Laos: Ratch delays plans for fourth unit at Hongsa plant

Laos: Ratch delays plans for fourth unit at Hongsa plant

The plan to build the fourth unit of the Hongsa power plant of SET-listed
Ratchaburi Electricity Generating Holding Plc (RATCH), Thailand's largest
private power producer, is being delayed pending the Laotian government's
decision on the country's power development policy.

Chief executive Rum Herabat said the company had hoped to propose the plan
to build a fourth unit for the plant. However, the government of Laos wants
to formulate a clearer policy to develop the country's power sector before
making any decision.

"The Laotian government wants to consider whether the additional lignite
that we found could be reserved for Laos to run its own coal-fired power
plant to generate power for its growing economy in the future," said Mr Rum.

According to the agreement Ratch made with the government, the company will
return all coal-fired power plants and facilities to Laos after the 25-year
concession expires in 2041.

Mr Rum said the company would finalise the plan to build the fourth unit
after all three units run smoothly and sustainably.

"It would take about halfway through the concession, or around 10 years from
now, to finalise whether we can build another unit for Hongsa power plant
since the government also needs time to finalise its power development plan
in the long term," he said.

During the waiting period, he said the company will prove the power plant
will benefit the country as well as raise income from power sales to Laos.

When Ratch started operation of the US$3.71-billion-baht first unit in June
2015, it hoped to build another unit at Hongsa to make use of the abundance
of lignite.

The company and partner Banpu Plc began a mining project late last year and
found up to 577 million tonnes of lignite reserves. That is far more than
the 371 million tonnes needed for the entire 25-year concession.

The second unit started operation in November 2015 and the third kicked off
in March this year, each with a power-generating capacity of 626 megawatts.

About 490MW of the total capacity will be sold to the Electricity Generating
Authority of Thailand, while 100MW is expected to be used in operations at
the power plant. Some 34MW will be sold to the Laotian government.

Ratch holds a 40% stake in the Hongsa power plant, with 40% held by Banpu
and the government holding the remainder.

Apart from the power-generating business, Ratch has conducted a feasibility
study on other utilities businesses in Laos as well as Myanmar.

"At this stage, we are interested in the tap water business in major cities
in Laos as the country is developing infrastructure to help improve living
standards. The water utilities business is an interesting one. However, it
is still at the feasibility study stage," he said.

Recently, the company also started investing in the 80MW Mount Emerald wind
farm in Australia, with the project and financing handled by its subsidiary,
Ratch-Australia Corporation Ltd, in which it owns an 80% share.

The project is worth A$258 million (6.72 billion baht) and construction is
expected to start this month. Commercial operation is slated to begin in
September 2018.

Ratch has also teamed up with BTS Group Holding Plc and Sino-Thai
Engineering & Construction Plc to submit a bid under the name BSR Joint
Venture for the construction of rail projects in Bangkok.

The projects are the MRT Pink Line (Khae Rai-Min Buri) with a total track
length of 34.5 kilometres, and the MRT Yellow Line (Lat Phrao-Samrong) with
a total track length of 30.4km.

In addition, the company plans to continue expanding its power-generating
capacity both from renewable and fossil-fuel sources in Asia-Pacific.

RATCH shares closed on Friday on the SET at 50 baht, down 50 satang, in
trade worth 12.3 million baht.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1140437/ratch-delays-plans-for-four
th-unit-at-hongsa-plant

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com