Thailand's National Energy Policy

1. Thailand's National Energy Policy Dr. Twarath Sutabutr Director Policy and Strategy Coordination Office Friday 15th December 2006

2. Thailand’s National Energy Policy Short Term …….. “ Governmentwill support energy saving and promote energy efficiency as well as enhance more use of renewable energy. Promotion of exploration and develop domestic energy as well as international petroleum resources will be accelerated including those within overlap pig-claim areas with neighboring countries. Emphasis is also given to promote clean energy are establish market-based pricing structure. Reform of energy management scheme by clearly separating policy from regulatory foundations ispriority along with ensuring competition in energy business as well as better feasibility R&D activities on Energy Technology” …. H.E. General Surayud Chulanont November 3rd, 2006 Immediate Actions And Implementations Long Term Set direction toward sustainable development Policy and Strategy Coordination Office

3. Thailand’s National Energy Policy • Establish the regulatory framework for Electricity and Natural Gas Industries • Enhance Energy Supply Energy Security (Self Sufficiency) • Promote Energy Saving & Energy Efficiency • Promote Renewable and Alternative Energy  Reduce Imports and diversify fuel types and sources • Market-based Pricing Structure Reflect true cost in a transparent manner and promote competition • Set mandate on Clean Energy Alleviate impacts on environment  Energy CDM Project • Promote Public and Private Participation in Policy Formulation  Sustainable Development Immediate Actions and Implementation + Set direction toward sustainable development Policy and Strategy Coordination Office

4. Establish Regulatory Framework for Electricity and Natural Gas Industries • Enactment the Energy Industry Act to regulate the electricity and natural gas supply industries: • The regulatory function to be separated from policy making • Establishment of independent regulatory body • Regulatory framework during the transitional period • Dissolution of the temporary Electricity Regulatory Board. Responsibilities for electricity tariff, load forecast, power development plan, interconnection regulations and IPP bidding to come under National Energy Policy Council • Establish a “Natural Gas Regulator” as a committee under Corporatization Act to take over any “state power” currently given to PTT Plc. Policy and Strategy Coordination Office

5. Enhance Energy Supply : Proposed Amendments to the Petroleum Act B.E. 2514 Objectives • To change certain provisions in line with advancement in technology • To provide incentives for marginal and declining petroleum fields by royalty reduction • To introduce criteria on decommissioning of offshore platforms • To revise composition of the Petroleum-Committee Members • To streamline and shorten approval processes under the Petroleum Law

6. Average Growth 6% (2006-2021) 7,130 7,500 3,115 5,252 32% 28% 43% 72% 27% 34% 28% 19% 13% Long-Term Natural Gas Procurement Plan MMscfd @ 1000 btu/scf LNG/Regional Gas Myanmar New NG Resources in Thailand Current NG Resources in Thailand LNG (MTA) 1.3 7 9 10 10 10 Policy and Strategy Coordination Office

7. Preliminary Power Development Plan (New Capacity after 2010: Gas 40%, Coal 40%, Import 20%) Policy and Strategy Coordination Office

8. Promote Private Sector Investment in Power Generation The Status of IPP, SPP and VSPP(Already Supplied to Grid as of September 2006) Remark: Including the Pre-COD of BLCP Policy and Strategy Coordination Office

9. To encourage biddersto submit bids offering: competitive power prices risk allocation terms attractive to the Government capacities and related CODs that meet solicited capacity requirements Tentative Schedule - RFP issued April 2007 - IPPs submit bid Oct. 2007 - Evaluate & select winner April 2008 - PPA & GSA negotiations concluded Oct. 2008 Next IPP Bid Solicitation for Generation Capacity during 2011-2015 • Issues still to be clarified: • Amount of solicitation • Eligibility of EGAT’s subsidiaries • How to encourage fuel diversity, particularly coal Policy and Strategy Coordination Office

