VZCZCXRO5787
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #7422/01 3490212
ZNR UUUUU ZZH
R 150212Z DEC 06
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 3449
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 BANGKOK 007422 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG EPET TH
SUBJECT:  REFORM BUT NO BIG CHANGES: THAILAND'S NEW 
MINISTER OF ENERGY SPEAKS 
 
 
¶1.  SUMMARY.  On December 4, the Ambassador, accompanied by 
the Commercial Counselor and a group of industry 
representatives met with Thailand's new Minister of Energy, 
Dr. Piyasvasti Amranand.  In his remarks and responses to 
industry concerns the Minister outlined a generally welcome 
program of reform, but no major policy changes.  He indicated 
that Thailand's plans for solicitation of independent power 
producers are on track and will go ahead with no EGAT 
setaside.  He also said that studies will proceed for the 
proposed hydro project on Burma's Salween river.  End summary. 
 
¶2.  On December 4, Ambassador Boyce led a delegation 
including the Commercial Counselor and a group of U.S. energy 
industry representatives to meet with Dr. Piyasvasti 
Amranand, Thailand's new Minister of Energy.  The Ambassador 
congratulated Dr. Piyasvasti on assuming his position, after 
which the Minister gave some brief remarks and then heard 
comments from the industry representatives. 
 
REGULATORY REFORM 
 
¶3.  The Minister outlined a series of government objectives 
for the energy sector.  These included an effort to reform 
the regulatory regime for the sector, involving amendments to 
both laws and regulations.  He cited the laws regarding oil 
trading, oil storage, and petrol stations specifically as 
needing amendment, and discussed plans for a new 
all-encompasing Petrol Act.  He also discussed his intent to 
set up an independent regulator for the oil and gas industry. 
 
FULL SPEED AHEAD FOR IPPs 
 
¶4.  Dr. Piyasvasti provided an update on the progress of the 
planned second round of bidding for Independent Power 
Production concessions.  He noted that preparations for the 
bidding were nearly complete, with the IPP solicitation 
expected in March or April of 2007; having been postponed 
from May 2006.  In response to an industry question, the 
Minister clarified that the Electricity Generating Authority 
of Thailand (EGAT) would not/not be participating in the next 
round of IPP bidding.  EGAT affiliates including Electricity 
Generating Company (EGCO) and Ratchburi Electricity 
Generating Company (RATCH), however, would be allowed to 
participate. 
 
TOWARDS A LEVEL PLAYING FIELD 
 
¶5.  The Minister noted that state enterprises have been 
moving increasingly into sectors previously dominated by the 
private sector, and acknowledged that this represented unfair 
competition.  He said that the RTG would be working to level 
the playing field, and that state companies will be brought 
under the Competition Act.  (Comment:  It will be interesting 
to watch what effect, if any, this will have in the retail 
fuel sector, where PTT is widely believed to maintain 
artificially low prices to please the government.  Although 
the RTG formally privatized PTT in 2001, a the Ministry of 
Finance still holds 52% of its shares, and a Ministry of 
Finance mutual fund holds another 15.5%.  End comment.) 
 
SUPPORT FOR RENEWABLE, BUT NOT ZONING 
 
¶6.  The Minister welcomed investment in renewable energy 
projects (the Ministry has a target of 8% renewable energy in 
Thailand by 2011), indicating that the Ministry planned to 
increase the 'adders' applied to the purchase price of 
renewable energy as incentives.  Nevertheless, the Minister 
cautioned that the first projects should not be overly 
ambitious, suggesting that a proposed 300 megawatt generating 
plant was too large.  He also expressed his disapproval for 
zoning (to protect biomass fuel sources from subsequent 
competitors), saying "you make the project, you take the 
risk." 
 
THE ENVIRONMENT SLOWS DEVELOPMENT 
 
¶7.  Responding to concerns over the environmental hurdles 
concessionaires must pass before proceeding with project 
construction, the Minister acknowledged that the current 
process makes rapid expansion difficult.  At the same time he 
remarked that reform of the environmental regulations, to 
make the process less cumbersome, would be the most difficult 
issue to tackle in the sector.  It is not clear that he 
expects any change to the current regime in the near future. 
 
