Thai energy populism is too costly for us to swallow

[webfact]

Energy populism is too costly for us to swallow
Pichaya Changsorn
The Nation



BANGKOK: -- Besides the messy Thai politics, energy is one particular area that has been subjected to a public backlash on a massive scale during the past few years.

Much of the information spreading over the Internet (websites, Facebook posts, Line chats and so on) are half-truths, and some are completely absurd, such as the premise that Thailand is as rich as Saudi Arabia in terms of oil reserves. But people, including some who are educated, are seemingly ready to believe much of this propaganda.

The public are deeply discontent and distrustful of politicians, bureaucrats and the media. They like to hear what they like to hear. They want to believe what they would like to believe. It has also been mingled with politics, to be specific, the so-called Thaksin Shinawatra regime. Energy was among the top subjects that demonstrators fiercely raised during their months-long rally in Bangkok against the previous elected administration run by Thaksin's sister Yingluck Shinawatra.

So it is no wonder the National Council for Peace and Order (NCPO) has put energy reform at the top of its agenda. The military junta has vowed to finalise a reform package for the energy sector by the end of this month. To that end, the junta has called for meetings with groups who have widely differing opinions on the issue of energy reform.

The public has some grounds for its discontent. Domestic prices of electricity, cooking gas, and petrol have all gone up by more than 20 per cent since 2011 (see the "Thailand's soaring energy prices" graphic).

Electricity tariffs have been increased by 23.7 per cent, from Bt3.16 per kilowatt-hour in 2011 to Bt3.48 in 2012, Bt3.78 last year, and Bt3.91 at present. Prices of octane 91 petrol with 10 per cent ethanol (E10), for example, have gone up by 20.2 per cent, from Bt31.84 at the beginning of 2011, to Bt32.74 in January 2012, Bt35.38 at the start of last year, and Bt38.28 at present.

Through a few rounds of adjustments beginning last September, prices of liquefied petroleum gas for cooking have been raised by nearly 25 per cent to Bt22.63 per kilogram.

The cooking-gas prices were increased to reduce the huge subsidy burden carried by the Oil Fund, while the policy to fix the diesel price at Bt30 a litre has kept petrol prices unreasonably high. E85 petrol has also received a huge Oil Fund subsidy, at Bt11.60 a litre.

A major cause of the rising price of electricity is the cost of natural gas, for which the wellhead prices in the Gulf of Thailand have gone up by more than 50 per cent over the past six years.

But these Oil Fund cross-subsidies and undisclosed formulas for natural-gas prices are not obvious to the public, who have seen their end prices only go one way: up.

They have also read many reports, some true and others untrue, about the hefty bonuses and benefits PTT has paid its board members and management, and its nearly Bt100-billion annual profits (which were in fact meagre when compared with its own sale figures and those of its industry peers).

Moreover, the public takes note that in contrast to the local price rises, the world oil prices have been relatively stable during the past few years.

In nominal terms, crude-oil prices averaged US$87.04 a barrel in 2011, $86.46 in 2012, and $91.17 last year. Last Friday, West Texas Intermediate crude was trading in New York at about $105 a barrel, affected by the unrest in Iraq.

However, all of the above problems and misperceptions reflect an inconvenient truth: The more government meddles with energy-price policies, the more they get into trouble.

Politicians have found energy prices among the easiest ways to win voters' favour, but for Thailand, energy populism is too costly for us to swallow. As a country that is importing all types of energy - 81 per cent of its oil consumption, 70 per cent of domestic coal usage, and 20 per cent of natural gas - subsidising energy to achieve low prices is a sure path to disaster.

Instead of stepping into the shoes of politicians, the NCPO should take this opportunity to reform the energy sector for a sustainable future.

Instead of fixing short-term symptoms, it should focus its efforts on doing good things that are normally difficult to implement by populist politicians.

Overhauling the energy industry's regulatory bodies should be among the junta's first priorities, as well as finding effective laws and mechanisms to prevent or minimise political interventions in energy policy and agencies.

With dwindling domestic gas reserves that are estimated to last only seven years, and rising imports of liquefied natural gas whose prices are double those of domestic gas, Thailand is already in an energy crisis.

And populist energy policy can only make things worse.

Source: http://www.nationmultimedia.com/business/Energy-populism-is-too-costly-for-us-to-swallow-30237370.html


-- The Nation 2014-06-30

[NeverSure]

"The public are deeply discontent and distrustful of politicians, bureaucrats and the media."

[chooka]

They think energy is expensive in Thailand, geez go to Australia you need to work 3 jobs just to pay the electricity bill.

[ramrod711]

Instead of fixing short-term symptoms, it should focus its efforts on doing good things that are normally difficult to implement by populist politicians.

