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Power hike to force up price of goods

BANGKOK: Entrepreneurs under the Federation of Thai Industries (FTI) plan to increase product prices by 5-12% if the government implements its plan to increase the power tariff between January and April next year. The current power tariff, which has been driven by a higher fuel tariff (Ft), stands at B4.72 per kilowatt-hour (unit).

economics
By Bangkok Post

Wednesday 14 December 2022, 09:47AM


High-voltage power poles for Pathum Thani Provincial Electricity Authority. The regulator announced the power tariff will increase to B5.37-6.03 a unit in the first four months of 2023. Photo: Pattanapong Hirunard / Bangkok Post

High-voltage power poles for Pathum Thani Provincial Electricity Authority. The regulator announced the power tariff will increase to B5.37-6.03 a unit in the first four months of 2023. Photo: Pattanapong Hirunard / Bangkok Post

The Energy Regulatory Commission earlier announced the rate will increase to B5.37-6.03 a unit in the first four months of next year, reports Bangkok Post.

Under these circumstances, it will be difficult for manufacturers to freeze their goods prices because of higher production costs, though many of them have shifted to renewable energy by installing solar panels at their factories, said Kriengkrai Thiennukul, chairman of the FTI.

"We want the government to cap the Ft rate from January to April next year," he said. "The measure is needed as the country is facing an inflation hike and the global economy remains unstable due to geopolitical conflicts."

The federation is concerned that rising energy costs in Thailand will discourage foreign investors from expanding their businesses here, choosing other investment destinations.

"Many foreign companies are interested in venturing into business in Asean, but they may not choose Thailand because our energy costs are higher than those in neighbouring countries," said Mr Kriengkrai. "If they invest in Thailand, they may lose competitiveness."

With energy price rises showing no sign of abating, many businesses are also considering downsizing, he said. Isares Rattanadilok Na Phuket, vice-chairman of the FTI, called on the government to launch measures to help factory owners better deal with production costs, as well as assist those who want to adopt renewable energy.

Authorities should shorten the process to gain permission to install solar panels with an electricity generation capacity of 1 megawatt at factory compounds, he said.

The government should also consider granting lowinterest loans to encourage entrepreneurs to develop renewable energy systems, said Mr Isares.

He said there are many reasons for the expensive electricity bills in Thailand.

"One factor is a delay in gas production preparation at the Erawan gas block in the Gulf of Thailand when the right to gas production changed hands," said Mr Isares.

This caused Thailand to import more liquefied natural gas, which is more expensive than domestic gas supplies. He also raised doubts over predicted power consumption in the country, which is higher than actual demand.

In mid-November the Electricity Regulatory Commission (ERC) warned that the cost of electricity will rise about 14% to a minimum B5.37 per unit between January and April next year on rising fuel costs. 

Secretary-general Khomgrich Tantravanich said the ERC had three options - and the increment to B5.37 would cost consumers the least. The two other choices were B5.70 and B6.03 per kilowatt-hour.

The present rate is B4.72per unit, already an all-time high. The smallest increment, to B5.37, would be a rise of 13.77%. The biggest one (to B6.03) would mean a 28.39% rise, more that 1/4 of the current cost.

Headline inflation in Thailand is expected to be at 6.3% in 2022 before declining to 3% in 2023, according to the most recent statement by the Bank of Thailand.

“Headline inflation is expected to be higher than previously assessed for 2023 on the back of the upward adjustment of electricity charges, but it is expected to return to the target range by the end of 2023. Core inflation projection is close to the previous assessment at 2.6% in 2022, 2.5% in 2023, and 2% percent in 2024,” the regulator said in the statement on Nov 30.

Core inflation is the one stripped from food and energy prices.

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