10. Power Purchase from Lao PDR Policy and Strategy Coordination Office

11. SPPs and VSPPs: Cogeneration and Electricity from Renewable Energy • Renewable electricity produced from biogas, biomass, MSW, Wind, Solar and other renewable energy • Revise the VSPP’s regulation to expand the power purchase to grid from <= 1 MW to <= 10 MW and to include cogeneration facilities • In case of VSPP’s, provide “Adder” to normal purchase price for renewable energy • In case of SPP’s, use the bidding system for energy payment adder to the normal purchase price • Community-scale project development • Bio-diesel • MSW fired power plants • Development guidelines and implementation of CDM projects • Adder for VSPP Programme • Biomass 0.30 Baht/kWh • Micro Hydro (< 50 kW) 0.80 Baht/kWh • Micro Hydro (50-200 kW) 0.40 Baht/kWh • Wind 2.50 Baht/kWh • MSW 2.50 Baht/kWh Policy and Strategy Coordination Office

12. Promote Energy Saving and Efficient Use of Energy • Establish National Demand Side Management Office • Speed up energy efficiency labeling program • Expand scope of building codes for energy conservation • Establish minimum energy efficiency standards equipments • Cogeneration via SPP,VSPP, and DG • Set targets for energy • saving in both public • and private sectors • Awareness • Campaign • Logistics • Promote mass transit and use of rail for transportation • Energy efficiency and labelings of vehicles Policy and Strategy Coordination Office

13. Liberalize ethanol production and investment Promote competition in supply of ethanol and regulate ethanol price to ensure fair price for consumers Apply tax incentive to ensure that retail price of gasohol is lower than ULG-95 Postpone ULG-95 phase out until Ethanol production is sufficient Fair alternatives exist for old cars Assurance of Gasohol qualities at all petrol stations Encourage production and consumption taking into account the economic cost and potential Set clear policy and direction to promote bio-diesel as new alternative for transportation fuel Promote Alternative Transport Fuels : Gasohol and Bio-diesel Policy and Strategy Coordination Office

14. Import Duty Exemption for NGV equipment and container until 2008 NGV engine Excise Tax Reduction for NGV- OEM from 30 % to 20% Excise Tax Reduction for NGV-Retrofit from 30 % to 22% but not exceed 50,000 Baht BOI Privileges ENCON Fund 2 Billion Baht To change the NGV engine for BMTA’s vehicles and coaches. PTT fund 5 Billion Baht To change the NGV engine for private transportation companies • Truck • BMTA vans • Coaches • Conversion of LPG taxies to NGV taxies Measures to Promote NGV Taxation Revolving Fund • Target of NGV Promotion Present 2010 • No. of installed NGV in vehicles 23,193 500,000 cars • No. of NGV Filling Station 76 740 stations • Establish clear and fair NGV pricing structure Policy and Strategy Coordination Office

15. Measures to Support Clean Fuel for Environment • Oil Vapor Recovery System • Petrol stations, oil depots and oil trucks in Bangkok, Nontaburi, Pathumtani and Samutprakarn areas must install the vapor recovering units (VRU) • The regulation is expected to be approved by Cabinet by the end of November 2007. New facilities must comply immediately and existing facilities have one year to comply. • Implementation of Euro-IV oil specification • Present SpecificationNew Specification (Effective in 2012) • 1. Gasoline/Gasohol • Lead <= 0.013 g/litre 0.005 g/litre • Olefin - <= 18% Vol • Sulphur <= 500 ppm <= 50 ppm • Benzene <= 3.5% Vol <= 1% Vol • 2. Diesel • Sulphur <= 350 ppm <= 50 ppm • Cetane No. >= 47 >= 50 Policy and Strategy Coordination Office

16. Market-Based Pricing structure MARKETING MARGIN OF PRETROLEUM PRODUCTS (10 JAN 04 - 8 NOV 06) • Promote competition and efficiency to ensure competitive and transparent energy prices Policy and Strategy Coordination Office

17. Thank you from Ministry of Energy For more information, log on http://www.energy.go.th