Probe into Independent Power Producer scheme tendering processes

Economy August 13, 2014 01:00

By Watcharapong Thongrung
The Na

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The Independent Power Producer (IPP) scheme is being scrutinised to evaluate the transparency of its contract-tendering processes, said Areepong Bhoocha-Oom, permanent secretary of the Energy Ministry. He said he had held discussions with the newly appoin

The investigations follow a petition to the National Council for Peace and Order (NCPO) to examine the ousted elected government’s award of an exclusive contract to Independent Power Development, a joint venture between Gulf Energy Development and Mitsui & Co (Thailand), to build a 5,000-megawatt natural-gas-fired power plant.
Areepong said all seven of the new members of the energy regulatory body were qualified and there were no conflicts of interest as alleged, because they had resigned their other positions upon their appointments to sit on the commission.
He said a committee appointed by NCPO to follow up and scrutinise public-sector budgets and the Office of the Auditor General of Thailand were investigating the IPP auction along with the energy regulator. The Energy Ministry is also taking part to provide necessary information.
A ministry source said companies that took part in the IPP programme had alleged an unclear process for announcing the terms of reference (ToR) and the names of the qualified bidders, emphasising the point that Electricity Generating Co had proposed the lowest electricity tariffs but was not picked. 
Sources said there was no explanation to the public on whether the ToR were designed for the benefit of some particular bidders, despite the fact that the deal was worth more than Bt100 billion and would be an obligation for electricity consumers for a 25-year period.
Praipol Kumsup, an economics lecturer at Thamamsat University, agreed that the public should be told the details and procedures of the IPP tendering and the methods should be more flexible and not involve large electricity purchases from a single company. Nevertheless, the bidding for this contract has taken place and the power purchase agreement has already been signed. Cancelling the concession at this late stage might affect the confidence of investors, since Mitsui is a majority shareholder of the project. Chen Namchaisiri, vice chairman of the Federation of Thai Industries, said an examination of the IPP tendering procedures could be worthwhile to clear up suspicious issues, but he agreed that the contract in question should not be cancelled, since doing so would affect the investors.