How about helping people install solar collectors for their homes. Surplus electricity produced could be sold back to the utility. A subsidy to help with the installations might be productive.

[junk1e]

Instead of fixing short-term symptoms, it should focus its efforts on doing good things that are normally difficult to implement by populist politicians.

How about helping people install solar collectors for their homes. Surplus electricity produced could be sold back to the utility. A subsidy to help with the installations might be productive.

Agree. Use of solar energy in Thailand appears to virtually non existent and difficult to obtain. We use solar panel for hot water and has worked perfectly for the past 11 years. Efforts to find a supplier who can instal full solar system have proved fruitless. My sister in UK uses solar energy for all their electricity and sell surplus back to the grid. Initial installation was subsidised.

[brianP]

Before i left California, i used the states incentives to install solar power, when i sold the house it added over 50 grand to the value and only cost me 19 g's. Bill went from 250 a month to 16 bucks.

[Pib]

They think energy is expensive in Thailand, geez go to Australia you need to work 3 jobs just to pay the electricity bill.

Since a barrel of oil or cubic feet of natural gas pretty much sells to any country at the same price and adding in some transportation costs, energy prices by country vary greatly primarily due to "taxes added by the govt." Below is a 2011 report graphically showing electricity cost by certain countries...Thailand is not on the graph but for residential electricity costs in Thailand (including basic cost, energy fee, and taxes) the average cost is approx Bt4.8 per Killowatt Hour (KWH) or about 15 U.S. cents/KWH....this puts Thailand electricity energy costs a little higher that the U.S cost of 12 cents/KWH but way below countries like Australia at 29 cents/KWH. Note: some condo residents/renters which do not have their electric service in their name with the electric company pay more because the condo/landlord ups the price.

http://shrinkthatfootprint.com/average-electricity-prices-kwh

[Lancelot]

Much of the information spreading over the Internet (websites, Facebook posts, Line chats and so on) are half-truths, and some are completely absurd, such as the premise that Thailand is as rich as Saudi Arabia in terms of oil reserves. But people, including some who are educated, are seemingly ready to believe much of this propaganda.

Because an elder Thai told them so...

I've found that the locals will never believe any thing a foreigner has told them if it conflicts with what a fellow Thai has said

[Pib]

Before i left California, i used the states incentives to install solar power, when i sold the house it added over 50 grand to the value and only cost me 19 g's. Bill went from 250 a month to 16 bucks.

You got lucky. Usually the cost to add solar power to a home is not economical except if the local govt provides a BIG tax break/subsidizes the solar power installation, maybe annualized over a l...o....n....g term, or added-value greatly increasing the value of a home--and of course the home owner actually sells the home to reap the profit. Installation cost is still the big drawback to more homes installing solar power systems assuming you live in the part of the world with lots of sunshine.

[ginjag]

They think energy is expensive in Thailand, geez go to Australia you need to work 3 jobs just to pay the electricity bill.

And 5 jobs in Monaco, and =====+++

[h90]

Instead of fixing short-term symptoms, it should focus its efforts on doing good things that are normally difficult to implement by populist politicians.

How about helping people install solar collectors for their homes. Surplus electricity produced could be sold back to the utility. A subsidy to help with the installations might be productive.

And different than in Europe, Thailand needs most electric when the sun is full shining (aircons), so it makes a lot more sense than in Germany where not much sun shines in winter where most electric is needed.

Instead of the subsidy, they could remove the VAT on solar panels. Or start with office buildings and wire the aircons to the solar panels only (to ensure proper service of the solar installation).

[h90]

Before i left California, i used the states incentives to install solar power, when i sold the house it added over 50 grand to the value and only cost me 19 g's. Bill went from 250 a month to 16 bucks.

You got lucky. Usually the cost to add solar power to a home is not economical except if the local govt provides a BIG tax break/subsidizes the solar power installation, maybe annualized over a l...o....n....g term, or added-value greatly increasing the value of a home--and of course the home owner actually sells the home to reap the profit. Installation cost is still the big drawback to more homes installing solar power systems assuming you live in the part of the world with lots of sunshine.

And the solar panels don't last as long as advertised....

[Morch]

They think energy is expensive in Thailand, geez go to Australia you need to work 3 jobs just to pay the electricity bill.

Since a barrel of oil or cubic feet of natural gas pretty much sells to any country at the same price and adding in some transportation costs, energy prices by country vary greatly primarily due to "taxes added by the govt." Below is a 2011 report graphically showing electricity cost by certain countries...Thailand is not on the graph but for residential electricity costs in Thailand (including basic cost, energy fee, and taxes) the average cost is approx Bt4.8 per Killowatt Hour (KWH) or about 15 U.S. cents/KWH....this puts Thailand electricity energy costs a little higher that the U.S cost of 12 cents/KWH but way below countries like Australia at 29 cents/KWH. Note: some condo residents/renters which do not have their electric service in their name with the electric company pay more because the condo/landlord ups the price.

http://shrinkthatfootprint.com/average-electricity-prices-kwh

Capture.JPG

Thanks.

