Ratchaburi Electricity Generating Holding Plc is to invest more than Bt100 billion over the next 10 years to achieve its goal of becoming a regional player.

Newly appointed managing director Narong Sitasuwan said Ratchaburi had three goals: to be a major power-producer in Thailand, to produce power abroad and sell it to Thailand, and ultimately to produce and sell power overseas.

"To achieve these goals, we need to invest more than Bt100 billion over the next 10 years," Narong said.

Financing for the investment will come from retained earnings of Bt17 billion. The company has a low debt-to-equity ratio of less than one.

To maintain its local power-producer status, Ratchaburi hopes to join the second bidding round for the independent power-producer (IPP) scheme, which is set to open next year.

"We need to win the bidding as it would help us maintain our growth rate and market share, which is 15 per cent of total capacity produced in the Kingdom," he said.

Ratchaburi's production capacity is 4,000 megawatts per year, from Thailand's total output of 26,000MW.

Narong said he was confident that the company would be eligible to enter the bidding as it met all the regulations.

The Energy Regulatory Board said earlier that as a subsidiary of the Electricity Generating Authority of Thailand (Egat), Ratchaburi should not be allowed to join the bidding in fairness to other bidders.

In a show of confidence, Ratchaburi is preparing a land plot to locate the new power plant, which would be required under the IPP programme. Its existing plant at Ratchaburi could be expanded to accommodate a small power plant with production capacity of up to 700MW, but the company expects it would need to produce up to1,400MW.

If natural gas is used as the main fuel for the new plant, the investment cost would be US$400,000 (Bt15 million) per megawatt or a total of $560 million.

Narong said Ratchaburi would prefer to use natural gas for its power production rather than other fuels, particularly coal, as this could attract public criticism over environmental damage.

"The public still needs to be better informed on this issue, but if the government really wants to reduce gas consumption for the sake of energy security, then as a state agency, Egat should be the pioneer," he said.

Ratchaburi is considering whether to form a partnership for the IPP bidding - it could team up with a previous partner like Chevron, which owns shares in Tri Energy IPP Co Ltd. a 50:50 joint venture - or to enter the bidding process on its own.

Narong said that the bidding would attract huge interest from private producers, given the slower-than-expected power demand. To win a contract means the producer can produce and sell a quantity of electricity to Egat, allowing it to grow despite low demand.

Over the past decade, annual power demand grew by 12-15 per cent before slowing down to 2-3 per cent last year. Reserve capacity, forecast three years ago to be 13 per cent of total capacity, now stands at 20 per cent due to the lack of demand.

"As a precaution, in case are not awarded a contract, we want to invest more abroad," he said. Ratchaburi has a stake in the Nam Nguem II hydropower plant in Laos, which has a production capacity of 615 megawatts and Nam Nguem III, which can produce up to 460 megawatts.

In addition to the IPP bidding, Ratchaburi is interested in bidding for Egat's renewable-power scheme, to produce electricity from wind power and biomass fuels. The company is also studying the feasibility of producing and selling electricity at in the same area. It sees high potential for this business due to the high cost of expanding Egat's transmission lines.

"We are focusing on the IPP project and overseas expansion as we do not want to remain just a small power-producer," Narong said.

Siriporn Chanjindamanee

The Nation