Đề tài " Energy Sector Liberalisationand Privatisation in Thailand - Tự do hóa ngành năng lượng và Tư nhân ở Thái Lan "

Implementation of ESI Deregulation • The process started in 1992 and effort over 1992-2000 has concentrated on introduction of competition at the generation level – New Investment : Sma

Energy Sector Liberalisation

and Privatisation in Thailand

by Piyasvasti Amranand Inspector General, Office of the Prime Minister

APEC Energy Working Group Implementation Facilitation Team to Thailand (IFAT)

A Follow-up Workshop Karon Villa & Karon Royal Wing

17-18 August 2000

Management of the Energy Sector

• Since there is no Energy Ministry in Thailand,

responsibilities related to energy are scattered across 9 Ministries.

• The National Energy Policy Council (NEPC) is responsible

for determining energy policy.

• The National Energy Policy Office (NEPO) acts as the

secretariat to the NEPC NEPO undertakes policy as well

as regulatory work.

• In the near future, an independent regulatory authority

will be established for the electricity and natural gas

sectors.

Objectives of Reform

• Increase competition to achieve efficiencies and

ensure supply at reasonable prices

• Promote more efficient energy use

• Reduce the government investment burden

• Ensure best possible service, price and safety

standards

• Encourage public participation

• Develop the capital market

• Optimise the value of the public’s stake in the sector

Implementation of ESI

Deregulation

• The process started in 1992 and effort over

1992-2000 has concentrated on introduction of competition at the generation level

– New Investment : Small Power Producer (SPP),

Independent Power Producer (IPP) programs and power purchase from Lao PDR

– Existing Asset : Initial Public Offering (IPO) of

EGCO in the Stock Exchange of Thailand (SET) and sale of 14.9% to China Light and Power

• Development of a long term structure for ESI in

1992 with updates in 1996, 1998 and 2000

Implementation of ESI

Deregulation (con’t)

• The latest plan approved by NEPC on 13 July 2000

provides a detailed road map of reform over the next 5 years

• Restructuring under the current plan

– Privatisation of Ratchaburi Power Plant (2000)

– Privatisation of EGAT’s Thermal Power Plants (2003)

– Establishment of a power pool and independent regulatory

body (2002/3)

– Introduction of retail competition (2003)

– Restructuring of MEA and PEA

Regulations to Purchase Power

from SPP

• Cogeneration & Renewable

– Cogen: Efficiency >45% and steam >10%

– Renewable: May use up to 25% commercial

energy

• Direct sale to third party outside regulations

• Each sale into transmission system not

greater than 60 MW (90 MW on case by case)

Status of the SPP Program

• As of June 2000, 95 proposals had been submitted with total capacity for sale of 4,646 MW

• NEPC has approved the purchase of up to 3,200 MW

from SPP projects by EGAT

• As of June 2000, 52 proposals had been accepted with total capacity for sale of 2,136 MW and 1 proposal is still waiting for approval with capacity for sale of 3 MW

– 50 contracts signed

– 2 contracts under negotiation

– 1 proposal under consideration

Status of SPP Projects (con’t)

• 41 projects are already in operation with total generation

capacity of 2,883 MW and total sale to EGAT of 1,580 MW.

• It is estimated that 2 projects (capacity : 510 MW, sale :

130 MW) would not be completed, bringing the amount

of power purchase by EGAT down to 2,006 MW.

• Of the 2,006 MW, 1,828 MW is firm energy

• The surprisingly high success rate is due to capital

injection by a number of foreign strategic partners eg CMS, Sithe Energy, Ogden, National Power, Air Products, Tractebel, Fortum and Heat Oy

SPP Proposals Classified by Type of Fuel (as of June 2000)

Number of Projects Capacity (MW) Generating EGAT (MW) Sale to Commercial Energy

Power Purchase from SPP

(as of June 2000)

Firm Non Firm Total

Proposals Submitted

Number of projects 67 28 95 Generating Capacity (MW) 7,686.8 665.4 8,352.2 Sale to EGAT (MW) 4,459.9 186.3 4,646.2

