Egat considers coal venture

Subsidiary may invest in Indonesian mines

YUTHANA PRAIWAN

The Electricity Generating Authority of Thailand is considering investing in a coal mine in Indonesia through its wholly owned subsidiary Egat International Co to secure fuel for power generation.

Egat governor Sombat Santijaree said the state utility had been approached about acquiring the mining licences of several coal mines, mainly located in Kalimantan and Sumatra. Egat is now looking into the mines' commercial viability.

''Some mines have finished the exploration process and some are being explored and we will have to make an in-depth study to find the exact figure of coal reserves. If [the mines] prove viable, we hope to obtain the output to use in coal-fired power plants in Thailand,'' Mr Sombat said.

Egat would seek local partners to help operate the mines in order to reduce financing risk and other uncertainties.

Mr Sombat also said that Egat expected to finish selecting sites by the end of this year for four coal-fired power generators in Thailand with a total output of 2,800 megawatts. It expects the plants to start operating between 2015 and 2017.

Coal prices have risen dramatically over the past two years as power producers worldwide seek to reduce their reliance on more costly fuel oil and natural gas. Mr Sombat said it was becoming increasingly difficult to secure long-term contracts to buy imported coal.

He said many coal exporters were likely to reduce long-term purchase contracts to between three and five years from 10 years. This is forcing power generators to seek more supplies in the expensive spot market, where prices are likely to rise further from current levels of US$100-110 per tonne.

''If Egat fails to prepare to secure fuel for coal-fired power plants, power tariffs [by the time the new plants start operating] would be higher than expectations,'' Mr Sombat said.

The coal mined in Indonesia is the sub-bituminous grade, which has low sulphur emissions and is well suited to new cleaner-burning technology.

Egat is preparing to seek permission for a study from Indonesian government mining regulators and will send its own technical staff to the country to study the operations.

In any case, attempts to build new coal-fired power plants in Thailand are likely to be opposed by community and environmental activists, despite plant operators' attempts to persuade the public that new technology can greatly reduce the environmental impact of the plants.

Mr Sombat said that if Egat could not build plants in Thailand, it would shift to buying power from a coal-fired plant on Kong Island in Cambodia.

Koh Kong Power Light Co, a joint venture involving Italian Thai Development Plc, Egco Group Plc and Ratchaburi Power Generating Holding Plc, is scheduled to sell a total of 3,600 MW to Egat starting between 2019 and 2021.