Egt to adjust investment, control costs

The Electricity Generating Authority of Thailand will adjust its investment plan and control costs this year to deal with the economic downturn, said its governor Sombat Sarntijaree.

The declining economy has lowered the demand for electricity, which has prompted the state agency to delay investment in many projects by another one or two years, including the Wang Noi power plant and the power plant in the lower part of the South.

Sombat added that the investment focus in 2009 would therefore be on improving the efficiency of the existing power plants, such as the Ma Moh coal-fired power plant, to cash in on falling material prices.

Egat will also launch an early-retirement programme this year to cut costs further. The programme budget is around Bt1 billion. The state agency has 24,000 employees.

Sombat said that declining electricity demand would not adversely affect the agency's cash flow if the government compensates Egat for its subsidy of the price of electricity to the consumer over the past several months, worth a total of Bt13 billion.

Under six measures launched in August to lower the cost of living, Egat subsidised power bills for households consuming fewer than 80 units a month, with a 50-per-cent subsidy for consumption between 80 and 150 units.

Egat is still waiting for the compensation for the subsidy and has already asked the Finance Ministry for permission not to have to contribute its 2008 net profit of Bt7 billion to the state coffers.

It wants to save that money to be part of its cash flow. Egat's administrative costs are about Bt24 billion each year.

Egat pays 30 per cent of its annual net profit to the ministry in two instalments, the second of which, Bt7 billion, was due at the end of 2008.

Sombat said Egat did not reduce the budget for its long-term investment plans because the plans - such as the training of staff on nuclear-plant knowledge and the exploration of coal resources in Indonesia - do not require huge cash amounts.

In addition, Egat targets to set up a joint venture this year to develop the Hatgyi dam construction project on Burma's Salween River. The plant will sell its output to Thailand and is expected to start feeding energy into the national grid in 2015 or 2016.