Received notification of acceptance

Number of projects 30 22 52 Generating Capacity (MW) 3,496.9 611.3 4,108.2 Sale to EGAT (MW) 1,958.4 177.6 2,136

Contract Signed

Number of projects 30 20 50 Generating Capacity (MW) 3,496.9 556.4 4,053.3 Sale to EGAT (MW) 1,958.4 149.6 2,107.9

Power Purchase from IPP’s

• EGAT issued requests for proposals 15 December 1994,

with proposals submitted 30 June 1995

– Western Coast: Prachuap Khiri Khan, Phetchaburi, Ratchaburi,

Samut Sakhon, Samut Songkhram

– Eastern Coast: Chonburi, Rayong, Prachinburi, Sa Kaeo

First Round IPP Solicitation

• Seven PPA’s signed

– IPT (THAIOIL, Unocal, Westinghouse)

– TECO (Texaco, Banpu, Edison Mission Energy) – Union Power (Union Energy, Tomen, IVO, CEPA) – Gulf Power (Gulf Electric, Mission Energy)

– BLCP (Banpu, Loxley, Powergen)

– BW2 (Hemaraj, Tractabel)

– Eastern Power - Bangbo (GMS, Marubeni, China Development Bank)

Power Purchase from Lao PDR

• MOU of 4 June 1993: Thailand agreed to

purchase 1,500 MW of power from projects

in Lao PDR

• Second MOU of 19 June 1996: Thailand

agreed to increase purchase to 3,000 MW

• Lao PDR also agreed to support passage of

transmission system from the third country, Thailand can purchase power from Yunnan in the future

Power Purchase from Lao PDR

Projects with PPA

Nam Theun-Hinboun 187 Lao PDR, Nordic, MDX 3/98 Houay Ho 126 Lao PDR, Daewoo, Loxley 9/99 HOA & PPA under

Hongsa Lignite (Stage 1) 608 Thai-Lao Lignite 3/2008

Xe Kaman 1 407 Hydro-Electric Commission Enterprise

Corporation 3/2008

Xe Pien - Xe Nam Noi 365 Lao PDR, Dong Ah, Thai-Lao Hydropower,

Total 3,596

Power Purchase from China

• MOU signed 12 November 1998 for purchase of 3000 MW from China by 2017.

• ADB estimates that Yunnan Province, P.R China, has

hydropower generating capability of 90,000 MW.

• Lancang (Mekong) River has total potential of 22,260

MW Manwan (1,500 MW) is already in operation 2nd

dam under construction.

• Possible project for power sale - Jing Hong Project

– Capacity: 1,500 MW, with 1,500 MW for sale to Thailand

– Investor: GMS/Yunnan Electric

Power Supply by Source (PDP 99-02)

Unit:MW

EGAT-HYDRO 2,874 16.9 3,386 13.6 3,886 12.3 EGAT-THERMAL 11,825 69.7 12,287 49.3 11,786 37.4

Reform of Electricity Supply Industry

• The Privatization Master Plan

approved by Cabinet on 1 September

1998 provides high level road map.

• In order to draw up a detailed

framework and action plan, a revised reform plan was prepared.

• The new Reform Plan was approved

by the Cabinet on 25 July 2000.

G O

EGAT

Direct Customers MEA

PEA

END Users

END Users

Reform Plan :

Medium Term ESI Structure (2002)

R E G U L A T O R

IPPs

Direct Customers

Powergens SPPs

END Users

END Users

Power Purchase EGAT System Operation Transmission Hydro Generation

Reform Plan :

Long Term ESI Structure (2003/2004)

R E G U L A T O R

• All but a few large consumers get their physical

electricity from the DisCo division of a regulated

regional monopoly called “Regulated Electricity

Delivery Company (REDCo)”

• Consumers pay for this electricity either through the

REDCo’s SupplyCo division or through a competitive retailer (RetailCo)

• There is a “Power Pool” consisting of

• Independent System Operator (ISO)

• Market Operator (MO)

• Settlement Administrator (SA)

• The GridCo is independent of the ISO and ultimately

GenCos

Functions and Structure of the

Market

• ISO should use an integrated dispatch/spot market

process to determine real-time operation and the

corresponding market prices.

