Funding from conservation fund up for legal debate

The Energy Business Department will discuss with the Energy Policy and Planning Office the legal aspects affecting the possible use of Bt7.5 billion from the Energy Conservation Fund to install oil pipelines in the North and Northeast at a total cost of Bt20 billion.

Energy Minister Pongsak Ruktapongpisal initiated the pipeline project as one of his 2013 policies. The pipelines will be connected with those of Thai Petroleum Pipeline (Thappline) in Saraburi province and run to Khon Kaen via Nakhon Ratchasima (the Northeast line) and to Nakhon Sawan and Phitsanulok (North line).

The department's director-general, Viraphol Jirapraditkul, said he would also talk with Thappline on whether the company is interested in jointly investing in the project or would want to sell its business to the government to make it easy for the state to manage the project. The conclusion of the talks is expected soon.

An Energy Ministry source said it wanted Thappline to invest in the project. However, some foreign shareholders are not interested in having Thappline invest in such project as the government has set the rate of return at 11 per cent, versus their target of 15 per cent.

Thappline has registered capital of Bt8.479 billion. Its major shareholders are PTT, Thai Oil and Caltex (Chevron). The company operates three pipeline systems: Sri Racha-Saraburi, a Suvarnabhumi Airport dedicated line, and the Map Ta Phut-Sri Racha feeder line.

The government would return the money from this project to the Energy Conservation Fund by collecting fees from the companies using the new pipelines, while a state entity would be set up to manage the pipelines.

Pongsak recently said the investment in this project would save Bt2.5 billion per year in the cost of oil transport by vehicles. This would mean people in upcountry areas would be able to pay the same retail fuel prices as Bangkok residents.