Wonder how that correlates with average income.

[ebean001]

I assume the definition of "populist politicians" is someone who is for 'We the People".

[Benmart]

They think energy is expensive in Thailand, geez go to Australia you need to work 3 jobs just to pay the electricity bill.

Comparing overseas energy prices would seem to mean little to those living here, both locals and foreigners.

[Benmart]

Before i left California, i used the states incentives to install solar power, when i sold the house it added over 50 grand to the value and only cost me 19 g's. Bill went from 250 a month to 16 bucks.

Glad to, hear that. I hope some of your "profit" on the sale helped to off set any Capital Gains Tax obligations to Uncle Sugar. I too left California and wish all there good luck.

[steve73]

Solar PV panels are pretty cheap here in T/L.. So is labour to fit them, but it's the rest of the kit that's expensive...storage batteries (if you want to keep stand-alone) or invertors to allow conversion to AC to suit existing appliances.

..and as yet the Electric utilities do not allow feed-in to their grid of any excess power... so this make the whole thing less than worthwhile.

But by allowing feed-in, and providing some payments (need not be as high as EU countries) it would certainly encourage a domestic PV market to emerge..

[belg]

importing solar panels from china, almost a neighbour is more expensive than in the west, where it had to travel half the world

thai economics ???

[NeverSure]

All oil, gas etc. is in a global market. It will flow to the high bidder. Thailand is at no disadvantage buying oil and gas which has an international spot price.

If Thais are getting ripped off there is someone in the middle be it private or government taxes.

Unleaded gasoline in the Western US right now is $3.80 per US gallon. That would be $95 to put 25 gallons in my F150. That's $1 per liter, or 32.45 baht per liter.

Feel free to correct my math.

[kerrysum]

Much of the information spreading over the Internet (websites, Facebook posts, Line chats and so on) are half-truths, and some are completely absurd, such as the premise that Thailand is as rich as Saudi Arabia in terms of oil reserves. But people, including some who are educated, are seemingly ready to believe much of this propaganda.

Because an elder Thai told them so...

I've found that the locals will never believe any thing a foreigner has told them if it conflicts with what a fellow Thai has said

That is a good point in my opinion and well said. The old Thai saying has always been, I do not believe it, until I see it with my eyes. Let us remember that energy is a Commodity now, it affects everything from A to Z, it affects us in ways that can make us competitive. Perhaps we need to get off of the green shit, and use the natural resources that we were supplied, by Our Creator... Has Thailand changed? Yes it has, but it depends if one used to live on charcoal, in the old days, and yes used kersosene lamps back in the day. There was no electricity before, no television, and a transistor radio was king, if one could find a signal. Charcoal was delivered day by day, by a vendor, as was ice for the ice box. There were only 3 T.V. stations back then, but no one had a T.V.

It sure amazes me how they all survived, but damn I sure loved it. Lights went out at sunset, and then one sat outside and looked at the stars, and talked. There were no telephones either, in the villages. In the mornings we arose at 4 A.M. and took our carts to water well to get water for the day, and then carted it home for the days needs. I enjoyed shit like this, it was survival, and one could talk at the well...

Just my two cents brothers. kilosierra

[Thai at Heart]

subsidising energy to achieve low prices is a sure path to disaster.

Now how is that for s bit of fox news rhetoric.

Can one ask, "why?"

A. Too expensive?

B. Too complicated?

C. Going to spark a famine, pestilence or natural disaster?

[northernjohn]

They think energy is expensive in Thailand, geez go to Australia you need to work 3 jobs just to pay the electricity bill.

and that justifies the 20% raise in Thailand.

[northernjohn]

They think energy is expensive in Thailand, geez go to Australia you need to work 3 jobs just to pay the electricity bill.

Since a barrel of oil or cubic feet of natural gas pretty much sells to any country at the same price and adding in some transportation costs, energy prices by country vary greatly primarily due to "taxes added by the govt." Below is a 2011 report graphically showing electricity cost by certain countries...Thailand is not on the graph but for residential electricity costs in Thailand (including basic cost, energy fee, and taxes) the average cost is approx Bt4.8 per Killowatt Hour (KWH) or about 15 U.S. cents/KWH....this puts Thailand electricity energy costs a little higher that the U.S cost of 12 cents/KWH but way below countries like Australia at 29 cents/KWH. Note: some condo residents/renters which do not have their electric service in their name with the electric company pay more because the condo/landlord ups the price.

http://shrinkthatfootprint.com/average-electricity-prices-kwh

Capture.JPG

I ran out of likes but this is a great article.

