Thailand's Statement
on
"Energy Infrastructure Development Plan"
by
Mr. Paichit Thienpaitoon
Vice Minister for Energy of Thailand
at
The ASEAN Energy Minister – CEO Dialogue Session
ASEAN Energy Business Forum 2005
Angkor Palace Resort & Spa, Siem Reap, Cambodia
Thursday, 14 July 2005, 04.00 p.m.

Excellencies,
Distinguished Participants,
Ladies and Gentlemen,

It is a privilege for me to participate in this ASEAN Energy Business Forum 2005. His Excellency Mr. Viset Choopiban, Energy Minister of Thailand, conveys his apologies for not being able to join this event himself. On his behalf, I wish to share with you Thailand's Energy Infrastructure Development Plan.

As energy is an important driver of the economic growth, it is necessary for the government to ensure that energy demand and supply is well balanced to maintain the economic growth and development of the country. Energy infrastructure is, therefore, essential to link demand and supply together. And, I believe this matter can be one key area for closer cooperation between the public and the private sectors.

In Thailand, the major energy resources that we depend on are electrical energy and fossil fuel energy resources, mainly oil and natural gas.

Electricity Infrastructure Development -- Power Plants and Transmission System

As for electricity, it is projected that Thailand will need additional 20 Gigawatts (GW) of electricity during the next 10 years. Compared with the existing generating capacity of about 26 GW, you will see that we have to increase the generating capacity by roughly 77% in order to meet the future demand.

Where can the power supply be sought to meet the huge demand? In this regard, Thailand has plans for both domestic and foreign supply.

The domestic supply is currently from the generating capacity of the EGAT Public Company Limited (this was formerly Electricity Generating Authority of Thailand, or EGAT, which has been corporatized since 24 June this year) and from the private sector producers in the forms of Independent Power Producers (IPPs) and Small Power Producers (SPPs).

According to Thailand Power Development Plan 2004-2015, or the so-called "PDP 2004," 4 combined cycle power plants, 700 MW each, will be constructed during 2004-2010 by EGAT. Approval is also granted for an IPP (Gulf Power Generation Co., Ltd.) to construct its second generating unit of 700 MW, which will double its total generating capacity to 1.4 GW. After the year 2010, power purchase will be required from IPPs and neighboring countries.

Under the PDP 2004, there will be an additional of 18 new power plants during 2011-2015, with a total generating capacity of 12.6 GW.

As for the transmission system, when we consider the power demand and supply sources by region, it is found that the South and the Northeast of Thailand are faced with insufficient generating sources to meet their increasing demand.

Therefore, the PDP 2004 indicates that, in the Southern region, the 700-MW gas-fired combined cycle plant of EGAT in Songkhla will start commissioning by 2008. In this connection, the 115-kV transmission line, linking the Central and Southern, will be upgraded to a 230-kV system by 2007. This new transmission line will not only increase power flow between the regions but also allow installation of larger power plants with lower production cost in the South of the country.

For the Northeastern region, power supply has to rely mainly on power transferred from the Northern and the Central regions and power purchase from Lao PDR. So, to cope with the increasing demand, it is planned:

In addition, the expansion and/or improvement projects have been planned for the existing transmission systems in regional areas to enhance the reliability and efficiency of the power system.

Regarding the power supply from foreign countries, especially with our immediate neighbors where a huge potential of hydropower exists, currently the interconnections linking Thailand & Lao PDR, and Thailand & Malaysia are in operation. Construction of interconnection lines between Thailand & the Northwest of Cambodia is reported to be completed around 2006-2007. The construction of interconnection lines from southern China to Thailand, via Lao PDR, is now under feasibility study.

Natural Gas Infrastructure Development – Pipeline Networks

With regard to the natural gas infrastructure development, at present, about 80% of the total gas consumption is used for power generation. It is estimated that the average growth rate of natural gas demand in the power sector will be 5% per year from now up to 2015.

Moreover, in order to reduce oil import, Thailand has promoted greater use of natural gas in the transportation and industrial sectors.

In the industrial sector, we target to replace 5% of oil consumption by natural gas. The Gas District Cooling and Co-generation will be promoted in large industries & building and industrial estates. In the transportation sector, the target is to replace 10% of oil consumption by natural gas, or the so-called "NGV," by December 2008.

