Sunday, November 11, 2007

Thai power company in talks with China for investment in Lao power

Ratchaburi in talks with China for investment in Lao power plant


Ratchaburi Electricity Generating Holding Plc is expected to soon finish negotiations with a Chinese state agency on a joint investment in the Hongsa Lignite power project in Laos. The project is currently a joint venture between Ratchaburi and SET-listed coal miner Banpu Plc. The Electricity Generating Authority of Thailand (Egat) is expected to sign a power-purchase agreement (PPA) with the project operator within this year after more strategic partners buy into the project, according to Thawat Vimolsarawong, Ratchaburi's deputy managing director. He declined to disclose further details.

The project has been delayed because the operators decided to triple the capacity to 1,800 megawatts from 600 MW planned earlier. This requires a higher capital investment of US$2.5 billion.

''To diversify risk, more strategic partners are needed, so we are now discussing with strategic partners to determine the appropriate stake held by each holder,'' Mr Thawat said.

In addition, he said, the Laotian government would take part in the project, which is located in northern Laos. Construction is expected to start early next year, and the plant is scheduled to start commercial operations by 2013.

About 1,500 MW out of the total capacity of 1,800 MW will likely be distributed to Egat through transmission lines connecting Laos and Nan province in Thailand.

The Ratchaburi-Banpu joint venture has also joined with partners in Laos to conduct a feasibility study to develop a 140-MW hydropower plant in Nam Bak.

The company recently entered an agreement to develop the $668-million Xe Pain-Xe Nam Noi power plant, in which it holds a 25% stake. Korea Western Power Co holds 25%, with SK Engineering & Construction holding a 26% stake and the Laotian government owning the rest.

Ratchaburi is poised to win a bid to build a new 1,600-MW plant that will distribute electricity to Thailand's national power grid through the government's 3,200-MW independent power producer (IPP) programme. The results will be announced by mid-2008.

The company reported a sharp 23.4% year-on-year drop in third-quarter revenue to 10.24 billion baht from 13.4 billion a year earlier, with a net profit falling 68% to 560 million baht.

Nine-month revenues fell 11.9% year-on-year to 34.52 billion baht, with net profit dropping 8.45% to 4.47 billion baht from 5.18 billion the previous year.

The poor performance was due mainly to the two-month closure of electricity generators for a major overhaul in the third quarter. The maintenance is scheduled every six years.

Next year, it expects revenue to improve thanks to additional capacity from Ratchaburi power plant. The first generator is scheduled to start operations in March and the second generator in June. The project is now in a test run.

Ratchaburi has a total power generating capacity of 3,645 megawatts, or about 15% of the country's installed capacity. It sells all of its electricity to Egat.

Ratchaburi shares (RATCH) closed yesterday on the SET at 49.75 baht, down 0.75, in trade worth 27.5 million baht.

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