BANGKOK, Jan 8 (TNA) – Thailand’s Energy Minister and leader of the United Thai Nation Party has announced a New Year’s gift to citizens – a reduction in electricity rates by 0.03 baht to 4.15 baht per unit for the first billing period of 2025, amid promises to lower overall energy costs.
This populist move, while welcomed by citizens, has drawn skepticism from business sectors, as Thailand’s energy market primarily fluctuates with global energy prices and relies heavily on private sector involvement for supply security.
The energy policy debate intensified after former Prime Minister Thaksin Shinawatra pledged to further reduce electricity rates to 3.70 baht per unit and lower fuel prices by decoupling from Singapore market prices. The announcement triggered a sharp sell-off in power sector stocks on Monday, with utility shares plummeting across the board.
Energy expert Dr. Praipol Koomsap expressed doubts about achieving the 3.70 baht target this year, citing high LNG import dependency, ongoing geopolitical tensions affecting prices, and existing debt of 80 billion baht owed to EGAT and PTT from previous subsidy programs. He suggested that achieving such low rates would require government subsidies of over 100 billion baht from taxpayer money.
However, industry observers note that declining renewable energy costs and Thailand’s high power reserve margin of nearly 50% could pave the way for future price reductions.
Proposed solutions include renegotiating capacity payments in long-term Power Purchase Agreements (PPAs) to potentially reduce rates by 0.10 baht, and implementing power sector reforms to promote competition through direct power purchases and fair wheeling charges.
The Secretary-General of the Investment Analysts Association Sombat Narawutthichai supported the initiative to reduce electricity costs, noting its potential positive impact on both living costs and industrial competitiveness.
The challenge ahead lies in balancing affordable electricity rates with sustainable financial management, particularly given Thailand’s already high household debt levels. -819 (TNA)
