Legal delays stall Thailand privatization

2 March 2004 – Plans to privatize the Electricity Generating Authority of Thailand were stalled yesterday after documentation problems forced authorities to delay the utility’s transformation from a state enterprise to a publicly traded company.

Egat was originally scheduled to be corporatised yesterday, a crucial step on the road toward its planned April 30 initial public offering and May listing on the Stock Exchange of Thailand.

Union leaders have been rallying for over a week to fight the move, arguing that it amounts to the sale of strategic state assets to a handful of select investors and will eventually lead to higher electricity prices.

Prime Minister Thaksin Shinawatra has vowed to press forward with the IPO, insisting that the government will remain majority shareholder and accusing union leaders of fomenting unrest as a negotiating tactic aimed at securing higher benefits for themselves.

Ministers yesterday said the corporatisation, which involves the transfer of assets and liabilities from the state to a private company, had been delayed due to documentation problems, but would be completed within the next several days.

Energy Minister Prommin Lertsuridej said the formal company registration would be made within one or two days, and said the delay would not undermine the privatisation process.

“The Egat IPO will continue on schedule for April 30, with shares listed on the SET on May 12,” he said.

Egat’s IPO is this year’s most anticipated listing, and is expected to be the largest share float in the country’s history. While formal pricing and other details have not been announced, the government is expected to maintain a 75 per cent shareholding.

Dr Prommin insisted that the process had been transparent, and rebutted union statements that the listing would lead to higher power prices.

Power prices would continue to be set by an independent committee, he said. The market listing and transformation of the utility would also impose greater transparency and disclosure responsibilities on Egat while reducing public debt as the need for government guarantees on loans was reduced.

Egat governor Sitthiporn Ratanopas said the corporatisation date would depend on the Finance Ministry.

He maintained that the delay was due to ongoing legal complications at the Council of State, the government’s legal advisory body.

But Finance Minister Suchart Jaovisidha acknowledged that a delay in the corporatisation process could force a delay in Egat’s listing on the stock exchange.

“It’s up to the Energy Ministry to register the company with the Commerce Ministry,” he added.

On Feb 16, the State Enterprise Policy Committee, chaired by Deputy Prime Minister Somkid Jatusripitak, approved the privatisation of Egat with a public share float of no more than a 25 per cent stake. Egat controls the national power grid and directly owns a majority of the country’s generating capacity.

Authorities say the listing was aimed at improving efficiency within the utility, increasing the value of state assets and encouraging competition within the economy.