ERRA Regulatory Story of the Month: Natural Gas Regulation in Thailand
In order to facilitate exchange of information and share of best practices, ERRA monitors regulatory developments in its member base with the purpose to highlight top regulatory stories that could be presented to other members as a highlighted policy.
In the December issue of the Regulatory Story of the Month, the spotlight is on a new regulation adopted in July 2020 by the Energy Regulatory Commission (ERC) of Thailand, which aims to promote competition in the gas market in the country.
The gas sector in Thailand was dominated by PTT Public Company Limited (PTT), which was established 40 years ago to act as the Thai national oil and gas company. PTT own extensive submarine gas pipelines, gulf gas, LNG terminal and gas distribution companies. In an effort to enhance competition, ERC introduced a Third Party Access (TPA) regime in 2014 in accordance with Energy Act 2007. With this TPA regime, a gas transmission pipeline company and an LNG terminal had to develop TPA. Despite these measures, PTT was still the single shipper and there were no new shippers in 2015. In July 2017, the government had assigned a generation/transmission state-owned company, named EGAT, to be a new shipper and bring LNG for their power plants by 2019. The government also assigned PTT to be a Transmission System Operator (TSO) for the gas pipeline. In May 2020, ERC granted 3 new shipper licenses, allowing them to import LNG and use it for their power plants.
The new gas regulation sets LNG terminal and gas transmission pipeline tariffs, monitors the standard of service and lays out the procedures for resolving disputes among stakeholders. ERC has given permission to EGAT to bring two spot cargos of LNG for EGAT’s power plants in 2019-2020, slightly reducing the electricity tariff, an endeavour which was undertaken as a pilot project which showed that TPA worked but improvements are still needed. The next challenge for ERC will be to complete the regulatory framework and allow the market to develop to a level where it attracts more players, provides stable and sustainable price signals and lowers the supply costs for customers.