• ISO/MO also operate a day-ahead forward market for

the convenience of market participants.

• ISO would be an independent government owned

entity governed by its own independent Board and

corporate charter In particular ISO should not be

integrated with GridCo.

• ISO would lease the grid facilities from the GridCo

and decide how they should be used during system operations A Transmission Control Agreement (TCA) would define the respective rights and responsibilities

of the ISO and the GridCo.

Independent System Operator (ISO)

• A GridCo unaffiliated with the ISO, could

be allowed to have some interest in

competitive generation or retailers.

• During a transition period EGAT will be

the GridCo and will own generation.

• But eventually all EGAT generation should

be sold or transferred to other entities so that GridCo is independent of any

GenCos, retailers or traders.

GridCo

The Problem of Stranded Costs

Stranded Costs

Competition Should Reduce Costs, But

Will Reduce Prices Even More

Stranded Costs

• Given the expected high reserve margin of the

system during the next 5 years and unavoidable cos

t of human resource programs, competitive market prices will be low and stranded cost must be recove red by non-competitive processes.

• EGAT will create a special purpose “Debt Co”

function within the state enterprise to hold

stranded debt

• Impose Competition Transition Charge (CTC) paid

by consumers to recover stranded costs CTC shoul

d be used together with vesting contracts (CfDs) in order to stabilize average consumer bills and gener ator revenue during the early years.

Stranded Costs (con’t)

• The functions of “Debt Co” are to

– Hold the stranded debt and the vesting CfDs

– Define periodic CTC amounts needed to service

debt

– Service the debt with CTC and CfD payments.

• Stranded costs already exist and is not created by

the introduction of competition Competition simpl

y makes stranded costs transparent.

• Retail tariff to consumers could still be lower even

with the payment of CTC by consumers.

Thai Power Capacity

• Current generating capacity is at roughly

20,000 MW.

• Under the Medium Economic Recovery Case

(MER) power supply is expected to grow to 25 ,477 MW in 2001 and 28,312 MW in 2006.

• The share of power supply from EGCO, IPPs,

SPPs and import is expected to grow from 25

% in 1999 to 40% by 2006

• EGAT’s share in power supply, excluding

Ratchaburi, is expected to fall to 48%.

Disposition of EGAT’s Generation

Assets

• It is recommended that EGAT’s generation

assets should be separated into 4 groups:

– Ratchaburi power plant (3,645 MW)

– PowerGen 1 (6,581 MW in 2011)

– PowerGen 2 (4,075 MW in 2011)

– Hydro power plants (3,384 MW in 2011)

• The analysis finds that the allocation of power

plants to PowerGen 1 and PowerGen 2 enables maximisation of available operating synergies and results in cost reductions.

• PPAs should be managed by

– 2 IPP Traders

– SPP Trader

– Foreign-PPA Trader

• The traders could be EGAT itself or wholly

owned subsidiaries of EGAT

• Vesting contracts might be used to help manage risk and limit market power

Dealing with PPAs

• Retail competition as defined can commence for all consumers

in Thailand by the time the power pool commences operation

in 2003 because the method of recovering stranded costs does not require that a pool of customers be held captive for a

number of years to pay off the stranded costs.

• However it will require establishment of pricing and settlement

system; e.g billing system needs to be able to reconcile hourly consumption with hourly price (or average of).

• The required system can be ready by power pool

commencement in 2003 if work starts in 2000.

Retail Competition

Year 2003 - Power Pool Commencement

EGAT (State Enterprise)

Governor

Corporate Support

Energy Management Agency Other BUs

• Market education

• DebtCo and PPA

Traders become operational

possible complete divestment in due course

Notes:

DebtCo

PG2 PG1

x%

x% = In process of sell-down

foreign PPA Trader

SPP PPA Trader

100% 100%

After 2003 -Corporatisation of

Hydro and GridCo

Governor Corporate Support DebtCo?

