Thailand: Energy Ministry to set up expert panel for studying the creation of national oil company

Thailand: Energy Ministry to set up expert panel for studying the creation
of national oil company

THE ENERGY ministry plans to set up a committee made up of representatives
from related state agencies, energy experts and civil groups to study the
establishment of a national oil company (NOC), after the National
Legislative Assembly (NLA) passed the Petroleum bill on Thursday.

Energy minister General Anantaporn Kanjanarat said yesterday that the
committee could include opponents to the bill, assuring an impartial study.

The comprehensive study could be competed within 60 days, he said.
Previously the National Energy Policy Council had assigned the Finance
Ministry to look into the establishment of the NOC, he said.

However, the future of the NOC is less than certain.

After facing opposition from the business community and prominent figures,
section 10/1 NOC was scrapped from the bill. However, it was annexed to the
end of the bill, meaning the government has no obligation to create it.

Deputy Prime Minister Wissanu Krea-ngam said yesterday that the Cabinet
would decide whether or not an NOC would be set up.

If the Cabinet decides to goes ahead, Wissanu said there might be a separate
law or new amendment to the Petroleum Bill to provide a legal framework for
the NOC.

Meanwhile, Veerasak Pungrassamee, director-general of the Mineral Fuels,
said the department would conduct the study to determine the best method to
be used for the next auction of petroleum exploitations. There are three
options: concession, production sharing contract and service contract.

He said the new terms of reference (ToR) would be finished by the end of
April and the auction would be held after the ministry issues organic laws
in line with the Petroleum Bill.

The existing concessions for both Erawan and Bongkot fields, which account
for a combined 70 per cent of the countries oil and natural gas reserve, are
due to expire in 2022 and 2023 respectively.

At the same time, Kamolphan Cheewaphansri, one of the key leaders of the
People's Network for Thailand Energy Reform, who support the NOC but oppose
the Petroleum Bill, yesterday vowed to continue the fight to establish the
NOC.

The NOC is considered to be an effective mechanism to protect national
energy resources, according to the group. Their stance is strongly opposed
by the business community and former deputy prime minister MR Pridiyathorn
Devakula.

In a related development, another key bill is a Petroleum Income Tax Bill,
which was also passed by the NLA on Thursday. The Finance Ministry will
supervise tax collection from oil companies awarded exploitation contracts.

The Finance Ministry aims to close a loophole by imposing stringent rules on
business operations between a parent company based abroad and its subsidiary
in Thailand.

The new rules are expected to help the Revenue Department collect more
petroleum income tax as they have the potential to prevent transfer pricing.
This involves a parent company charging unreasonably high costs, such as
rent of an oil rig from its subsidiary to deflate its profits, said Prapas
Kong-Ied, deputy permanent secretary of the Finance Ministry.

Currently, petroleum income tax is 30 per cent on top of profit, compared to
20 per cent on corporate income tax for other types of businesses and
industries.

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Link to Original Article:
http://www.nationmultimedia.com/news/national/30310961

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com