Shocking hike: Thai industries spark concern over electricity rates

Thailand’s plan to hike electricity rates later this year could deter foreign direct investment, warned the Federation of Thai Industries (FTI). The alert followed the Energy Regulatory Commission’s (ERC) announcement on Friday, indicating an imminent rise in power bills for both businesses and households.

The ERC has proposed three new power tariff options, featuring increases from 11% to 44% above the current rate of 4.18 baht per kilowatt-hour, which will remain in effect until the end of August. These adjustments stem from higher gas prices during the cool season and the need to repay debts to the Electricity Generating Authority of Thailand (EGAT) and gas suppliers.

The new rates, set to be implemented from September to December, will range from 4.65 to 6.01 baht per unit. The commission explained that EGAT and gas suppliers had previously helped the government keep tariffs low from September 2021 to April this year, leading to a 15 billion baht debt from gas purchases and a 98 billion baht loss for EGAT.

Kriengkrai Thiennukul, FTI Chairman, stated that the 4.18-baht rate is already high. Foreigners who plan to invest in Thailand may need to think carefully.

Thailand’s power tariff surpasses that of some neighbouring countries, including Vietnam, potentially making Vietnam a more attractive destination for foreign investors. This disparity could impact Thailand’s efforts to lure foreign firms, as rising electricity costs may elevate operating expenses.

Entrepreneurs might consider relocating to countries like Vietnam, which not only offers lower electricity rates but also benefits from more free trade agreements than Thailand. Kriengkrai added that higher power bills could compel local manufacturers to increase product prices, making it challenging to compete with exporters of low-cost goods.

“This may affect the state’s attempts to encourage foreign firms to invest in Thailand as electricity prices are set to increase, eventually driving up their operating costs.”

The situation places Thailand in a precarious position as it attempts to stimulate its sluggish economy. The anticipated rise in electricity costs could have a ripple effect, impacting both domestic and international investment landscapes, reported Bangkok Post.