Hydro

GridCo

EGCO Ratchaburi

• Corporatisation

of Hydro and GridCo and possibly privatisation

Restructuring of MEA : After 2003

• Separate accounting of

distribution and supply within MEA REDCo.

• If performance targets are

not achieved, corporatise REDCo and all NSBs.

• Reconsider the structure of

- Information Technology Dept (ITD)

- Power System Maintenance Dept (PMD)

Restructuring of PEA : 2003 onwards

PEA (State Enterprise)

Governor

BU1

• REDCos and NSB

corporatised and possibly

privatised

• If efficiency

improvement not sufficient,

consider corporatisation of Network.

Notes:

BU2 BU3 BU4

REDCo1 REDCo2 REDCo12 NSBs

x%

Supporting Service NETWORK

Ratchaburi Power Plant

• Ratchaburi will be a 3,645 MW Power Plant

Complex when completed consisting of the

following

– 3 x 725 MW Combined Cycle Gas Turbines

– 2 x 735 MW Thermal units

– Common facilities, including offices,

accommodation, water supply and treatment, storage facilities

– site for additional 2 x 700 MW Thermal units – switchyard

Revised Plan for Ratchaburi Privatisation

• The revised plan for Ratchaburi privatisation was

approved by the cabinet on November 30, 1999:

– IPO to the general public and investors of 40% of the shares

on 4 October 2000.

– 15% to be allocated to EGAT employees at par value on

average with reasonable lock up period

– EGAT to retain 45%

• Given that the 15% offer to EGAT employees is

relatively high compared to international

precedent cases, a well-designed locked up

structure which is not negatively perceived by

other IPO investors is critical to a successful IPO.

Corporate and Ownership Structure (con’t)

RHCO

Public EGAT

Equity

Bt 18,334 mm

Power plant units

Funds

Debt

Bt 42,779 mm

Tentative Time Frame for IPO

• Negotiation & finalization of loan documents at the end of

• 2 nd Week of October Authorized Committee, EGAT and

RHCO member approve IPO price

• Expected proceeds from sale of shares to EGAT employees

and the general public would be 10,000 million baht (at

15 baht/share)

Current GSI Structure

Unocal (60%)

PTTEP (25%) (17%) Total

Mitsui (7%) (3%) BG

Others (15%)

PTT (100%) PTT (100%)

EGAT (75%)

LPG+

Petrochemical Feedstock (14%)

Industrial Customers (11%)

Competition in Gas Supply Industry

• NEPO’s plan for regulatory & industry structure of

GSI

– division of transmission and trading

– licensing all operators

– independent regulatory authority

– common pipeline tariff

– Third Party Access (TPA) provided

– existing contracts honoured

– open competition in construction & ownership of new

high-pressure pipelines and new low-pressure distributio

n concessions

Structure of PTT Gas

PTT/PTT Co., Ltd./(Plc)

PTT Gas

Supporting Units GSP

Energy Industry Act

• In order to introduce retail competition and create

a power pool, a new energy law will be needed.

• Energy Industry Act is being drafted and should

become law in 2002.

• The Act will

– create an independent regulatory body, the National

Energy Regulatory Commission (NERC), to regulate

electricity and natural gas supply industries

– create a power pool

National Energy Regulatory

Commission (NERC)

• NERC will consist of 5 full time commissioners for a term of 6

years.

• National Energy Regulatory Office (NERO) will serve as the

secretariat of NERC and will be headed by a Secretary

General.

• The Act clearly distinguishes the roles of National Energy

Policy Council (NEPC), which will only be responsible for

policy, and those of NERC.

• Regulatory duties currently the responsibilities of Department

of Energy Development and Promotion, Public Works

Department and NEPO will be transferred to NERC/NERO.