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IMPACT OF THE FINANCIAL CRISIS IN THE DEVELOPMENT OF THE ENERGY SECTOR : A CLIENT’S POINT OF VIEW. by Piyasvasti Amranand National Energy Policy Office, Thailand ENERGY WEEK 1999 World Bank 7 April 1999, Washington D.C.
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IMPACT OF THE FINANCIAL CRISIS IN THE DEVELOPMENT OF THE ENERGY SECTOR : A CLIENT’S POINT OF VIEW by Piyasvasti Amranand National Energy Policy Office, Thailand ENERGY WEEK 1999 World Bank 7 April 1999, Washington D.C.
COMMON FEATURES OF ENERGY SECTOR IN EAST ASIAN COUNTRIES (BEFORE CRISIS) • HIGH RATE OF ENERGY DEMAND GROWTH • ENERGY PRICES PARTIALLY CONTROLLED • EXCHANGE RATE FIXED OR RIGID • DEREGULATION AND PRIVATIZATION OF ENERGY SECTOR IN INITIAL PHASE • LOCAL CAPITAL MARKET RELATIVELY UNDEVELOPED
IMPACT OF GLOBAL FINANCIAL CRISIS ON ENERGY SECTOR • SUBSTANTIAL SLOWDOWN IN ENERGY DEMAND GROWTH • RISE IN ENERGY PRICES IN LOCAL CURRENCIES • NORMAL OPERATIONS AND INVESTMENT PROGRAM SUBSTANTIALLY HIT BY LIQUIDITY PROBLEM AND FALL IN SOVEREIGN CREDIT RATING • FX LOSS FOR ENERGY RELATED ENTERPRISES GREATLY AFFECTED THEIR SOLVENCY
RESPONSES TO IMPACT OF GLOBAL FINANCIAL CRISIS • REDUCTION IN INVESTMENT • UPWARD ADJUSTMENT IN ENERGY PRICES • PRIVATIZATION AND DEREGULATION SPEEDED UP • CONTRACT RENEGOTIATION AND DEBT RESTRUCTURING
ISSUES ENCOUNTERED IN IMPLEMENTATION • REDUCTIONS IN ENERGY INVESTMENT AND IMPORT HAVE REPERCUSSIONS ON ENERGY EXPORTING COUNTRIES • CONTRACT RENEGOTIATION NEED TO BE CAREFULLY IMPLEMENTED AS NOT TO JEOPARDIZE INVESTOR CONFIDENCE • SECTORS WHERE PRICES ARE NOT CONTROLLED CAN BETTER COPE WITH CRISIS • COMPREHENSIVE SECTOR REFORM AND ESTABLISHMENT OF INDEPENDENT REGULATORY BODY BECOME MORE ESSENTIAL