Competition law and sectoral regulation on Competition law and sectoral regulation on Thai energy sector: A review and the Thai energy sector: A review and the forward development planforward development plan

Pornchai WisuttisakPornchai WisuttisakAdmitted as a lecturer in law at Law faculty, Admitted as a lecturer in law at Law faculty,

Chiangmai University, ThailandChiangmai University, ThailandPhD Candidate and casual tutor, School of Business Law and Taxation, PhD Candidate and casual tutor, School of Business Law and Taxation,

University of New South Wales, AustraliaUniversity of New South Wales, Australia

CUTS International conference on Reviewing the Global CUTS International conference on Reviewing the Global Experience with Economic Regulation: A Forward Looking Experience with Economic Regulation: A Forward Looking

Perspective- New Delhi on April 18-20, 2011Perspective- New Delhi on April 18-20, 2011

Thailand Country: Thailand Country: OverviewOverview

Region : South East Asia Region : South East Asia Population: Population: 6666..5151 million million Area: 513,115 sq km ( India has territory Area: 513,115 sq km ( India has territory

at nearly 3.3 million sq km)at nearly 3.3 million sq km) GDP per capita: approx US $8.2billionGDP per capita: approx US $8.2billion

Synopsis of the Synopsis of the presentationpresentation

1. Thai energy sectors : Liberalisation and 1. Thai energy sectors : Liberalisation and market reformmarket reform

2. Problems on Thai Competition law and 2. Problems on Thai Competition law and Energy sector regulationEnergy sector regulation

3. Plan for reform on competition law and 3. Plan for reform on competition law and sectoral regulation: the short and long term sectoral regulation: the short and long term proposal proposal

1. Thai energy sectors: Liberalisation 1. Thai energy sectors: Liberalisation and market reformand market reform

Liberalisation on electricity Liberalisation on electricity sector sector Permitting private participant of SPP and IPPPermitting private participant of SPP and IPP

Establishment of two large IPPs are Electricity Establishment of two large IPPs are Electricity Generating Company Limited (EGCO) and Generating Company Limited (EGCO) and Ratchaburi Electricity Generating Holding Ratchaburi Electricity Generating Holding Public Co., Ltd (RATCH)Public Co., Ltd (RATCH)

The two IPPs still under control of The two IPPs still under control of Electricity Electricity Generation Authority of Thailand (EGAT) Generation Authority of Thailand (EGAT) ( SOE)( SOE)

Master plan electricity Master plan electricity liberalizationliberalization

Cancelation of the Master Cancelation of the Master PlanPlan

Taksin’s government tried to liberalise electricity Taksin’s government tried to liberalise electricity without a structural changewithout a structural change

The plan created uncompetitive electricity The plan created uncompetitive electricity market and deriving state monopoly market market and deriving state monopoly market power to privatised EGATpower to privatised EGAT

The plan was then challenged by the Federation The plan was then challenged by the Federation of Thai consumers in the Supreme Administrative of Thai consumers in the Supreme Administrative court casecourt case

Liberalisation on oil and Liberalisation on oil and gas sector gas sector

NEPO also proposed plans to liberalise gas by NEPO also proposed plans to liberalise gas by deregulation of the gas sectors and privatisation deregulation of the gas sectors and privatisation of the Petroleum Authority of Thailand (PTT)of the Petroleum Authority of Thailand (PTT)

The set framework was mainly focus on the open The set framework was mainly focus on the open and disintegration of gas pipeline and and disintegration of gas pipeline and distributiondistribution

Master Plan for Oil and Master Plan for Oil and Gas liberalization Gas liberalization

Inconsistency of Inconsistency of implementationimplementationThe government implemented the PTT The government implemented the PTT

corporatisation without, steps 1) and 2)corporatisation without, steps 1) and 2)Implement only 3) by corporatisation PTT via Implement only 3) by corporatisation PTT via

IPO in Thai Stock market IPO in Thai Stock market PTT monopoly of gas and oil market after the PTT monopoly of gas and oil market after the

corporatisationcorporatisationChallenged in the Supreme administrative court Challenged in the Supreme administrative court

casecase

Supreme Administrative Supreme Administrative Court decisionsCourt decisions

CurrentCurrent energy market energy market structurestructure

 Monopoly gas supply Monopoly gas supply

Gas is the major sources of electricity generationGas is the major sources of electricity generation

1313

Thai Electricity generation in 2008Thai Electricity generation in 2008

GasGas 700. 700. %%

DieselDiesel 02 02

%%Import from Import from MalaysiaMalaysia

03 03 %%

Import from Import from Laos Laos 1 .61 .6 %%

HydroHydro47.47. %%

LigniteLignite126.126. %%

OilOil10.10. %%

Import coal Import coal 8822%%

Renewable energyRenewable energy14.14. %%

Source: 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).

