Application for acquisition of public service subsidy must follow the Order of the Prime Minister Office on supporting fund for public service obligation by state enterprise, B.E. 2551. The application is valid only for action plans/projects that commence in 2010.

1. Steps and Time Frame for Procedural Performance under the Order of the Prime Minister Office on Subsidy

1.1. A state enterprise shall submit a PSO proposal attached with accounting systems which separate commercial operations from public services. Each account should consist of the balance sheet, profit and loss, and cashflow statement which require approval from the line ministry for further submission to the attention of the PSO committee. The proposal must be submitted within 10 months prior to the beginning of the budget year (by November), otherwise it has to be re-submitted at the following budget year.

1.2. The PSO subcommittee shall consider the proposals and the amount of PSO prior to submission to the PSO committee which shall give its observation to the finance minister who shall bring it up for the cabinet’s approval.

1.3. The state enterprise shall develop budgeting details for the subsidy approved by the cabinet with annual expenditures according to the required procedure.

1.4. The PSO committee shall prepare a Memorandum of Understanding (MOU) with the respective state enterprise prior to budget allocation.

1.5. The state enterprise shall prepare the PSO performance report as regulated by the committee as follows:

- A six-month performance report shall be submitted within 30 days to the line ministry for further approval by the PSO committee after the Office of the Auditor General has completed the required review.

- An annual performance report shall be submitted within 45 days to the line ministry for further approval by the PSO committee after the approval of the Office of the Auditor General.   

2. Developing PSO Proposals

State enterprises shall prepare proposals on PSO subsidy covering the following details:

2.1. Characteristics of products or services and PSO demand
2.2. The target groups using products or services
2.3. Objectives and policy for PSO providing
2.4. Estimated cost for PSO providing attached with details to identify activity-based costing
2.5. Schedules on acquiring PSO subsidy
2.6. Expected outcomes with PSO performance indicators
2.7. Readiness and cost effectiveness of the project
2.8. Risk assessment with solutions to possible uncertainties
2.9. Relating rules, regulations, controlling procedures, respective cabinet resolutions and laws
2.10. Strategic plans for improving performances and excellences in various areas to ensure quality of public services 
2.11. The requirement of marginal fee to be a part of the subsidy, as prescribed in the Ministerial Regulation Prescribing Rates and Conditions of Collecting Interests and Fees of On-Lending by Ministry of Finance, B.E. 2551 (2008).  The exchange rate for Thai baht shall be based on the announcement of BOT on the respective date that the fee for on-lending loan is calculated.





3.  Accounting Criteria for PSO

3.1. A state enterprise applying for PSO subsidy shall prepare two accounting systems; on commercial operations and on public service operations, respectively. Each account shall contain items of balance sheets, profit and loss, and cashflow statement as follows:

1. Incomes from public service comprising:

• Direct income from PSO = service fees per unit (as set by the state) multiplied by units of public service provided
• Other additional incomes from PSO providing 

2. PSO providing expenditure comprising:

• Direct and specifically identified expenditure of PSO providing,
• Indirect expenditure, not specifically identified as PSO providing cost shall be proportionately calculated from the activity-based costing.

3. Assets and liability of commercial and public service operations comprise the followings:

• Assets and liability for PSO providing are those specifically identified and of allocated budgeting value,
• Assets and liability for general services and operations are those specifically identified as such based upon budgeting value, or proportionally assessed by activity-based costing criteria.

3.2. Calculation of PSO providing cost shall be based upon the avoidable costing criteria only for those supporting PSO projects in comparison with the standard cost of business operation. If the standard cost is considered inappropriate the respective state enterprise may base upon comparison with the average PSO costing of the last five years.

4. MOU for PSO

State enterprises shall prepare the MOU for PSO providing which covers the following details:

4.1. PSO project title
4.2. Details of the ‘providing partners’ which are the chairman of the PSO committee and the director general of Bureau of the Budget, as well as the ‘receiving partner’ which refers to the top executive of respective state enterprise.
4.3. Scope of the operation and limitation of service provision which includes:

       1. Characteristics and demand of the products or public service
       2. Target groups
       3. Time frame of certain projects
       4. Proposed budgeting for both business and PSO accounts
       5. Limitation of service provision

4.4. Objectives and policies of PSO
4.5. PSO outcomes for both expected quality and quantity
4.6. Procedures on supervising and assessment with performance indicators for PSO
4.7. Strategic plans for performance improving to enhance excellences in various areas.
4.8. Conditions on payment of the PSO subsidy are:
       1. Amount of the subsidy,
       2. Timeline of PSO reimbursement,
       3. Reimbursement procedure,
       4. Conditions on subsidy adjustment in the case that a state enterprise fails to achieve the MOU objectives. A written explanation shall be submitted with details and relevant documentation.
       5. Conditions on the return of residual subsidy to the treasury when losses from PSO providing at the year-end performance is lower than the estimated figures.
4.9. Disclosure of information and the performance report on PSO providing.

5. The Format of PSO Performance Report

A state enterprise shall prepare a PSO performance report with following details:

• Details of PSO providing that cover objectives, performance policy, types of products or services with volume and the target users.
• Data base and performance reports of the past five years.
• Costs of PSO providing in detail, comparing with the agreed upon performance outcome in the MOU.
• Performance outcome according to PSO providing indicators of the MOU comparing to the expected outcome / result and project impact.
• Assessed effectiveness of PSO providing under the strategic improvement plan for performance of excellence.
• Details of PSO subsidy with specific conditions and the amount received.
• Other additional details provided with specific objectives of the respective state enterprise.