Plans to Invest Over 10 Billion Baht for Renewable Energy Projects and Power Plants Acquisition
Sahust Pratuknukul, President of Electricity Generating Public Company Limited or EGCO Group reveals that “The operating results for 2011 performed as expected with consolidated profit before foreign exchange at 5.3 billion baht. The Group completed the acquisition of an additional ownership interest in Quezon from 26.125 to 52.125%. EGCO Group's Small Power Producer (SPP) projects namely TJ Cogen, TP Cogen and SK Cogen have been selected under firm contract for cogeneration system B.E.2553 which the Company has contracted capacity of 90 MW each for 25 years and signed Power Purchase Agreements (PPAs) with Electricity Generating Authority of Thailand on November 25, 2011. Besides, the 55 MW Lopburi Solar Project, the largest thin-film solar power plant in the world, in which EGCO Group has 33.33% ownership, has supplied 8 MW to EGAT since late December 2011 and expected to complete the commissioning in phases within first quarter of 2012.
“In addition, the Company acquired a 12.50% interest in Xayaburi hydropower company limited (XPCL), which is a run-of-river dam on the Mekong River in Laos PDR. XPCL has entered into the PPA with EGAT to sell 1,220 MW, the commercial operation date is currently scheduled in January 2019. EGCO Group also acquired 90% stakes in Theppana Wind Farm Company Limited, located in Chaiyaphum province and 99.99% stakes in SPP4 Project, the solar power plant with contracted capacity of 6 MW, located in the boundary between Srisaket and Ubon Ratchatani province which achieved the commercial operation date (COD) on January 24, 2012.
EGCO Group currently has 16 operating plants with total installed capacity of 4,444 MW while total contracted capacity with EGAT under long term PPAs is 3,862 MW. This resulted in 12% EGCO Group’s market share in Thailand compared to a total installed capacity of 31,447 MW. Furthermore, the Company has 5 projects under development with total installed capacity of 549 MW
4 Strategies to increase market shares in medium to long term
Study Upstream Business to generate future growth
The President continues to elaborate about the company’s strategies that “EGCO Group plans to increase market shares in power business by developing and acquiring projects in Thailand and ASEAN with 4 major plans as follows,
- Negotiation on contract extension for Rayong and Khanom power plants or development of new project in existing location and preparation for the new round of IPP bidding.
- Increase domestic renewable power from 46 MW to 300 MW by 2015.
- Development of 3 SPP projects in Pathum Thani and Ratchaburi which scheduled the COD by 2017-2019
- Expansion of investment in overseas IPP projects by merger and acquisition and consideration on increasing investment in existing projects. The company is under study for possibility of capacity expansions of Quezon in the Philippines for about 500 MW and of Nam Thuen 2 in Laos PDR.
“EGCO Group also has developed the energy market database in order to drive future growth for EGCO Group in total dimensions namely upstream business; Power Fuel and downstream business; Power Producer”
Investment Capex plan for 2012 at over 10 billion baht
Focus on renewable projects and overseas acquisition
Sahust said that “In 2012 EGCO Group targets to profit more than 5 billion baht with key focus on asset management and will increase investment in acquiring operating power plants to instantly boost up revenues or developing plants that will generate return in 2-3 years.”
In terms of this year business plan, EGCO Group main investment focus is in renewable projects in which 10 of solar and wind projects are now under negotiation. For overseas business development, the company is seeking for new investments in neighboring countries such as Laos PDR and Myanmar to sell electricity back in Thailand. The company is also interested investment in Indonesia and the Philippines.
“In this year we will invest over 10 billion baht in power projects if the negotiations are successful and investment ratio between domestic and overseas is 30:70”
Profit 5.3 billion baht in 2011
EGCO Group’s consolidated profit before foreign exchange (FX) for the period ended December 31, 2011 was 5,301 million baht, a decrease of 963 million baht compared to the same period last year. The difference resulted from decreased availability payments of Rayong Power Plant, Khanom Power Plant and two joint ventures; BLCP Powers and Gulf Power Generation.
However, excluding Quezon’s refinancing cost and withholding tax from special dividend payment and Conal Holdings Corporation (Conal)’s change in the functional currency, EGCO Group’s profit before FX would have been 6,049 million baht, a decrease of only 215 million baht compared to 2010. The company holds ending balance of cash and cash equivalents of 8,402 million baht.
“The 2012 investment plan will utilize funds from cash on hand and debt, which may result in higher Debt-to-Equity Ratio (D/E) than the present at 0.25.” concluded the President