The Energy Regulatory Commission (ERC) has blocked Global Power Synergy Plc (GPSC), PTT's power-generating arm, from taking over Glow Energy Plc, in a move that collapses this year's biggest investment deal.
The energy regulator on Thursday disagreed with the acquisition, saying the deal breaches the Energy Industry Act's standards for monopoly.
In June, GPSC agreed to purchase 69.11% of Glow's shares from French-based Engie Group. The remaining 30.89% of shares were to be bought through a tender offer.
The deal had an estimated value of 139 billion baht.
Under the plan, GPSC was to own 80% of private power purchase agreements (PPPAs) in the Map Ta Phut area. Before the takeover began, GPSC controlled 20% of PPPAs in the area and Glow had 60%, with the remaining 20% held by the Provincial Electricity Authority (PEA).
Former finance minister Korn Chatikavanij objected to the deal, and he submitted a petition to the ERC and the Office of the Ombudsman on Sept 12.
Moreover, the US-Asean Business Council submitted a letter of concern to Deputy Prime Minister Somkid Jatusripitak in August, saying the council was seeking clarity on serious concerns from member companies in the industrial sector regarding the attempted takeover.
Most power buyers in Map Ta Phut are petrochemical units of SCG Chemical Co and requested the ERC be a moderator and have GPSC sign an agreement to act fairly after acquiring Glow.
ERC secretary-general Naruephat Amornkosit said the deal would have seen GPSC monopolising PPPAs for electricity trading with a dozen industrial firms in the Map Ta Phut area.
"Although there will only be GPSC and the PEA, we judge that GPSC will have an infrastructural advantage over PEA, particularly in stable power transmission," Ms Naruephat said. "The ERC's decision will uphold a standard of duty that the agency should promote competition among power players and will not allow a monopoly in the sector."
In a survey conducted by energy policymakers a decade ago, the PEA's service was found to be quite poor because of unstable transmission that damaged the production process of several companies without any reimbursement for the damage.
The PEA has been assigned to maintain the same rate among households, state agencies and business operators, also known as the uniform tariff, giving the provider a disadvantage over GPSC, which operates under a higher tariff.
The PEA is also burdened with the development of transmission lines and systems that have suffered an investment loss in some remote areas because of low user numbers.
Ms Naruephat said Section 60 of the Energy Industry Act of 2007 empowers the ERC to establish regulations to prevent any monopoly that reduces or limits power competition in energy service.
"We have fulfilled our duty in allowing this industry free and fair competition and supporting overseas investments, so we consider this decision fair," Ms Naruephat said.
After releasing the verdict, the ERC will report to GPSC that it has the right to file an appeal if the company disagrees.
Chawalit Tippawanich, GPSC's president, said the company has yet to decide on filing an appeal of the ERC's decision, but it will move on to develop other investment projects that are on hand and discuss asset acquisitions, both domestic and overseas.
GPSC is a subsidiary of PTT Plc, the state-run oil and gas conglomerate, and the parent firm seeks to play a bigger role in powering the Map Ta Phut area.
If GPSC merged with Glow's assets, it would be ranked the fourth-largest power producer in the country with 4.835 gigawatts.
The Electricity Generating Authority of Thailand ranks first for power capacity with 16.01GW, followed by Ratchaburi Electricity Generating Holding Plc at 8.02GW, Gulf Energy Development Plc at 5.3GW and Electricity Generating Plc at 4.26GW.
