Ft to Remain High to Ensure Profitability
Posted on: Friday, 26 August 2005, 21:00 CDT
Aug. 26--The fuel adjustment tariff, known as Ft, will be restructured to ensure that Egat Plc reaches its revenue projection and to create more transparency for investors ahead of the privatisation of the country's largest utility, the National Energy Policy Committee said yesterday.
Deputy Prime Minister Visanu Krue-ngarm, who chairs the committee, said that under the reform, the only Ft components to remain would be Egat's costs for fuel and electricity purchases. The new Ft would be more fair to consumers.
Besides fuel and electricity purchase costs, Ft components now include Egat's administrative and foreign-exchange costs. The Ft is reviewed every four months although the government has prohibited increases in the adjustment for two years.
In theory, the Ft restructuring should lead to lower Ft charges in power bills but in practice, the charges will not decrease, at least in the near future, because Egat currently must bear the expense of subsidising power costs at four satang a unit (kilowatt/hour), according to an official of the Energy Ministry.
The committee also approved an increase in Egat Plc's registered capital to eight billion shares from two billion, with a par value of 10 baht each. The shares are slated to be offered for subscription at the end of October and allotted to investors in mid-November.
Under the current listing plan, at least 75 percent of the registered capital will be held by the government. The rest will be tendered to investors, with around 70 percent to be offered to local investors and 30 percent to foreigners. A portion of the local shares will be allotted to provident funds.
The committee also resolved that Egat accelerate the restructuring of its power business into an enhanced single-buyer pattern and the unbundling of its accounting practices to separate the generation and transmission businesses.
On the basis that Egat will be prohibited from participating in IPP bids after 2010, the committee has allowed the utility to hold 50 percent of new power generating capacity obtained from 2011 to 2015 to ensure energy security.
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Source: Bangkok Post
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