Electricity price support has cost PTT THB10.8 billion in lost revenue

The measures, which have been in place since October 2022, have capped the increase in electricity prices for households and businesses at 2%. This has meant that PTT has had to absorb the cost of the rising cost of fuel and other inputs.

PTT said that the measures have had a significant impact on its business. The company's operating profit for the fourth quarter of 2022 fell by 21% year on year.

The government has said that it is committed to supporting electricity prices for consumers. However, it is unclear how long the measures can be sustained.

The impact of the measures on PTT's business is a sign of the challenges facing energy companies in the face of rising energy prices.

Specifically, the measures have affected PTT's gas business. PTT is the largest supplier of gas to Thailand's power sector. The cap on electricity prices has meant that PTT has been unable to pass on the full cost of the rising price of gas to consumers.

PTT has said that it is working with the government to find ways to reduce the impact of the measures on its business. The company has proposed a number of options, including adjusting the cap on electricity prices, or providing financial support to PTT.

PTT Plc's president and CEO Auttapol Rerkpiboon recently disclosed to the Stock Exchange of Thailand (SET) the facts regarding the Cabinet's resolution on December 19, 2023, concerning measures to reduce electricity expenses. These measures will have an impact on the operations of PTT Plc, including:

▪︎ Adjusting the natural gas price structure

▪︎ Transmitting natural gas prices in the Gulf of Thailand when producers are unable to deliver gas as per the contractual conditions (Shortfall).

▪︎ Adjusting the natural gas price structure, which will change the cost of gas separation operations. This will increase the average cost of gas separation operations, including gas in the Gulf of Thailand, Myanmar, and Liquefied Natural Gas (LNG) (Pool Gas). It will have an impact on the operational costs of gas separation businesses, except for liquefied petroleum gas used as fuel in the country.

These measures are temporary until the Energy Regulatory Commission (ERC) officially sets up the gas price structure, which is estimated to be around January to April 2024. Based on preliminary impact assessments during this period, the overall gas business operation of PTT Plc will be reduced by approximately 6.5 billion baht.

However, PTT Plc plans to mitigate the impact, such as by optimising gas separation operations, proposing ways to procure LNG to achieve the electricity price target set by the government, and discussing the overall impacts of gas price structure adjustments with the Ministry of Energy to find suitable solutions together.