Egco, the holding company, will lend to its subsidiaries for expansion, instead of their seeking finance separately as in the past.

Sakda Sreesangkom, Egco senior executive vice president (finance), said subsidiary Rayong Electricity Generating Co Ltd had fully repaid long-term foreign debts, totalling Bt3 billion early this month, well before the payment schedule in December, and was now debt-free.

"With Rayong Electricity Generating Co debt-free, Egco, as parent company, will have a better debt capacity and should be in a better bargaining position for loans as it can use Rayong Electricity Generating Co as collateral, because most foreign loans carry high interest rates," he said.

In the past Egco let its subsidiaries finance expansion by seeking foreign loans, but power-plant subsidiaries usually have less bargaining power than the parent company.

Egco did not use its power-plant subsidiaries as collateral because most of them were burdened with foreign debt. Egco as a holding company hadno power plants of its own.

Rayong Electricity Generating Co was the first independent power plant in Thailand, set up on June 1, 1994. With a capacity of 1,232MW it is in a position to secure 12-year loans.

Sakda said Egco had cash flow of Bt3 billion and might not need additional loans this year, partly because of the delay in independent power-producer (IPP) projects.

The company may seek short-term loans to finance short-term projects such as the acquisition of 50 per cent of BLCP, a coal-fired power plant, and CLP, requiring Bt6 billion from financial institutions.

Egco may tempt investors with big lots of debentures to finance bidding for IPP projects, Sakda said.

Watcharapong Thongrung

The Nation