Ministries to help relieve Egat burden

The Energy Ministry has asked the Finance Ministry to absorb the financial burden of 4.5 billion baht from the Electricity Generating Authority of Thailand (Egat) for purchasing crude palm oil.

The state budget should absorb this financial burden because Egat has to follow the policy, as the cost for crude palm oil for power generation is higher than for other fuels, said Energy Minister Sontirat Sontijirawong.

“The two ministries will work together to seek a solution to help Egat,” he said.

The 4.5-billion-baht burden occurred in the first half of 2019 when the government ordered Egat to purchase 360,000 tonnes of crude palm oil from farmers to absorb surplus volume and increase crop prices.

The crude palm oil is used for power generation at Egat’s Bang Pakong plant. The first shipment was made during February-June, totalling 160,000 tonnes, with a second shipment of 200,000 tonnes scheduled for May-October.

“The state budget covering this financial burden is the best solution because the higher cost should not be passed on to people’s power bills,” Mr Sontirat said.

The government has many plans to handle the surplus of crude palm oil, such as increasing the methyl ester content in biodiesel and using it for power generation.

As a result, the price of crude palm oil increased to 21 baht per kilogramme in June from 4.13 baht in January. The price of fresh palm oil nuts rose to 3.70 baht per kg in June from 2.65 baht in January.

Last week, the Energy Policy Administration Committee approved delaying power generation from crude palm oil, in line with a request from parliament’s energy committee, as the policy would raise power bills.

The ministry has mandated biodiesel B10 as the primary diesel at petrol stations, replacing B7, effective from early 2020.

Widespread consumption of B10 can absorb a surplus of crude palm oil at roughly 150,000-200,000 tonnes a year.