Ratchaburi Electricity Generating Holding plans to participate in the Energy Ministry's bidding for electric-plant construction, in order to keep its No-1 ranking among independent power producers, says president Narong Sitasuwan.

The firm expects to reap a net profit this year higher than the Bt6.5 billion gained in 2004, due to higher interest income and lower costs.

But next year's net profit is likely to decline slightly, because of the huge expense of scheduled maintenance shutdowns, which will lead to the company's highest maintenance costs in six years.

Narong said Ratchaburi was interested in joining the bidding for electricity generation by both natural-gas and coal plants in order to maintain its IPP top ranking, because the company's economy of scale would create advantages for the business. Its market share is about 15 per cent of the overall domestic production capacity of 26,000 megawatts, second to that of the Electricity Generating Authority of Thailand.

He also expressed confidence about winning the bid, because of the firm's financial advantage, including its Bt17.7 billion in retained earnings, Bt9.5 billion in working capital and low-cost financing and the readiness of its existing facilities.

"We must to wait for a clearer policy and plans to create a good understanding among players; otherwise, we will have too much risk for project implementation. We think we have the potential to win, with factors like location and ability to refinance the projects," he said.

Managing director Prachuab Ujjin said Ratchaburi's current capital was sufficient for construction of six plants and that it would need to issue debentures in 2010.

In addition, deputy managing director Thawat Vimolsarawong said the company had an advantage from a compound located at the entrance of the energy source for electricity, while PTT has agreed to supply natural gas to Ratchaburi. The company also plans to construct power plants in new areas.

An analyst at Siam City Securities said Ratchaburi had the potential to win the bidding for at least two plants, because it had a good location, ready pipeline system and strong financial status for reinvesting. Its low debt-to-equity ratio also boosts its financial capability.

Globlex Securities senior vice president Warut Siwasariyanon said Ratchaburi had advantages that would help it win the bidding: managing expertise, a high credit rating and a strong financial performance. However, whether Ratchaburi did win also depended on several other conditions, such as technology requirements, location and other specifications.

For example, it could lose the bidding for electricity generated by coal to Banpu, which produces coal and operates a coal-fired electric plant. Ratchaburi could seek cooperation with Banpu in the bidding, he said.

"The company could manage any electric plants in the world, considering the size of its current plants. But there are many conditions in the bidding. It is not clear whether foreign companies will be allowed to enter the bidding. If so, GE could also win," he said.

After recording a net profit of Bt5.2 billion for the first nine months, Ratchaburi is likely to see its bottom line at around Bt6.5 billion the year. This will be due to foreign-exchange profits of Bt300 million in the first nine months and interest-expense reductions from refinancing totalling Bt600 million for the first nine months and Bt800 million for the year.

But Prachuab said profits would decline slightly next year, because the company would have increased maintenance expenses involving five major overhauls, which would double this year's expenses.

Anoma Srisukkasem

The Nation