It unfortunately is based on 2011 costs but I do not think there will be large changes in it. All the countries will go up.

[DaveHKT]

All oil, gas etc. is in a global market. It will flow to the high bidder. Thailand is at no disadvantage buying oil and gas which has an international spot price.

If Thais are getting ripped off there is someone in the middle be it private or government taxes.

Unleaded gasoline in the Western US right now is $3.80 per US gallon. That would be $95 to put 25 gallons in my F150. That's $1 per liter, or 32.45 baht per liter.

Feel free to correct my math.

F150. Would that be the Ford or the Ferrari version?

[wabothai]

May be it would be wise to make...... aware of the high cost of running an aircondition. They could be turned down a few degrees. Or turned off when one is not present. There are plenty of fans around.

Shopping mals can do with less !!! And so on.

But who cares?

[Cats4ever]

They think energy is expensive in Thailand, geez go to Australia you need to work 3 jobs just to pay the electricity bill.

Bulldust.

[Daniel Boon]

Instead of fixing short-term symptoms, it should focus its efforts on doing good things that are normally difficult to implement by populist politicians.

How about helping people install solar collectors for their homes. Surplus electricity produced could be sold back to the utility. A subsidy to help with the installations might be productive.

Agree. Use of solar energy in Thailand appears to virtually non existent and difficult to obtain. We use solar panel for hot water and has worked perfectly for the past 11 years. Efforts to find a supplier who can instal full solar system have proved fruitless. My sister in UK uses solar energy for all their electricity and sell surplus back to the grid. Initial installation was subsidised.

solar energy is not all its cracked up to be ... and the average Thai cannot afford the panels or the associated additional costs ...

[lostsoul49]

Instead of fixing short-term symptoms, it should focus its efforts on doing good things that are normally difficult to implement by populist politicians.

How about helping people install solar collectors for their homes. Surplus electricity produced could be sold back to the utility. A subsidy to help with the installations might be productive.

They already did this under the Dems... People went out and built solar farms, spent a hell of a lot of money on setting them up with panels and the industrial grade inverter etc... They were promised up to 5.8 baht per KWH seeing as the authority was paying more than that from Laos and Myanmar who had Thailand over a barrel. (up to 8 baht KWH).

It ran for about a year and then the Thaksin regime were voted in and it was scrapped leaving many in the crapper who had not yet recouped their investment for their farm. That really pissed a lot of people off.... I myself had done all the research for a 200 KW farm on my land luckily just before the scheme was pulled.

I ended up putting the land up for sale and sold it quite quickly, and coincidentally my wife was approached by a representative of the PEA asking if our land was still for sale, because they are now building their own solar farms. Our land was strategically positioned right on the grid.

[hhinhh]

Instead of fixing short-term symptoms, it should focus its efforts on doing good things that are normally difficult to implement by populist politicians.

How about helping people install solar collectors for their homes. Surplus electricity produced could be sold back to the utility. A subsidy to help with the installations might be productive.

Don`t start that nonsense which was introduced by he Greens some years ago. In Germany we pay 20 b € (850 b THB!!!) anually for this kind of energy which is not constant and the flow of electricity can only be achieved stable due to the help of (nuclear) power plants in neighbour countries, also causing a disruption of all kind of industry investments with medium and high electricity consumption while private people pay now € 0.26€ (more than THB 10) per KWh.

[Thai at Heart]

Instead of fixing short-term symptoms, it should focus its efforts on doing good things that are normally difficult to implement by populist politicians.

How about helping people install solar collectors for their homes. Surplus electricity produced could be sold back to the utility. A subsidy to help with the installations might be productive.

They already did this under the Dems... People went out and built solar farms, spent a hell of a lot of money on setting them up with panels and the industrial grade inverter etc... They were promised up to 5.8 baht per KWH seeing as the authority was paying more than that from Laos and Myanmar who had Thailand over a barrel. (up to 8 baht KWH).

It ran for about a year and then the Thaksin regime were voted in and it was scrapped leaving many in the crapper who had not yet recouped their investment for their farm. That really pissed a lot of people off.... I myself had done all the research for a 200 KW farm on my land luckily just before the scheme was pulled.

I ended up putting the land up for sale and sold it quite quickly, and coincidentally my wife was approached by a representative of the PEA asking if our land was still for sale, because they are now building their own solar farms. Our land was strategically positioned right on the grid.

part of the problem was aboiut how the rights to produce were being auctioned. People got hold of the licenses and were sitting on them waiting to partner with someone who might want to put up a farm.

These farms are costing EGAT an arm and a leg. Nice work if you can get it.