Thailand has resumed liberalising its energy sector, opening it up to competition again after a decade of policy hiatus when global oil prices were well over US$100 a barrel.
During this period, the costs of electricity and gas for the people were heavily subsidised by the government to lighten their burden. After oil prices collapsed in 2014, the military government started to gradually reduce these subsidies and other market distortions.
A massive amount of money is to be poured into the sector over the next several years. But, it also means a great deal of work is in store for policymakers as they seek to maintain a fair playing field for everyone involved in the market.
Businesses that have recently been freed up for the private sector to operate include the compressed natural gas station business, the import of liquefied petroleum gas, gas pipeline operation, gas transportation and the retail liquefied natural gas (LNG) business.
Thailand started liberalising its energy business through an independent power producer programme from 1990-95, when the government allowed private companies to operate oil refineries and oil retailing businesses, which encouraged both foreign and domestic investors to splash out massive capital expenditures.
Twarath Sutabutr, director-general of the Energy Policy and Planning Office, said the ongoing reforms still need regulatory oversight to ensure a fair business platform for everyone.
The state must enable the private sector to take part in the energy business, he said, as the government alone cannot handle the huge budget and technology requirements moving forward.
The arrival of foreign investment in the Thai energy sector has traditionally reflected government need. It started in the 1980s when the government had to maintain a relatively high economic growth rate of more than 7% a year, prompting it to roll out policies and restructure its energy business model to attract foreign direct investment.
Investment from foreign companies in the oil refinery business helped improve ageing facilities, which had long been monopolised by the government.
The liberalisation during that time included the oil retailing business and non-oil retailing business, which started growing rapidly after being freed up.
Twarath: State alone can't handle energy
A few years later, the government opened up the power-generating sector by allowing private firms to operate power plants via independent power producer (IPP) and small power producer (SPP) programmes in order to meet rising demand.
Bids for IPP licences were made three times over the course of several years, along with bids for SPP licences, with a total power-generating capacity of nearly 25,000 megawatts.
Currently, energy generated from private producers amounts to 52% of total power-generating capacity.
Meanwhile, when global oil prices surged above US$100 a barrel in 2009, driving up costs of power generated from fossil resources, renewable resources began to rise in popularity.
The government auctioned licences for private companies to develop renewable power plants and sell that energy to state utilities. It attracted more than 100 private firms to join the programme with several billion baht pouring into the sector as many companies expanded their projects, with some even listing on the Stock Exchange of Thailand (SET).
One of the renewable energy operators, SET-listed Gunkul Engineering Plc, a provider of engineering services and renewable power, voiced concerns that the government should maintain its policy of supporting renewable power while concurrently not tinkering with the regulatory framework too often, as this would have an impact the sector.
For example, the Supreme Administrative Court recently ruled that it is inappropriate to rent out Sor Por Kor land in Chaiyaphum, which had been designated for farming purposes, to build wind farms. It further ordered the revocation of a licence to develop a wind farm there.
That sparked concerns among solar farm developers in nearby areas, including one of Gunkul's wind farms, which is due to be developed in Saraburi. That, in turn, forced the company to suspend its feasibility study for the project.
Gunkul's managing director Somboon Aueatchasai said 15 other wind farm developers are facing the same predicament, since they are waiting on agricultural policymakers to decide how to deal with wind farms located in the disputed areas.
Scan Inter Plc, a SET-listed compressed natural gas (CNG) retail operator and engineering service provider, has also registered to become an operator of gas transport services, in line with another liberalisation policy in the industry.
Also, gas pipelines, monopolised for more than two decades by PTT Plc, the state-owned oil and gas conglomerate, have been opened up to private companies.
Scan Inter's executive director Littee Kitpipit praised energy policymakers for the liberalisation drive as Thailand has suffered from energy price distortions for a long time, particularly from 2004-16.
The company entered the CNG retail business in 2014, when policymakers initiated plans to float prices and liberalise the industry. The following year it began operating gas refill stations, and has continued to expand since, with the number of stations set to reach 16 by the end of 2017.
Enserv Power Co, a local solar farm operator and power-storage producer, said the state should facilitate the use of renewable energy in the household and building segments, allowing for private residences to store and then sell excess energy back to the grid.
"It's a good trend," said chairman Tanachat Pochana. "But amendments are needed for residents to be able to do so."