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ICBC (Thai), GuarantCo collaborate on Bt402m loan to Thai Biogas Energy

GuarantCo and Industrial and Commercial Bank of China (Thai) have jointly created an innovative financing structure, providing a loan of Bt402 million to Thai Biogas Energy Co (TBEC) for construction of two new biogas projects.

The two new projects will take the total number TBEC operates to nine. These projects convert wastewater from agri-processing factories to generate biogas, which is supplied to the host factories to reduce their fuel costs substantially.

Leftover electricity supplies the local power grid. In the process air pollution is greatly reduced, the host factories' profitability is improved, and the health and livelihood of the people living nearby is enhanced.

TBEC says its projects help provide energy security to Thailand by replacing imported fuel with indigenous environment-friendly biogas.

The two new projects will be located in the Southern region and will add 30 per cent to TBEC's capacity, to 35 million normal cubic metres of biogas per annum. This is equivalent to saving Thailand from importing 20 million litres of heavy fuel oil every year and reducing carbon-dioxide emissions by 350,000 tonnes per year.

The smaller project with a capacity of 2.8 megawatts is already under construction and is the first large-scale biogas project in Phang Nga. The second project is an expansion of the existing TBEC Tha Chang Biogas project with an additional 4.2MW.

The ICBC (Thai) loan is guaranteed by GuarantCo, which is an infrastructure debt fund sponsored by the governments of Britain, Switzerland, Sweden and the Netherlands, to aid infrastructure development in countries around the world. GuarantCo does so by providing local currency guarantees, which are additionally backed by German state bank KfW, Dutch development bank FMO, and Barclays Bank.

In addition to this initial guarantee, GuarantCo has in principle approved providing further guarantees to TBEC of about US$7 million (Bt230 million) equivalent, and is considering increasing that to about $17 million. Such additional guarantees would enable TBEC to construct a further five or six biogas projects and consolidate its market dominance as the partner of choice for agri-processing companies in the Mekong region.

Gustaf Godenhielm, managing director of TBEC, said this new partnership with ICBC (Thai) and GuarantCo further strengthened its already good financial resources and would facilitate accelerated growth. With an asset base of Bt1 billion, growth of two to three projects per year (equivalent to an increase in assets of between Bt300 million and Bt450 million), "We are rapidly cementing our position as [the] undisputed market leader in biogas."

Andrew Bainbridge, chairman of GuarantCo, said renewable energy was expected to be at the forefront of efforts to tackle climate change, which is rightly recognised as one of the major problems facing the world today.

"We are therefore excited to support TBEC in financing its highly developmental biogas plants, which have the added advantages of tackling local pollution and boosting rural incomes. Having proved its business model, TBEC is poised to enter its next phase of growth, and we look forward to further supporting TBEC's expansion into the greater Mekong region."

Ye Hu, chairman of ICBC (Thai), said the bank had always been committed to supporting sustainable economic development in Thailand through its innovative financial solutions and expertise in international financing.

"We are pleased to provide credit facility to a leading renewable-energy developer like TBEC that possesses strong technology know-how and expertise," he said.

"We are delighted with the new partnership with TBEC and GuarantCo to support new projects which display great potential and yield environmental benefits, as well as contributing to the development in the rural area of Thailand in the long run."


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