 433 223 618 Email p.wisuttisak@unsw.edu.au