FTI warns power rate hike would discourage foreign investors
The Federation of Thai Industries (FTI) on Thursday warned Thailand would not be able to compete with neighbouring countries for investments if the government increases the electricity rates.
FTI president Kriengkrai Thiennukul said the joint standing committee on commerce, industry and banking of three professional groups wanted the government to further reduce the power rates but the Office of the Energy Regulatory Commission (ERC) announced last week that the electricity rates would have to be increased.
Kriengkrai said the current rate of 4.18 baht per unit of electricity usage had already placed Thailand at a disadvantage in competing with neighbouring countries.
He warned that if the power rates were increased as announced by the ERC Office, Thailand would definitely lose the chance to draw direct foreign investments.
He said the cost of production in Thailand was already higher than in neighbouring countries. “The costs in Vietnam and Indonesia are already lower than here,” Kriiengkrai said.
He noted that Thailand’s rank among ASEAN nations with the highest FDI had fallen from third or fourth to sixth already.
Kriengkrai added that many SMEs had already shut down because they could not cope with rising costs and competition from cheaper goods from China.
The FTI president was reacting to an announcement by the ERC Office on Friday, saying the fuel tariff (FT) for electricity generation would have to be raised, which would result in power fees rising by 0.46 to 1.82 baht per unit.
The ERC Office explained that the office had to repay debt to the Electricity Generating Authority of Thailand (EGAT) and the rising prices of natural gas for the winter season would force an increase in the FT.
ERC Office secretary-general Poolpat Leesombatpaibool said the office would propose three options to the government to consider after it would hold a public hearing on the options within this month. The new rates would be announced one month before the new power rate would take effect, he added.
Under the first option, the power rate would rise to 4.65 baht per unit, to 4.92 baht per unit under the second option and to 6.01 baht per unit under the third option.
In the first option, the ERC Office would repay debt to EGAT in a very small ratio. Under the second option, it would repay a higher percentage of the debt while under the last option the ERC Office would repay the debt to EGAT in full, Poolpat explained.
