"APEC Energy Working Group Natural Gas Reform Workshop"
APEC Energy Working Group Implementation Facilitation Assistance Team to Thailand A Follow-up Workshop Phuket, Thailand, 17-18 August 2000 Invitation: On 23 June 2000, the Royal Thai Government issued an invitation letter to the Chairman of the APEC Energy Working Group (EWG) for a delegation of experts to travel to Thailand to assist with Thailand’s natural gas and power sector reform process. Background: An APEC-PECC Energy Investment Workshop was held in Oakland on 19-20 April 1999. The objective was to recommend specific actions to improve investor confidence and mobilize capital for infrastructure development in APEC’s energy sectors. In pursuant to the APEC EWG meeting in Oakland in April 1999, Thailand had an opportunity on 8-10 November 1999 to welcome a panel of experts, or the so-called “Visit Team,” from the public and private sectors of member economies. This Visit Team comprised representatives from Australia, Canada, New Zealand, the Philippines and the United States of America, selected by the Implementation Committee for Natural Gas and Independent Power Producers. The purpose of the Visit Team was to advise the Thai authorities on ways to successfully implement the natural gas industry reforms and to begin the consultative process on implementing APEC’s ten Natural Gas Initiative Business Priorities. Business representatives from member economies also participated in the workshop. The Visit Team, through their extensive experiences, provided Thai authorities with advice, challenges and successes for the natural gas sector reform to be adapted to suit conditions in Thailand. This “Test-Case” workshop provided an excellent opportunity for Thai authorities and business representatives to discuss freely and broadly on such key issues as key inhibitors for the natural gas reform process, distortion in the reform process, new entry in the industry, definition of old and new gas supply, Third Party Access, timing of reform and public opinion on the reform process. The result of the Natural Gas Reform Workshop in November 1999 in Thailand was also useful for the implementation of the restructuring of the electricity supply industry (ESI) and the establishment of the power pool. Clear policy directions have helped to revive investor confidence in Thailand. A number of investors are showing great interest again in projects related to natural gas production and pipeline as well as power production and trading activities. It is believed that reforms of both the natural gas supply industry and the power sector would provide an important stimulus to the recovery of the Thai economy. At the APEC Energy Ministers Meeting in San Diego, USA, on 12 May 2000, Energy Ministers have made a vigorous commitment to the new Implementation Strategy. The first Visit Team to Thailand was cited to be a successful approach of the Implementation Strategy. In order to respond to the Ministers’ commitment and to propel the energy sector reform in Thailand, a follow-up visit of the EWG Implementation Facilitation Assistance Team (IFAT) will be helpful in determining the most suitable approach and policies on the Thai energy sector. Purpose of the 17-18 August 2000 Workshop: Thailand is seeking advice from the IFAT members on the following two main issues: Firstly, the issue on Third Party Access (TPA) to the natural gas pipeline system, which is a crucial element of the future open and competitive natural gas market but the implementation of which has been delayed. Secondly, the Power Pool establishment in Thailand by 2003. Following the Master Plan for State Enterprise Sector Reform, National Energy Policy Office (NEPO) commissioned a group of consultants to conduct a study to finalize the detailed plan for restructuring the power sector. According to the plan, wholesale competition, through the introduction of the Power Pool and bilateral trading, will commence in 2003, and all consumers will enjoy the benefits of wholesale competition since day one. To make the plan a reality, NEPO and the three utilities and related agencies need to work closely together to implement many important tasks, including establishing the regulatory body, drafting the market and technical rules, and designing a detailed mechanism for stranded cost recovery. Proposed Structure of the Workshop The workshop will be held in a plenary session. Thursday, 17 August 2000 (am) Discussion on the Third Party Access (TPA) to the natural gas pipeline system. Briefing on the TPA study will be made to the meeting. Problems and hindrances that delay the implementation will be tabled for advice and recommendations of the IFAT. In addition, transparent regulatory and policy framework based on best practice principles and competitive market designs to attract investment in the energy sector may also be discussed. Thursday, 17 August 2000 (pm) Discussion on the Power Pool establishment in Thailand by 2003. The proposed future ESI structure will be presented for the IFAT’s comments. (Background information is available in NEPO’s homepage: www.nepo.go.th/power/pw-PowerPool-FR-index.html ) Problems and challenges encountered during the reform process, and remaining issues to be resolved in Thailand will be discussed. Discussion topics of interest are: 1. Introduction of retail competition 2. How to prevent and curb the exercises of market power Friday, 18 August 2000 Discussion on the Power Pool establishment in Thailand by 2003 (continued). Presentation/discussion by the IFAT on challenges and solutions on specific implementation issues plus advice and recommendations of the IFAT on the application to Thai conditions: 1. Establishment of an independent regulatory body 2. Transmission congestion management and transmission planning 3. Stranded costs 4. Settlement systems 5. Managing the process and achieving consensus and acceptance Wrap-up of the workshop Workshop Participants: APEC Energy Working Group (EWG) APEC Energy Business Network (EBN) IFAT Members as appointed Thailand Participants : National Energy Policy Office (NEPO) Department of Mineral Resources (DMR) Electricity Generating Authority of Thailand (EGAT) / Metropolitan Electricity Authority (MEA) / Provincial Electricity Authority (PEA) 2 Petroleum Authority of Thailand (PTT) / PTT Exploration & Production Public Company Limited (PTTEP) / Electricity Generating Public Company Limited (EGCO) / UNOCAL Thailand Business representatives from member economies Date and Venue of the Workshop: The workshop will be held on Thursday and Friday, 17-18 August 2000 in Phuket province in southern Thailand. The fourth meeting of the EWG Business Network (EBN) will be held back-to-back with the workshop on Saturday, 19 August 2000, at the same venue. The workshop will be co-hosted by the NEPO, EGCO, PTTEP and UNOCAL Thailand. Accommodation/Facilities Arrangements: As in the previous workshop, the IFAT members are requested to bear their own travel and accommodation costs. Thailand will meet the cost of providing lunches, dinners, meeting room and facilities charges. Thailand will also provide the secretariat support. Prepared by the National Energy Policy Office 7 July 2000 3