Thai businesses on track to navigate energy price cuts: TDRI concerns loom

Thai businesses are assessing the implications of the government’s recent energy price cuts, amidst concerns from the Thailand Development Research Institute (TDRI) about the potential adverse long-term effects of the policy.

The Srettha Thavisin-led government has decided to slash the power tariff from 4.45 baht per kilowatt-hour to 3.99 baht between September and December and cap the retail price of diesel at 30 baht a litre, a decrease from the previous price of 31.94 baht a litre.

This policy move is one of the government’s early interventions designed to mitigate the impacts of high energy prices on businesses and households. However, its impact is yet to be fully understood.

For example, Doctor Weerachat Kittiratanapaiboon, the chief executive of Biodegradable Packaging for Environment Co (BPE), a Thai company specialising in the production of food and beverage containers from agricultural waste, indicated that it is still assessing how the energy price reduction will affect its operating costs.

Dr Weerachat, a former doctor who transitioned into business, expressed scepticism about the potential for the policy to lead to substantial reductions in power bills and operating costs. He pointed out that the high cost of energy had previously led BPE to install rooftop solar panels, which now account for about 40% of the company’s electricity needs.

While the Federation of Thai Industries has welcomed the lower power tariff, it has called on the government to devise more sustainable solutions to the problem of high electricity bills.

Energy price structure

The federation argued that while controlling energy prices might yield short-term benefits, it does not address underlying issues in the national energy price structure, which could result in a resurgence of expensive electricity and oil prices.

This sentiment is echoed by TDRI senior researcher Chakorn Loetnithat and Siripha Junlakarn, a researcher from Chulalongkorn University’s Energy Research Institute, who have called for a more strategic approach to Thailand’s energy pricing.

They argue that the reduced power tariff extends the repayment period for the Electricity Generating Authority of Thailand (Egat), which could impact its cash reserves and its ability to invest in smart energy solutions to combat global warming.

Furthermore, they warn that if the energy measures are kept in place for too long, it could discourage energy conservation efforts. They recommend that these energy measures be short-term to prevent them from placing undue pressure on public debt, reported Bangkok Post.

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