Electricity Generat-ing Plc (Egco) will suffer a double blow if it is unable to join the bidding for independent power producers (IPPs). Not only will the company's general expansion programme be stymied; its deal for a bigger stake in BLCP Power Co Ltd could also be foiled.

Somyos Polachan, senior executive vice president of the power company, said that CLP Power Asia Ltd had said it would sell an additional 25-per-cent stake in BLCP Power to Egco only if Egco can join the bidding for IPPs.

"We have finalised the price, but the deal will proceed only when we know that we can join the bidding," Somyos said.

CLP Power Asia owns half of BLCP, a 700-megawatt coal-fired power plant, and is also a major shareholder of publicly traded Egco. While Electricity Generating Authority of Thailand holds 25.4 per cent of Egco, CLP Power Asia controls 22.4 per cent through its subsidiary CLP Power Projects (Thailand) Co Ltd.

Part of Hong Kong's CLP Group, CLP Power Asia became an Egco shareholder with the intention of investing in only one power company in Thailand. However, Egat blocked CLP's attempt to seek a management role, forcing the Hong Kong company to forge a partnership with Banpu Plc to establish BLCP Power. But under its partnership terms with Egco, CLP Power must sell half of its stakes in any other power project in Thailand and neighbouring countries to Egco.

However, the Energy Regulatory Board's plan to keep Egat's affiliates and subsidiaries from the bidding makes it unattractive for CLP to follow the original deal through. If the deal collapses, Egco will also lose the opportunity to have a bigger part in BLCP's coal-fired power plant, which now enjoys lower operating costs than the plants powered by fuel oil.

Earlier, Egco hoped to wrap up the deal before the second half of this year, but it still remains uncertain whether it can join the bidding.

The IPP bidding is scheduled for some time late this year or early next year. The new power supply will then feed into the system after 2011.

Piyasvasti Amrananda, former chief of the National Energy Policy Office, earlier attacked the Energy Regulatory Board's decision. He said that the more bidders, the more competitive the bidding would be, and that the participation of Egco or Ratchaburi Electricity Generating Holding, another affiliate of Egat, would not mean conflicts of interest.

Somyos of Egco agreed. He noted that members of the board were not experienced and did not quite understand the power industry.

"There is no reason to block Egco from the bidding now that we are a Thai company which is capable in terms of experience and financial strength," Somyos said. He noted that despite the confusion about whether it could join the bidding, Egco had surveyed five plots where the new power plants might be located.

He noted that it should be known within two months if the company would be allowed to participate in the bidding, which would end confusion among investors and provide ample time for private companies to prepare themselves.

"It's still our policy to expand in the Kingdom before investing overseas. Within the next 10 years we plan to increase capacity by 3,000 megawatts," Somyos said.

Egco currently has an aggregate capacity of 2,414MW and is constructing four power plants.

Watcharapong Thongrung

The Nation