February 19, 2014 00:00 By Pichaya Changsorn The Nation
Bt20 bn investment for solar farms in Japan, coal-fired power plant in Myanmar
Ratchaburi Electricity Generating Holding’s board of directors have given the nod to two solar-farm projects in Japan and a coal-fired power project in Myanmar, which will require a combined investment of nearly Bt20 billion.
Ratch will also initiate a major change in its strategy to accelerate growth and pursue overseas expansion more aggressively.
Ratch decided not to join the 5.4-gigawatt independent-power-producer auction in Thailand last year because of uncertainty over the availability of natural gas to serve its potential project sites.
Chief executive officer Pongdith Potchana said yesterday that because there were few investment opportunities for power plants in Thailand over the next five years, the company would earmark at least 60-70 per cent of its capital-expenditure budget for overseas ventures over the next 10 years.
Under the redefined strategy approved by the board at the end of last year, the firm will increase its enterprise value (EV) 141 per cent from Bt116 billion currently to Bt280 billion by 2023. To achieve that target, Ratch has to add at least 3.16GW of power-plant capacity, or 48 per cent, to its current installed capacity of 6.54GW during the next 10-year period.
EV is calculated as market capitalisation plus debt, minority interest and preferred shares, minus total cash and cash equivalents. The EV target implies a more aggressive push by Ratch, which enjoys a huge cash hoard of Bt9.4 billion.
Ratch sees ripe opportunities in neighbouring countries, besides Laos and Australia, which contributed 0.2 per cent and 6.8 per cent of its total revenue of Bt53.49 billion last year.
It is especially interested in Myanmar, where it recently submitted a proposal to invest in a 300-megawatt gas-fired power plant at a site close to Nay Pyi Daw, the capital.
Ratch has formed a 50:50 joint venture with GGE, a Myanmar company, to bid for the project. It has to compete against 18 other bidders including three groups from Thailand. The Myanmar government will secure natural gas from the existing pipeline that channels gas to China for the planned power plant.
The new Myanmar project approved by the board is a 300MW, US$450-million (Bt14.6-billion) coal-fired power plant in Kengtung township, 150 kilometres north of Thailand’s Mae Sai border checkpoint. The company will submit the investment proposal to Myanmar’s Ministry of Electric Power by the end of next month. The Thai company that originally won the investment licence has agreed for Ratch to take a majority stake in the mine-mounted, coal-fired power development that will sell electricity to Thailand.
“We also have two or three other projects being discussed in Myanmar,” Pongdith said.
The two solar-farm projects in Japan, one with 10MW capacity and the other 20MW, will be developed by a 60:40 joint venture with listed Thai company Chow Steel Industries. The financial closing for the project, which will require more than Bt4 billion, is expected by midyear.
Ratch’s new strategy calls for the firm to expand its business scope from electricity generation to an integrated energy company with possible investment in upstream businesses such as coal and natural-gas supply, and downstream businesses such as electricity distribution and transmission.
Ratch could carry out its overseas energy projects through several platforms including buying shares of other energy holding firms such as subsidiaries of Banpu and PTT Exploration and Production.
The domestic power-generating business contributes about 46 per cent of Ratch’s EV, followed by Laos, which contributes 42 per cent, and Australia, 12 per cent.
The new business plan sets a target for Ratch to reduce the contribution of its power-generating business from 100 per cent to 95 per cent, giving 5-per-cent space for related (downstream and upstream) businesses by 2018, and 10 per cent by 2023.
Ratch earned Bt6.19 billion on revenue of Bt53.49 billion last year.