Electricity tariffs will have to rise if power companies are to remain in business, warn the Electricity Generating Authority of Thailand (Egat) after releasing a report that predicted it would lose more than two billion baht in 2006 if electricity rates remain unchanged amid surging oil prices.

In its Power Development Plan (PDP 2004) Ð approved by the Ministry of Energy’s policy committee last month Ð EGAT said its net profit will fall to 19.85 billion baht in 2004 from 30 billion baht in 2003 and to 6.26 billion baht in 2005 if the price of Dubai crude rose above US$28 a barrel with electricity tariff unchanged. This will be followed by a total net loss of 2.03 billion baht in 2006.

EGAT has already approved the construction of 18 new power plants from 2010 to meet the country’s rising power needs. Rising oil prices could threaten this expansion programme.

EGAT’s deputy governor Kraisri Kanasuta recently told reporters that it is using more bunker oil and low-speed diesel for electricity production but that will decline from 2007 as more natural gas becomes available as feedstock. He said that Bangkok’s decision to keep electricity tariffs unchanged has left EGAT with an additional 4.8 billion baht expense from higher oil costs.