High debt levels preventing Egat from lowering electricity bills
The Electricity Generating Authority of Thailand (Egat) has explained why its 110-billion-baht debt is preventing it from lowering electricity costs to reduce the public’s financial burden and promote the recovery of the Thai economy in the post-Covid era.
This huge debt has been accumulated as a result of the high price of liquefied natural gas (LNG) imported to fuel power stations, electricity, the cost of which has continued to rise due to the impacts of the ongoing Russo-Ukraine war, Egat governor Boonyanit Wongrukmit said on Thursday.
“Egat’s outstanding debt stood at 110 billion baht at the end of fiscal 2022,” he said. “This debt is from short-term loans that must be paid in 7 installments. The deadline for repayment of the last installment is April 2025.”
Boonyanit went on to say that any default on short-term loans would result in a jump in interest, which will be added to Egat’s production outlays and thus increase the cost of electricity generation.
“In the long term it could also affect our loan credit and therefore hinder Egat’s investment in expanding distribution channels and improving the production system,” he said. “We are shouldering this 110-billion-baht debt at our limit. Any more debt would be the last straw and break our back.”
“Energy costs might go down and this would enable us to manage electricity generation with more flexibility,” he said. “However, at present it is difficult to further extend the repayment of this debt. For this reason, the new government must continue to manage the fuel tariff (ft) to stabilise costs.
Boonyanit added that another risk factor that could affect the price of energy is the weather, especially the El Nino phenomenon which will result in reducing the amount of water feeding the dams.
“This phenomenon may not directly affect Thailand’s electricity generation as only 3 percent of electricity come from domestic dams,” he said. “However, it will impact the dams in Laos from which we buy electricity. If they are unable to meet our demand, we might have to switch to the more expensive LNG as fuel for power plants.”
Currently, the electricity generation cost from dams is 2 baht per unit, while that from LNG-fuelled power plants is quadruple that, at 9 baht per unit.
