New Energy Minister Thumbs Down Down Projects

Key Issues: 

Reuters 20 October 2006 

New Thai Energy Minister Piyasvasti Amranand has killed the grand plans of his predecessors, from vast tracts of oil palms to make biodiesel to building hydropower dams in military-ruled Myanmar.

Piyasvasti, an energy expert who quit the Energy Ministry in 2003 over a policy row with the government of deposed Prime Minister Thaksin Shinawatra, said he would instead boost the use of renewable fuel in power production.

”I agree with the idea of mixing used cooking palm oil with diesel, which would be good for consumers' health,'' Piyasvasti, 53, said.

”But it would be too risky to find huge amounts of land to grow just palm and nothing else,'' he said.

As global oil prices stabilised somewhat, a litre of pure palm oil would cost more than a litre of diesel and it would make no economic sense for the government to subsidise the project, started two years ago and ignored by farmers, he said.

Piyasvasti, head of the Thai government's energy policy unit before 2003, is part of a cabinet installed after a military coup ousted the Thaksin government last month.

Under a plan unveiled a year ago, the Thaksin government aimed for net crude importer Thailand to produce 300,000 litres of palm-based biodiesel a day by 2007, which meant an additional 640,000-800,000 hectares of oil palms.

But it never got off the ground and the Agriculture Ministry estimates 2006 palm output will be 5.7 million tonnes of fruit, little changed from last year.

The sharp change in direction puts Thailand at odds with other major Southeast Asian palm producers Indonesia and Malaysia. In July the two said they would set aside 40 per cent of their palm oil production for biodiesel.

Piyasvasti said he was not even going to think about Thaksin's pact with Myanmar to build a 1200 megawatt hydropower network of five dams along Myanmar's Salween River. The plan is opposed by environmentalists and Myanmar's ethnic groups. “The Salween dam is still far away. We don't need to think about it for now.''

Analysts said the post-coup interim government of Prime Minister Surayud Chulanont seemed intent on keeping a greater distance from Myanmar's military rulers.

Piyasvasti, a London-educated economist and mathematician, said he would also not revive Thaksin's plan to compete with Singapore as ``Asia's regional energy hub'' by working on tax incentives to lure foreign oil traders to Thailand. ``Thailand will have to admit it can't be Singapore, which is a true regional energy hub because it uses very little of its one million barrels per day refinery production domestically and sells the rest,'' he said.

Thaksin's plan to make southern Thailand an alternative oil shipping route to the busy Strait of Malacca and a regional oil stockpile site was not economically viable, Piyasvasti said.

”If we want to have a reliable supply of oil, it will be easier to secure it in the future markets'' than building large tank farms along the coast, which would also be disastrous in the event of oil spills, he said.