Government advised to find investors other than PTT to build LNG terminals

 

The PTIT also recommends that the government reinstate its plan to separate PTT’s gas-transmission system from the energy conglomerate, in a bid to create an independent transmission system operator (TSO) to pave the way for free and fair competition in the natural-gas market.

Siri Jirapongphan, executive director of the PTIT, told The Nation in an interview that the TSO could simply be legally unbundled from PTT, or the state could acquire all of the shares of the entity from PTT. 

The government would not find it difficult to raise funds for acquiring the gas-transmission operations from PTT since the monopolised business could generate sufficient returns to pay for itself, such as through issuing an infrastructure fund.

“It is very necessary to separate the gas-pipeline system as an independent agency as the first step to opening up competition in the gas market. This comes in line with the European Union’s directives and other international practices that the transmission network must be neutral,” he said.

Siri said PTT had done a good job in the past but the context had changed, since imported LNG would have a much higher share in the Thai gas market, from 7 per cent last year to more than 70 per cent in 15 years, because of dwindling domestic gas sources. “Since the ‘energy economics’ will depend on imports, we have to alter the platform to breed competition in LNG imports. This covers the operations of the LNG receiving terminals, the procurement of gas, and the application of market-based prices,” he said. The PTIT will submit its final report on the guidelines to promote competition in the natural-gas market to the Energy Regulatory Commission by the end of next month. ERC spokesman Viraphol Jirapraditkul said it had assigned the PTIT to undertake the study since it had recognised that issuing third-party access codes alone would not be sufficient to bring competition into the gas market. The study recommends that the government abandon PTT’s monopoly in the gas-supply sector in phases, ranging from transmission, distribution and the procurement of gas, to the operations of the LNG-receiving terminals, and the fuelling stations selling natural gas for vehicles (NGV). 

PTT established the first LNG-receiving terminal at Map Ta Phut in September 2011 and is scheduled to start the second one next year, which will double its total capacity to 10 million tonnes per year, or about 1,400 million cubic feet per day.

To serve future demand for LNG, PTT would have to build three more terminals during the next 20 years, if its monopoly were maintained. However, the PTIT is suggesting that the ERC open auctions to find investors to build the third, fourth and fifth terminals instead of PTT, in bid to create competition. 

The tender for the terminals should also include the building of gas-fired power plants that will be integrated into the LNG facilities, in bid to optimise the production efficiencies.

Considering projected future LNG demand, the third terminal has to be established by 2024, so the auction should be held soon to ensure that the winner of the contract will be able to start construction by 2020, he said.

The PTIT also suggests that PTT or other players in the future disclose their LNG procurement transactions and prices, that the ERC regulate the price of gas that PTT sells to industrial users, and that PTT charge other buyers the same as it charges its own separation plants for the gas. 

According to the study, PTT’s separation plants are getting gas from PTT more than 20 per cent cheaper than what the Electricity Generating Authority of Thailand, independent power producers and small power producers pay the gas monopoly.

In August 2014, the National Energy Policy Council gave its approval in principle for PTT to spin off its gas-transmission business, but it later ordered a delay, claiming opposition from some parties.