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National plan on sources of electricity generationNational plan on sources of electricity generation

MillionMillion

4%4% 4%4% 4%4% 3%3% 3%3% 3%3% 3%3% 3%3% 3%3% 2%2% 2%2% 2%2% 2%2%

73%73% 70%70% 69%69% 67%67% 69%69% 68%68% 69%69% 65%65% 61%61% 62%62% 63%63% 61%61% 60%60%

11%11% 11%11% 11%11% 10%10%9%9%

9%9%8%8% 8%8% 7%7%

7%7%7%7% 6%6% 6%6%

8%8% 8%8% 9%9% 10%10%10%10%

11%11%11%11% 15%15%

19%19%18%18%

17%17%16%16% 15%15%

10%10%10%10%9%9%

9%9%

8%8%

7%7%7%7%

6%6%

6%6%7%7%

6%6%5%5%

5%5%3%3%2%2%

2%2%

2%2%

2%2%

2%2%

3%3%3%3%

3%3%2%2%

2%2%2%2%

ปี�ปี�Source: 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).

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Electricity generators’ market sharesElectricity generators’ market shares

EGATEGAT1515,021.0 MW,021.0 MW 55 0.3%0.3% IPPIPP

12,151.6 MW12,151.6 MW 40.7%40.7%

SPPSPP2,079.1 2,079.1 MWMW 77..0%0%

Import from Import from MalaysiaMalaysia

300300 MW MW 11 ..00 %%

Import Import from Laos from Laos 340340 MW MW 11 ..11 %%

EGAT hold majority share of two largest IPP (Ratchaburi Electricity Generating Holding PCL and Electricity Generating Company Limited )

Source: 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

Source: 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).

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PTT Business chains in oil and GasPTT Business chains in oil and Gas

2. 2. Problems on Thai Problems on Thai Competition law and Energy Competition law and Energy sector regulationsector regulation

Thai competition lawThai competition law

Thai Energy sector regulationThai Energy sector regulation

Problems on Thai competition lawProblems on Thai competition law

Institution problems on Thai Institution problems on Thai competition lawcompetition law

Influence from government and business Influence from government and business lobbylobby

Financial constraint Financial constraint Lack of expert Lack of expert Lack of coordination with sectoral regulationLack of coordination with sectoral regulation

The Competition law The Competition law exemption and limited exemption and limited role on energy sectorrole on energy sector

EGAT, MEA, PEA, and PTT, Pcl EGAT, MEA, PEA, and PTT, Pcl are SOEsare SOEs

Problems on Thai competition Problems on Thai competition law( cont)law( cont)

Problems on Thai Energy Problems on Thai Energy regulation regulation ERC institutionERC institutionEnergy regulation and the Conflict between Energy regulation and the Conflict between

supporting SOEs and promoting market supporting SOEs and promoting market competitioncompetition

Lack of rule for open to access to essential Lack of rule for open to access to essential facilities or third Party access on electricity facilities or third Party access on electricity infrastructureinfrastructure

Problems on Thai Energy Problems on Thai Energy regulation (cont)regulation (cont)

http://www.erc.or.th

Conflict between supporting SOEs and Conflict between supporting SOEs and promoting market competition promoting market competition

section 7(3) of Energy Industry Act states that ERC has to section 7(3) of Energy Industry Act states that ERC has to promote competition in the energy industry and prevent promote competition in the energy industry and prevent abusive use of dominance in the energy industryabusive use of dominance in the energy industry

section 8(5)states that ERC has to support and maintain SOEs section 8(5)states that ERC has to support and maintain SOEs as monopoly enterprisesas monopoly enterprises

Problems on Thai Energy Problems on Thai Energy regulation (cont)regulation (cont)

No access to essential No access to essential facilities in the Energy Actfacilities in the Energy Act

Problems on Thai Energy Problems on Thai Energy regulation ( cont)regulation ( cont)

3. Plan for reform on 3. Plan for reform on competition law and sectoral competition law and sectoral regulationregulation

Short term plansShort term plans ERC action on market competitionERC action on market competition Build public recognition on competition Build public recognition on competition

lawlaw Advocacy between competition law and Advocacy between competition law and

the sector regulation the sector regulation

Long term strategyLong term strategy Establishment of National Competition Establishment of National Competition

CouncilCouncil Reform on Thai Energy sectoral Reform on Thai Energy sectoral

regulation regulation Reform on Thai competition lawReform on Thai competition law Establish formal and effective work Establish formal and effective work

coordination between competition law coordination between competition law and sectoraland sectoral

ConclusionConclusion

Inappropriate liberalizationInappropriate liberalizationCurrent uncompetitive structure under Current uncompetitive structure under

SOEs monopolySOEs monopolyProblems on Thai competition lawProblems on Thai competition lawProblems on Energy regulationProblems on Energy regulationShort- term planShort- term planLong- term planLong- term plan

धन्यवा�द Thank youThank you

Kob Khun KrubKob Khun Krub

Pornchai WisuttisakPornchai WisuttisakContact No. +61 433 223 618Contact No. +61 433 223 618

Email p.wisuttisak@unsw.edu.auEmail p.wisuttisak@unsw.edu.au