Thailand: Power hike to force up price of goods

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 4.72 baht per kilowatt-hour (unit).

The Energy Regulatory Commission earlier announced the rate will increase to 5.37-6.03 baht a unit in the first four months of next year.

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 low-interest 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.

th04“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 related news, the FTI on Tuesday reported the Thailand Industry Sentiment Index increased to 93.5 points in November, up from 93.1 points in October, mainly attributed to increases in sales and goods purchase orders.