Energy reforms helped by global price drop
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energy reform
ENERGY REFORM is one of the biggest achievements so far by the Prayut Chan-o-cha government.
It has emphasised restructuring of the energy industry according to the three pillars of security, economy and ecology.
They have had huge luck on their side. The Organisation of Petroleum Exporting Countries decided to stage a price war against US shale producers, sending crude oil prices tumbling 48 per cent last year. This year crude has crumbled further to below US$50 a barrel.
But credit should also be given to Energy Minister Narongchai Akrasanee, who jumped at the chance to boldly rejig oil and liquefied petroleum gas prices to make them reflect true costs.
Until the recent slide of global oil prices, energy prices in Thailand had only been on the way up. The relentless rise of oil and electricity prices raised a large public outcry.
Neither had the energy industry done well on the supply side. In its report last year, the International Energy Agency pinpointed Thailand as the country in Asean that was at the greatest risk in terms of energy security in the future as the country would have to depend more on imports.
Depleting natural gas reserves have forced the country to turn to foreign liquefied natural gas (LNG). Energy officials have warned that Thailand’s electricity tariff could go up by as much as 30 per cent in 10 years, as LNG is much more expensive than domestic gas and gas piped in from Myanmar.
Despite possible opposition, Narongchai also decided to open a new round of bidding for petroleum concessions, which could lead to more domestic production of oil and gas in the future.
Bids for drilling permits had not been held for seven years, as past governments claimed fierce opposition from some non-government groups that did not want the country to “sell” fuel resources to foreigners.
Narongchai said he could not ensure that his government’s efforts would last. No one can guarantee that politicians will not bring back subsidies to please voters.
“Bureaucrats will be quiet since they can be removed [by politicians]. So media must protest loudly, although you might get your advertisements withdrawn like what happened in the past,” he said at a recent press conference.