DIVIDING THE GULF:  CAMBODIA'S BALL 
 
¶8.  Projections for Thailand's future energy supplies rely 
significantly on new gas fields in the Gulf of Thailand. 
Many of the potential sites, however, lie in the area of 
territorial overlap between Thailand and Cambodia, with 
 
BANGKOK 00007422  002 OF 002 
 
 
negotiations for dividing the area ongoing.  Dr. Piyasvasti 
told the meeting that he was not sure that an agreement could 
be concluded under the current government, but noted that the 
government did want to make progress during its term.  He 
noted that the Thai position was very clear and that it was 
now up to Cambodia to respond to the latest Thai 
counter-proposal. 
 
BUYING TIME ON BURMA 
 
¶9.  The Ambassador asked about the Minister's plans for the 
controversial dam project proposed for the Salween River in 
Burma, which would have EGAT buy much of the power produced 
by the dams.  In responding Dr. Piyasvasti avoided taking a 
clear position on the project.  He noted Thailand's need to 
diversify energy sources, which would need to include buying 
energy from neighboring countries.  Yet he said that it would 
not be good to become over reliant on one country and noted 
that with natural gas Burma was already a major supplier of 
energy to Thailand.  He expected that currently planned 
hydroelectric expansion in Laos would be sufficient to supply 
Thailand's energy needs for the next ten years.  Nevertheless 
he noted that two MOUs had been signed with Burma for 
feasibility studies relating to the Salween river dams, and 
that these would proceed as planned.  He indicated that once 
the studies were completed the project would be evaluated 
again. 
 
COMMENT 
 
¶10.  Dr. Piyasvasti was articulate, well informed and 
engaged, and seemed receptive to comments from industry.  He 
appears committed to using his limited time in office to 
making real improvements in Thailand's energy sector.  He did 
not address the issue of diversification of Thailand's energy 
supplies and the RTG's target of increased use of coal.  With 
considerable popular opposition to coal power in Thailand, it 
remains to be seen to what extend he will attempt to make 
progress in this area.  The U.S. corporate representatives 
were generally pleased with the presentation.  End comment. 
 
BIOGRAPHY 
 
¶11.  Dr. Piyasvasti Amranand was born 11 July 1953 and is 
married with two children.  He speaks fluent English. 
Educated in England, Dr. Piyasvasti received a BA (1st Class 
Honours) in Mathematics from Oxford, an MSc (Distinction) in 
Econometrics and Mathematical Economics from the London 
School of Economics, and a PhD in Economics, also from LSE. 
From 1994 to June 2000 he served as Secretary General of the 
National Energy Policy Council, with the National Energy 
Policy Office (NEPO) of the Office of the Prime Minister. 
From June to September 2000 he was Inspector General, Office 
of the Prime Minister, before becoming Director General of 
the Public Relations Department from October 2000 to April 
¶2001.  He again served as Secretary General of the National 
Energy Policy Council from May 2001 to June 2002, before 
becoming Deputy Permanent Secretary, Office of the Prime 
Minister, from June 2002 to January 2003.  In April 2003 Dr. 
Piyasvasti left government service, taking the position of 
Chairman of Kasikorn Asset Management Co., Ltd. (KAsset, 
Thailand's largest investment fund, with assets under its 
management of about USD 6.4 billion), where he remained until 
he was named Minister of Energy in October. 
 
¶12.  Dr. Piyasvasti has been closely involved with all major 
policy changes in Thailand's energy sector since 1986.  These 
include oil pricing policy and deregulation of oil prices, 
reform of the electricity tariff structure, deregulation and 
privatization of the energy sector, as well as purchase of 
electricity and natural gas from projects in neighboring 
countries, gas pricing policy, long term power and natural 
gas development plans, fuel specification and vehicle 
emissions, demand side management, energy conservation policy 
and promotion of renewable energy.  He has been a member of 
the State Enterprises Performance Evaluation Committee since 
1997, serving as chairman of the working groups responsible 
for evaluation of the Telephone Organization of Thailand 
(TOT), Provincial Water Authority, Metropolitan Mass Transit 
Authority, Express Way and Rapid Transit Authority of 
Thailand, Krung Thai Bank, Small Industrial Finance 
Corporation and the Small Industrial Finance Credit Guarantee 
Corporation. 
 
ARVIZU