1. ASEAN People Forum Thailand’s Perspectives on Energy Industry and Investment in ASEAN October Chuenchom Sangarasri Greacen Palang Thai

2. ASEAN is energy resource-rich.

3. ASEAN Plan of Action for Energy Cooperation (APAEC 2010-2015)
Program Area
Ownership
1. ASEAN Power Grid
Heads of ASEAN Power Utilities/Authorities (HAPUA)
2. Trans-ASEAN Gas Pipeline
ASEAN Council on Petroleum (ASCOPE)
3. Coal and Clean Coal Technology
ASEAN Forum on Coal (AFOC)
(ACE as Secretariat)
4. Energy Efficiency and Conservation (EE&C)
EE&C-Sub-sector Network
5. Renewable Energy (RE)
RE- Sub-sector Network
6. Regional Energy Policy and Planning (REPP)
REPP Sub-sector Network
7. Civilian Nuclear Energy
A main impetus of ASEAN’s energy cooperation is to link resource-rich countries with those with high energy demand to promote accelerated development and consumption of energy resources to drive economic growth. The areas of cooperation with the most momentum are ASEAN Power Grid and TAGP, where formal institutions have been established to move cooperation beyond just talking and networking towards real implementation.
*ACE = ASEAN Center for Energy

4. Two clusters: the GMS and the peninsular-island clusters.

5. Indicative Master Plan on Power Interconnection in the GMS
Benefits :
Exchange energy e.g. during different peak periods
Reduce shared reserve margin
Maximize efficient utilization of resources in the GMS

6. Reality of GMS Power Grid: expensive, risky investment
US$billion
Project cost
Cost savings*
% benefit of total cost
1.0 – 2.1%
Based on unrealistically cheap hydropower costs
NT2 power at 1.4 US cents/kWh
Costs excluded in analysis:
Control center
Water usage
Regulator & reliability coordination
Transitional costs
Increased vulnerability: events in Laos/Cambodia determine reliability of Thai Grid
*Cost savings of extended power cooperation scenarios over base case
Source: Comments on Indicative Master Plan on Power Interconnection in GMS Countries by Bretton W. Garrett, P.Eng., Ph.D.

7. ASEAN Power Grid Projects
Projects under construction:
Thailand – Lao PDR
Roi Et – Nam Theun 2
Udon Tani – Nabong
Lao PDR – Vietnam
Lao PDR – Cambodia
Projects under design or study
1) Sarawak – Peninsular Malaysia
2) Peninsular Malaysia – Sumatra
3) Batam - Bintan - Singapore
4) Sarawak - West Kalimantan
5) Philippines - Sabah
6) Sarawak - Sabah - Brunei
7) Thailand - Myanmar
8) East Kalimantan - Sabah
Idea of “Regional Grid” unlikely (technically, politically and economically) so only bilateral projects that make economic/commercial sense will be pursued. From Thailand’s perspective, the “ASEAN Grid” is merely a grid extension beyond Thai borders to bring electricity (mostly hydro) from neighboring countries.
Source: APAEC

9. Trans-ASEAN Gas Pipeline Projects
No regional gas market like in Europe or North America as long-term take-or-pay contracts are the norm here. Development likely to be negotiated bilaterally if it makes commercial sense.
Source: APAEC

10. Thailand’s perspectives

11. Projects within Thailand implemented with government’s force
Example of the Thai-Malaysian Gas Pipeline

14. When resistance is tough at home, ASEAN “Grid” allows cross-border exports of environmental, social and HR problems of securing energy
Nam Theun 2 (1000 MW)
Mainly to serve Thailand
6,200 people in Laos resettled
Dam will dry Nam Theun River and swell Xe Bung Fai River
Endangered species, elephant habitat to be flooded

15. ASEAN framework is used to explore and expand business opportunities for Thai energy corporations
Power projects by Electricity Generating Authority of Thailand (EGAT)’s subsidiaries
RATCH
EGCO
EGAT International
Activities in Laos, Burma, Cambodia, Indonesia
Gas/petroleum projects by
PTT (partially privatized gas/petroleum utility)
PTTEP and its various subsidiaries
Activities in Burma, Malaysia, Indonesia, the Philippines
EGAT
PTT

16. Energy plan and policy decisions (at national or ASEAN levels) dominated by business interests
Program Area
Ownership
1. ASEAN Power Grid
Heads of ASEAN Power Utilities/Authorities (HAPUA)
2. Trans-ASEAN Gas Pipeline
ASEAN Council on Petroleum (ASCOPE)
3. Coal and Clean Coal Technology
ASEAN Forum on Coal (AFOC)
(ACE as Secretariat)
4. Energy Efficiency and Conservation (EE&C)
EE&C-Sub-sector Network
5. Renewable Energy (RE)
RE- Sub-sector Network
6. Regional Energy Policy and Planning (REPP)
REPP Sub-sector Network
7. Civilian Nuclear Energy
Power and gas utilities are main drivers
EGAT
PTT
Support by Government
Source: APAEC