To promote the use of NGV, we have to develop the related infrastructure, involving natural gas pipelines and service stations. The establishment of NGV stations will be speeded up from the current 31 stations to 180 stations by 2008.

Current and Future Natural Gas Pipelines

Now in Thailand, we have two multi-product pipelines in operation for the transport of petroleum products, plus the pipelines importing natural gas from Myanmar, making a total capacity of about 3 billion cubic feet per day.

To cater the increasing natural gas demand in the next 10 years, the 3rd offshore natural gas pipeline is being constructed. When it is finished, the total capacity will increase to about 5 billion cubic feet per day.

Development of Infrastructure to Promote Biofuel Utilization

Excellencies,
Distinguished Participants,

At present, oil prices are very high, and there has been a strong urge for the use of green fuels. Biofuels have, therefore, come on view and have played a greater and greater role in many countries, including Thailand.

Gasohol Promotion and Future Demand

Biofuel has been developed in Thailand for some time and is now intensified with a view to reducing oil import. We have introduced to consumers in Bangkok metropolitan areas a biofuel product, that is, gasohol 95 or the so-called "E-10," which is the mixture of ethanol and Octane 91 gasoline at a ratio of 1 to 9. The price of gasohol 95 is set to be cheaper than that of gasoline 95 (at 3.75 US cents/litre) to induce gasohol utilization. And, the outcome is very satisfactory.

Now, our target is to distribute gasohol instead of gasoline nationwide. Octane 95 gasoline will be removed from the market in 2007 and Octane 91 gasoline in 2012.

Within this year, the establishment of gasohol stations will be speeded up from 730 to 4,000 stations, and it is expected that gasohol 95 utilization will increase to 4 million litres/day.

Biodiesel Promotion and Future Demand

For biodiesel, the Thai government has recently approved a budget of 1.3 billion Baht (or about 32.5 million US$) for biodiesel development during 8 years' period, from 2005 to 2012. A target is set to produce 8.5 million litres of biodiesel by 2012.

Last month (on 11 June 2005), we have launched a demonstration project of biodiesel production from wasted cooking oil in Chiang Mai province, a major city in the north of Thailand. It is the first demonstration project of biofuel production at the community level in Thailand and the first of its kind in Asia. The trial blending ratio of biodiesel is 2%, or known as "B2," and the application was targeted at 1,000 public passenger pick-ups running in the city. The blending of biodiesel will increase to 5% in 2007 and to 10% in 2012.

The outcome has been very successful and the project participants have been more than targeted. The engine performance and emission tests were carried out prior to and after the use of biodiesel. This is to create consumers' confidence in biodiesel. Oil companies participating in the project will open more "B2" service stations in Chiang Mai as the product has been widely accepted by consumers and it has caused no problem to the engine.

The project can be the prototype of biodiesel production at the community level in other major cities. And, interested private investors are welcomed to participate in biodiesel production in Thailand.

Establishment of Ethanol Production Plants

For the production of ethanol to produce gasohol, Thailand can produce ethanol from sugarcane, cassava and oil palm. At present, there are altogether 6 private sector plants that have been approved to produce ethanol, with a total production capacity of 1.09 million litres per day. Currently, 3 plants are in operation. The remaining 3 plants are reported to be in operation by the end of this year.

Since raw materials for ethanol production are abundant in the ASEAN region, close cooperation among ASEAN countries in biofuel development will be beneficial to all of us in the region. Agricultural products grown in one country can be sold to another to produce biofuels. Our cooperation can be, for example, the collaborative plantation of the feedstock plants and the facilitation of cross-border trade of agricultural products for biofuel production as well as biofuel products. The facilitation can be in the form of relaxation of the regulations and tax exemption related to the cross-border trade. This will contribute to the biofuel development on a larger scale.

Conclusion

In conclusion, may I express my sincere appreciation to the organizers of the AEBF 2005 for the opportunity given to me to share Thailand's energy infrastructure development plan with this distinguished forum.

The Thai government has clearly devised the plans and strategies based on the concept of sustainable development with a view to creating energy balance between the demand side and the supply side, as this will eventually enhance energy security of the country.

Energy infrastructure development will require huge resources, including, among others, technical expertise and financial resources. I sincerely believe that the private sector can participate and play an important role in the energy sector and that our long-term goals of balanced growth, improving efficiency and competitiveness, greater regional integration, and a fair regulatory framework would provide the foundation for which a mutually beneficial partnership can be formed.

Thank you for your kind attention.