Ratchaburi's power plant in Ratchaburi province. Rising power demand has prompted
Ratchaburi to look beyond neighbouring countries.
Power plants, mines in Australia on radar
NAREERAT WIRIYAPONG
Ratchaburi Electricity Generating Holding Plc. Thailand's largest private power producer, has resumed talks to acquire power plants in Australia and is also exploring investment opportunities in coal mines there.
Managing director Noppol Milinthanggoon said the strong Thai baht had given Ratchaburi greater purchasing power in negotiations that have not been fruitful since the talks began last year.
In addition to coal-fired power plants, Ratchaburi is interested in buying shares in coal mines in Australia, he said.
"We had limited capacity in making the offers last time and the seller turned to other interested buyers. However,their talks have not been concluded,"Mr Noppol said.
"Currently, greater opportunities are available for us after the baht appreciated to the level that we feel more comfortable for the talks."
Mr Noppol said that continuous growth of Thailand's electricity consumption had prompted Ratchaburi to look beyond neighbouring countries in Southeast Asia for investments.
So far, the company has invested in power plants in Laos, including the coalfired Hongsa Lignite project, and studied investment feasibility in Vietnam, the investment feasibility in Vietnam, the Philippines and Indonesia.
Ratchaburi's power plant in Ratchaburi province. Rising power demand has prompted
Ratchaburi to look beyond neighbouring countries.
"Australia, meanwhile, has a market that is open for foreign companies to invest. We are interested in coal-fired and combined-cycle power plants, as well as coal mining assets that fit with our strategies," he said.
Healthy gross domestic product (GDP) growth in Asia has resulted in high power consumption. Ratchaburi has explored investment opportunities overseas in the past two years to help strengthen the reliability of the Electricity Generating Authority of Thailand's power system, he added.
Analysts said limited opportunities to build new plants or acquire existing ones locally had pushed private power producers such as Ratchaburi to more aggressively expand their presence abroad.
"In Australia, asset prices are not cheap, especially when compared with those in Asean but I think given the current options available locally, Ratchaburi might have to make the decision to buy despite the high prices," said Saknarin Sasanonda, an analyst at UOB Kay Hian Securities (Thailand).
To ensure smooth operations of the power plants in Australia, Ratchaburi might have to secure supply of coal by investing in coal assets there too, he added.
However, the power producer has sound financial capability with low debtto-equity ratio of only 0.3 to 1 time.Consequently, investing in Australian assets will not be difficult for Ratchaburi as it could borrow from banks to fund the projects, Mr Saknarin said.
Ratchaburi shares (RATCH) closed on Friday on the Stock Exchange of Thailand at 37.75 baht, down 50 satang,in trade worth 245.2 million baht.
Bangkok Post
20 December 2010