Thai power subsidy for poor may stay

[Admin]

Thai power subsidy for poor may stay 
Bangkok Post: 27 Dec 2010
Power subsidy may stay
New fund would pay B14-15 billion a year

The government vows to move ahead with plans to permanently extend subsidies on monthly electric bills of less than 90 units per household using the new power development fund.

Prime Minister Abhisit Vejjajiva said the fund, for which regulations are due to be in place next year, would play a key role to subsidise free electricity for low-income earners. The government estimates that the fund would need to contribute 14-15 billion baht a year to support the subsidy programme.

Around 30 million people from 9.16 million families nationwide are expected to be entitled to assistance.

Set up in 2007, the power development fund aims mainly to help communities in areas where power plants were located. It is to be used as a channel for subsidies for low-income consumers, rehabilitating localities, compensating people affected by power plant operations, and promoting renewable and environmentally friendly energy.

Revenue for the fund is provided by a levy on power generators through the electricity tariffs. All power plants have to pay a levy to the fund during plant commissioning. Contribution rates range from zero to 2%.

Under the current structure, the Provincial Electricity Authority (PEA) receives a lump-sum financial transfer from the Metropolitan Electricity Authority (MEA) to subsidise rural electrification and guarantee the revenue requirements of the PEA, which are normally lower than those of the MEA.

The subsidy amounts to around 10 billion baht per year.

The government is now developing a source for the fund, and reviewing its longstanding Ft, or fuel tariff, in order to ensure adequate subsidies for low-income earners.

Mr Abhisit said the government would adjust the ways electricity is charged to promote energy savings.

The Ft, an amount levied on top of electricity rates, is reviewed every four months to reflect changes in power producers' fuel costs and the exchange rate. However, in recent years the Ft has barely budged as successive governments tried to keep power bills in check.

The premier said the Ft would shift to a more progressive rate.

The government has subsidised power bills of less than 90 units (kilowatt/hours) per household for two and a half years. The programme was due to expire on Dec 31 but the cabinet has extended it until the end of February.

Payungsak Chartsuthipol, chairman of the Federation of Thai Industries, said industries were concerned about the plan to adjust the way power is priced, as heavy industrial users would probably face the biggest increase.

"Industry is the country's key income contributor. It has to compete not only with players in the country but also the global market," said Mr Payungsak.

"The government must come up with reasonable levies that enable Thai industries to compete with other countries."

He also said the government must study thoroughly the impact of free electricity for low-income earners at the expense of the industrial sector.

"Industry does not mind the government's populist policy, but this should not create a burden for others."

http://www.bangkokpost.com/business/economics/213238/power-subsidy-may-stay