Thailand's Ministry of Energy has announced that it will freeze electricity prices at THB4.18 (approximately US$0.12 ) per unit until the end of 2024. This decision aims to alleviate financial pressure on businesses and consumers amid a challenging economic environment.
Deputy Prime Minister and Energy Minister, Pirapan Salirathavibhaga, confirmed that electricity tariffs would remain unchanged from September to December 2024, dismissing earlier reports suggesting a 50% increase. This move comes as Thailand grapples with weak consumer spending and a sluggish manufacturing sector.
To counteract the economic downturn, the government is focusing on stabilizing electricity prices to prevent further deterioration. The Electricity Generating Authority of Thailand (EGAT) is actively collaborating with private sector partners as part of the Power Development Plan (PDP 2024), which aims to boost renewable energy usage.
In response to speculation about potential tariff hikes, the Federation of Thai Industries (FTI) has expressed concern that businesses already face economic challenges and fierce competition from China. FTI Chairman Kriengkrai Thiennukul warned that increasing electricity costs could deter foreign investment, noting that Thailand's position in Southeast Asia's foreign investment rankings has dropped from third or fourth place to sixth.
The current tariff of 4.18 baht per unit is seen as uncompetitive, exacerbated by high labor costs that make Thai products more expensive. This situation has led to the closure of many small and medium-sized enterprises unable to compete with cheaper Chinese imports.
Despite these challenges, Thailand's electricity rates remain comparable to those in Indonesia and lower than in Vietnam and Malaysia. Vietnam, for instance, offers incentives to foreign investors and has recently approved Direct Power Purchase Agreements (DPPA) for renewable energy, a move welcomed by the business community. However, Vietnam's power shortage crisis in the summer of 2023 still looms as a potential risk despite government assurances.
In September 2023, the Thai government pledged to reduce living costs by developing low-carbon energy sources while ensuring a stable power supply. Nonetheless, Thailand continues to rely heavily on natural gas, primarily controlled by the state-owned PTT Public Company Limited. The government reviews electricity tariffs every four months to balance state control and market forces.
