Ministry to take up electricity price issue

BLCP was awarded the contract to supply electricity on the estate after it won an IPP (independent power producer) bid by offering the lowest price to the Electricity Generating Authority of Thailand (Egat). However, the company now is facing a demand from its coal supplier, Rio Tinto, for a 40-per-cent increase in its supply contract. BLCP wants the Energy Ministry to amend its Map Ta Phut contract so it can afford to meet Rio Tinto’s demand.
The British-Australian coal miner is demanding US$90 per tonne for the coal it supplies BLCP, up from $50 under the existing contract. Rio Tinto says it is suffering serious losses and could go bankrupt if it does not make major adjustments to its supply contracts.
However, BLCP is legally bound to the agreement it made with Egat under the IPP bid, so Arak is taking the matter to the Office of the Attorney-General for a judgement on whether the Energy Ministry has the authority to amend the contract, or to provide a solution on the matter.
“The request by BLCP that the ministry consider increasing the electricity price to help the company’s financial status is legally related, and we need to bring the issue to be judged by the Office of the Attorney-General. As the energy minister, I cannot make the decision on my own. I don’t want to be in jail in my old age,” Arak said.
“If the judgement of the Office of the Attorney-General is in favour of allowing the Energy Ministry to resolve the issue for BLCP, we will find an appropriate solution to help the private sector. However, the issue will be submitted to the National Energy Policy Council for final consideration.”
After being faced with Rio Tinto’s demand to raise its coal-supply price, BLCP, which is 50-per-cent owned by Banpu and 50 per cent by Energy Generating Co, made a request for an adjustment to its electricity price to the Energy Ministry and the Energy Regulatory Commission.
A source at the Energy Ministry argued that the existing contract between BLCP, a private company, and Egat should stand, and the firm should bear the burden of failing to anticipate that it could not meet the price it bid. That burden should not be pushed on to the public.
BLCP’s power plant has the capacity to produce 1,434 megawatts of electricity. The plant started its first power unit on October 1, 2006, with 717MW in capacity, and the second unit in February 2007 with another 717MW. Under the Power Development Plan set by Egat, the contract has a 25-year tenure.