An increase in fuel tariff, or FT, planned for the business sector beginning next month needs to be reviewed.
For fear of losing public support, the Prayut government ordered the suspension of any increase in the fuel tariff -- which is used to calculate electricity bills -- for households which will continue to pay the same rate of 4.72 baht per unit.
But the business sector is to pay new rates -- a 20.5% increase or 5.69 baht per kilowatt-hour (unit) from January to April next year, causing concerns over unavoidable production price hikes and broader economic repercussions.
The Federation of Industry earlier this week said it had sought a meeting with Prime Minister Prayut Chan-o-cha, hoping that it could convince him of the fuel tariff rise's detrimental impact on industry and on the national economy.
The fuel tariff rise, they said, will result in an increase in the cost of goods and services, and it will hurt the country's competitiveness tremendously. In comparison, Vietnam's electricity costs are much cheaper.
In urging reconsideration, the federation cited irregularities in the distortion of the fuel tariff's production structure and electricity fee calculation that places a huge yet unnecessary burden on the public.
Previously, the federation said its attempts to convince Deputy Prime Minister and Energy Minister Supattanapong Punmeechaow of the need to resolve fuel tariff concerns were futile. The federation said it was frustrated by Mr Supattanapong's silence.
The irregularities, which stem from dubious energy contracts the Egat signed with independent power producers, or IPPs, involve the so-called "availability payment", which provides incentives for the private sector and eases the state burden in electricity generation.
In effect, such contracts allow several producers to bill the Electricity Generating Authority of Thailand (Egat) once they complete power plant construction without generating any units of power to the system.
In the absence of good governance, such practices result in an enormous electricity surplus, exceeding 50% of peak demand, while the acceptable amount of surplus by international standards to secure energy security is only 15%.
In short -- the surplus results from the availability payment, which has been included in electricity bills in what is known as the fuel tariff for decades. The tariff is adjusted every four months with regard to changes in energy prices. There are reports that the availability payment during September-December this year cost Egat 30.6 billion baht.
The tariff suspension put Egat in heavy debt, and the agency has sought hefty loans, with the government acting as guarantor. This is another financial timebomb for the agency and the government.
The sheer energy surplus and the fuel tariff aberration have been openly discussed by several sectors of society, yet there are no remedies. The Energy Ministry, as well as the Energy Regulatory Commission (ERC), have just sidestepped it.
In its latest move, the federation said it's necessary for the government, the Energy Ministry, and the Egat to negotiate with the IPPs to look for options to minimise the damage to the country.
As head of the administration, Gen Prayut can no longer stay in his comfort zone and distance himself from the matter. His tolerance of such non-transparency in this crucial sector should make the public question his integrity and leadership, or lack thereof.
