Thailand's government yesterday indefinitely postponed its plans to privatize the nation's largest power producer in May, caving in to mounting protests from state workers.
Energy Minister Prommin Lertsuridej said the listing of 25 percent of the Electricity Generating Authority of Thailand (EGAT) would be shelved to allow for consultation with unions and the creation of a new power regulator.
"The initial public offering of EGAT is postponed indefinitely and the government will not set a new deadline," he told reporters.
"I hope that overseas as well as local investors will understand the situation," he said, referring to fears that the postponement of the country's biggest ever float will hurt confidence in Thailand's economy.
The decision was a stunning reversal by the government which had vowed to press ahead with its policy of privatizing state enterprises and told protesters that they faced a crackdown if demonstrations got out of hand.
Last week Prime Minister Thaksin Shinawatra warned that the stock market and baht currency could crash if his government abandoned its privatization agenda, a key part of its economic platform since storming to power in 2001.
But he began the climbdown early yesterday in his regular radio address, taking a softer tone towards the tens of thousands of state workers who have rallied outside EGAT headquarters for the past two weeks.
"I have asked my ministers why workers have had to rally and I found out that I myself must be blamed for rushing officials to privatize and that a lack of explanation to the public has caused misunderstandings," he said.
Thaksin said the public had gained the wrong impression that the entire 25 percent stake would be sold to foreigners, but that in fact only about 2 percent to 3 percent would find its way to overseas investors.
But he insisted he was not caving in to the demonstrations, and that he would not agree to a public hearing on the privatization issue which is one of their demands along with the removal of EGAT's chief.
"It's not about retreating or not retreating but it's a matter of clarity, fairness and the national interests, while we also have to take staff welfare into consideration," he said.
Prommin said the government would attempt to reverse the misunderstandings and also establish a seven-member committee to oversee electricity distribution and pricing before pushing ahead with new plans to privatize EGAT.
The government has said EGAT will need to invest heavily in the future in order to keep up with the huge demand for electricity in Thailand and that if it remained a state enterprise the debt would weigh heavily on the country.
But the first hiccup in the listing plans came Monday when the government announced that the first step in the process, corporatization which would transform it into a public company, was delayed due to legal technicalities.
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