Ratch suspends three overseas projects

Ratchaburi Electricity Generating Holding, Thailand's largest private power producer, has suspended work on three projects outside the country, notably the Koh Kong power plant in Cambodia, which has been put on hold mainly because of the political dispute between the two nations.

Projects in Laos have also been suspended. Ratch has to negotiate with the Electricity Generating Authority of Thailand (Egat) to adjust power prices after construction costs increased from last year.

Referring to the Koh Kong plant, Ratch managing director Narong Sitasuwan said yesterday: "As everyone knows, if the relationship between the two countries is not good, we can't do anything. But we can wait for the right time and we still intend to invest in this project."

The project in Cambodia is the biggest power plant in which Ratch has ever invested. The company has co-invested with Electricity Generating (Egco) - with a combined share of 70 per cent - to generate power from coal, with a production capacity of 3,660 megawatts. The US$7.3-billion (Bt246 billion) project was scheduled to begin commercial operations in 2016.

According to the previous plan, Ratch was to start construction of the Koh Kong power plant this year. The company did start some of the basic construction but now the process is suspended.

Narong added that the other overseas projects suspended are the Hong Sa lignite power plant and the Nam Ngum 3 hydropower plant in Laos. Ratch is proposing that Egat revise its power price now that construction costs have soared by 25 to 30 per cent from last year.

The investment value of the Hong Sa power plant and the Nam Ngum hydropower plant are $2.61 billion and $708 million, respectively. The Nam Ngum 2 power plant is Ratch's only overseas project that is still on schedule.

Narong said that in order to diversify risk from the existing projects, Ratch had recently restructured its internal administration by naming two deputy managing directors. The company also set up three business units in order to closely monitor its overseas investments, particularly in Laos, which needs new power plants.

"As far as I'm concerned, there are roughly 100 locations in Laos that can set up power plants, of which 30 to 40 locations [have commercial potential]. Our staff is now exploring those locations to seek out new opportunities," he said.

The company is conductng a feasibility study for the 140MW Nam Bak hydropower plant - an extension project of Nam Ngum 2 - which will enhance production efficiency of the Nam Ngum 2 plant.

Narong added that Ratch would revise down its investment budget for the five-year business plan ending in 2011 in order to reflect the fact that several projects have been suspended. The current plan calls for spending Bt30 billion on the projects.

Narong said he could not estimate the revised, lower amount.

Ratch expects its revenue this year to grow by 5 per cent from Bt46 billion last year, while earnings are forecast to increase by 10 per cent from Bt5.8 billion.