Energy Act: Implications for the Energy Sector in Thailand

Abstract

For many years Thailand has attempted to conduct industry structural reform, ownership reform and regulatory reform in its electricity and natural gas sector. Although there have been some ownership reform in PTT, a public enterprise in oil and gas sector, progress in industry structural reform and regulatory reform in the gas sector has been slow. Moreover attempts to privatize EGAT, an electricity stateowned enterprise, have failed for several times due to inconsistent government policies and protests from various interest groups. One of the factors, to which slow and unsuccessful reform in electricity and gas industries in Thailand are attributed, is the lack of energy legislation. To take steps to expedite the reforms, the government drafted an “Energy Industry Act” which was enacted in 2007. This law consolidates the laws relating to electricity and gas sector with the objectives of promotion of competition and private participation in energy sector, and establishment of an independent, transparent, and accountable energy regulator as well as new regulatory framework. The question arises whether this law could generate a new hope in energy sector. To answer this question, first this study details the key features of the Energy Industry Act, particularly in the areas of industry restructuring, promotion of competition, establishment and governance of regulatory body and regulatory framework. Then this paper will review energy laws of some countries such as United Kingdom, Malaysia, India, Singapore, the Philippines, South Africa and Ghana, in order to assess the implications of these laws on changes in their electricity and gas industries and regulatory environments. Due to distinct characteristics of each country’s energy industries and diverse paces of reforms, the implications of the laws on progress of reforms could be different from one country to another. This paper also analyzes the likely implications of the Energy industry Act on Thailand’s electricity and natural gas business. The key features of the Act that provide significant changes in the energy sector are the establishment of the regulatory body and framework, the introduction of a new regulatory instrument called Power Development Fund and a new system for consumer protection. However the Act does not stipulate a clear design for energy structural reform. This paper also discusses the possibility of achieving regulatory governance and of promoting competition, consumer protection and environment.