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Starting from fiscal 2010, the government may provide subsidies to state-owned enterprises as a public-service obligation (PSO), State Enterprise Policy Office director-general Areepong Bhoocha-oom said yesterday.

State enterprises providing utilities must submit a request to the Finance Ministry this year if they want a government subsidy, he said.

The State Railway of Thailand (SRT) and the Provincial Waterworks Authority (PWA) are expected to be eligible.

Subsidies to the SRT are expected to cost about Bt2 billion a year and cover railway service for economy-class riders. Another Bt1 billion is expected to go to the PWA to provide tap water to small villages, he said.

The subsidies will allow these two state enterprises to provide services to low-income groups at prices below operating costs.

Finance deputy permanent secretary Sathit Limpongpan said the PSO system was new to Thailand and that it would make government subsidies more transparent than previously. Under the new system, state enterprises will be required to separate their accounts into commercial and public-service activities, with the government supporting only the latter.

The existing subsidy system does not require new accounting practices, making it difficult to judge whether a state enterprise is operating at a loss from support for social projects or from mismanagement.