Piyasvasti Amranand, now chairman of Kasikorn Asset Management, expressed his concern on the sidelines of the Bank of Thailand's annual symposium on government energy policy.

Piyasvasti said the government had used PTT Plc, a listed state-owned energy firm, to intervene in the market and that its objective of lowering fuel costs would ultimately backfire. Oil companies with no refineries had shut down because they could not survive in the distorted market. Upcountry, independent petrol stations have also gone out of business.

He said consumers would be the affected most in the long run, similar to when the government controlled the oil market before 1990. The market began to be liberalised after 1990, but in the past few years the government introduced many market barriers.

The government also subsidises liquefied petroleum gas (LPG) to help the poor, but Piyasvasti pointed out that most of the poor in rural areas did not use LPG.

Moreover, many motorists had switched to LPG from petrol, which causing the government to lose Bt150 million a month.

The government has also failed in regard to electricity and the implementation of a renewable energy policy, and this has resulted in market monopolies. He said the distorted market had prohibited independent operators from investing in electricity generation. A major obstacle is that independent power producers are not allowed long-term contracts to sell surplus electricity to the Provincial Electricity Authority.

He said government policy tended to promote vertical integration between PTT and the Electricity Generating Authority of Thailand, which would harm competition.

Piyasvasti also questioned the government's efforts to promote alternative fuels, such as ethanol. The government should take into account economic returns and the implication for industries like food production, he said.

Wichit Chaitrong

The Nation