Chamber: Decide on policy now

Businesses have urged the government to make up its mind quickly on an energy policy, saying a delayed decision will affect their cost management, production efficiency and competitiveness.

Sanan Angubolkul, vice-chairman of the Thai Chamber of Commerce, said yesterday at a seminar that the government needed to decide now on an energy policy, particularly how it will ensure energy security to cope with declining reserves.

“It’s a must for the government to decide whether to proceed with the 21st round of bidding on concessions for oil and gas exploration and production, or choose a production-sharing contract (PSC),” he said.

Energy activists favour a PSC model to replace the current system that charges a progressive rate of royalty fees throughout the concession period and a 50% tax on corporate income.

They said granting new concessions would affect national security because exploration would belong to the private sector. They also fear the process will not be conducted transparently.

Under the PSC system, the contract requires the awarded company to bear the entire cost of investment and production, and net profit is mostly shared with the government as the company agrees to take a lesser cut.

Mr Sanan said it could take five to seven years for oil and gas exploration to take shape should the government call the 21st round of bidding.

“Delaying energy policy will eventually affect future production cost management of the businesses,” he said.

“The chamber is thus ready to host the joint meeting as soon as possible for all parties to share their comments, particularly on the 21st round bidding issue.”

Twarath Sutabutr, deputy permanent secretary of energy, said the government still planned to have the 21st round of bidding for oil and gas concessions. Authorities are studying appropriate concessions forms for three blocks in the Gulf of Thailand.

He said Thailand imported about 1.4 trillion baht worth of energy a year, which was mostly for transport and electricity generation.

Mr Sanan said businesses fully supported the government’s attempt to restructure energy prices to reflect their actual costs as it would lead to more effective cost management.

At the end of 2014, Thailand’s proven and probable reserves of petroleum gas and crude oil stood at 18.6 trillion cubic feet and 635 million barrels respectively.

Those supplies could feed domestic demand for 14 years, according to government estimates.