17. Conflict of interest : policy v business
Board of directors
Permanent secretary of ministry of energy
Chairman of PTT
Chairman of EGAT
Board member of PTT chemical
Chairman of Rayong refinery
Director general,Energy fuel
Dep. permanent secretary
Board member of Thai oil
Dep. permanent secretary
Board member of RATCH
Dep. permanent secretary
Board member of PTTEP
Director general of energy business
Board member of PTT
Director general of Department of Alternative Energy Development and Efficiency energy
Board member of RATCH
Director of Energy Policy and Planning official
Board member of PTTEP
Senior official of ministry of energy
Board member of Aromatics PLC
Senior official of ministry of energy
Board member of Bang chak
Board member of RATCH
Board member of Ratchaburi generation company
Senior official of ministry of energy 17

18. Energy policy and its impacts on share prices of energy companies in the stock market
The coup-installed government announced its policy on energy investment opportunities on 3 Oct 2006
Energy policy, PDP approval and IPP bidding resulted in significant windfall benefits for selected companies
1 year later, the share prices of companies benefiting from the PDP jumped 66% (other companies had a 8.7% rise)

19. Forecast_Mar07 (Base case)
More investments NOT equal to greater benefits for Thais
Generation capacity in excess of demand ( )
Under centralized monopoly structure
22,568
22,586
28,153
30,305
Forecast_Mar07 (Base case)
Source : EGAT
Excess gas/
pipeline capacity/
generation capacity
economic waste + excess burden for consumers

20. Power Demand: Projections vs
Power Demand: Projections vs. Actual 1992 – 2009 Repeated number errors with real consequences for affected ecology, communities and consumers MW

21. Incentive structure for utilities: the more expansion, the more profits
Financial criteria for utilities link profits to investments
Thailand uses outdated return-based regulation
WB’s promoted financial criteria such as self financing ratio (SFR) also have similar effects
ROIC (Return on Invested Capital means: the more you invest, the more profits
ROIC = Net profit after tax
Invested capital
EGAT 8.4%
MEA
PEA
4.8%
Result :
Demand forecast have systemic bias toward over-projections
Too many expensive power projects get built

22. Cycle of over-investment
Deterministic planning based
on demand forecast leads
to over-investment
in capital-intensive
power projects
Power demand
(over-)projections 1 2
Utilities’
Profits 3
Tariff structure that allows pass-through
of unnecessary investments

23. Energy security (or handsome profits) at the expense of ???

24. Siam Paragon MBK Central World Pak Mun 65 Dams Malls Province
Electricity production
and consumption
(GWh)
MBK
123 81 75
Siam Paragon
Central World
Impacts of Pak Mun Dam alone
1700 families
relocated
Loss of livelihood
for >6200 families
Loss of 116
fish species (44%)
Fishery yield
down 80%
Source: MEA, EGAT, Searin, Graphic: Green World Foundation
Pak Mun 65
Mae
Hong
Song
Dams Malls Province 24

25. การกระจายของจำนวนผู้ใช้ไฟและปริมาณการใช้ไฟฟ้า Distribution of number of power users & energy consumed
Agricultural pumping
Government
Specific businesses
Large industrial/commercial)
Small industrial/commercial
Small industrial/commercial
Large houses (>150 kWh/mo)
Small houses (<150 kWh/mo)
Number of customers
Electricity consumption
ที่มา : รายงานการปรับโครงสร้างอัตราค่าไฟฟ้า (มติ ค.ร.ม. วันที่ 3 ตุลาคม 2543)

26. "Nature has enough for our need, but not enough for our greed."
- Gandhi
"Nature has enough for our need, but not enough for our greed." -- Ghandi 26

27. In conclusion ASEAN = expanded ground ??
to which Thailand can export its envi, social & human rights problems from securing energy?
from which Thailand’s centralized energy corporations can grow and profit?
In which Thailand’s cycle of over-investment and excess consumer burden is aggravated?
ASEAN energy decisions dominated by utilities and senior officials with conflict of interests

28. MEDITATE, CONNECT, EMPHATIZE, BE GENTLER, BE KINDER
What to do?
Need to empower the grassroots
Need to reform the centralized monopoly structure and liberate decentralized solutions (local planning & control, energy efficiency and conservation, small-scale renewable energy)
Need to democratize national governments as much as ASEAN (Can we democratize ASEAN without democratizing our own governments?)
MEDITATE, CONNECT, EMPHATIZE, BE GENTLER, BE KINDER