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February 20, 2023

New Requirement for Transfer of Energy Licenses in Thailand

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On December 20, 2022, the Notification re: Rules, Procedures, and Conditions on Transfer of Energy Licenses of the Thailand Energy Regulatory Commission (ERC) became effective. The notification sets out the new standard and procedure for transferring licenses for energy industry operation. The notable changes in the notification are provided below.

Anti-Competition Consideration and Impact Assessment Report

In considering the transfer of a license, in addition to ensuring the transferee meets all the qualifications for an applicant for the license, the ERC will consider if the transfer would (1) create a monopoly, reduce or restrict competition, or result in market dominance; (2) affect the contracting parties of the transferors or energy users; or (3) affect energy security or the public interest.

In this respect, the vetting process for an application for license transfer would be separated into two different approaches. If the ERC believes that the transfer of the energy license would affect competition, energy users, energy security, or the public interest, the transferor will need to submit an impact assessment report on the license transfer to the ERC. In this regard, the ERC may establish a sub-committee or an independent consultant to contemplate the transfer at the transferor’s expense. However, if the ERC believes that the transfer of license would not lead to any impact, the transferor will not be required to submit the impact assessment.

Also, if the license transfer is related to any transactions specified under the ERC’s Regulation re: Rules and Procedures on Merger and Cross-Shareholding in Energy Businesses, B.E. 2565, the ERC can combine the license transfer application with the M&A application. After approval, the ERC might require the transferee to periodically report to the ERC and comply with measures stipulated by the ERC.

Therefore, an energy license holder which plans to carry out M&A activity or cross-shareholding transactions, or transfer its business to another entity, should be prepared to submit an impact assessment report if the license transfer might have an impact on its competition in the market, its contracting parties, energy security, or the public interest.

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