EGAT privatization receives boost

Brooker group analyst explains how the appointment of a new governor may speed privatization.

Last week, progress towards the privatization of the Electricity Generating Authority of Thailand (EGAT) received a major boost with the selection of its new Governor, Mr. Sitthiporn Ratanopas, by a government nominating committee. Mr. Sitthiporn has spent the last two years as President of Electricity Generating Plc (EGCOMP), a holding company and power plant operator set up by EGAT in 1992 that was listed on the Stock Exchange of Thailand (SET) in January 1995.

One of EGCOMP's largest shareholders is CLP Power Projects (Thailand) Ltd, a wholly-owned subsidiary of Hong Kong-based China Light and Power Co Ltd, that currently holds a 20.75% stake in the company. As well as being President of EGCOMP, Mr Sitthiporn is also a Deputy Governor of EGAT and is one of Thailand's most respected energy sector technocrats. His new appointment is due to be formalized by mid-September by EGAT's board before being forwarded to the Cabinet for final approval.

This move is being interpreted as a clear signal that the privatization of EGAT is likely to be given renewed priority by the Thaksin government. EGAT is responsible for providing electricity to the whole kingdom by generating, purchasing, transmitting and selling bulk energy to two state enterprise distributors and other direct consumers. EGAT is also responsible for the development and planning of the generation and transmission systems. In 2001, EGAT's operating revenues were THB 185 billion (US$ 4.4 billion), making it one of the biggest players in the country's energy sector.

Mr. Sitthiporn, who will be replacing current EGAT Governor Vitaya Kotcharug, is also well known for his political savvy and his favorable reputation with EGAT employees. Both of these qualities will be crucial for steering this state enterprise toward privatization, which at present is scheduled for 2004.

Perhaps the toughest hurdle facing Mr. Sitthiporn will be to overcome opposition to the privatization process from EGAT's 28,000 employees. Previously, Mr. Sitthiporn was known for his opposition to employee layoffs as part of efforts to restructure EGAT in preparation for privatization. It will be interesting to see if his views on this subject remain rock solid now that he is about to assume the Governor's chair at EGAT.

The timetable for Mr. Sitthiporn to take over the top position at EGAT could be delayed, however. Senior advisors to Prime Minister Thaksin who are driving his bureaucratic reform programme have argued that the appointment of a new EGAT Governor should be delayed until after the planned Energy Ministry is established.

Currently, EGAT is under the authority of the Office of the Prime Minister. Yet with the legislation that would make this change possible not scheduled for submission to Parliament until October 2002, it remains unclear whether the Thaksin government will risk putting off Mr. Sitthiporn's confirmation.

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