Thailand: Costs set to torpedo Krabi power deals

Thailand: Costs set to torpedo Krabi power deals

The auction results that awarded three private companies contracts to build
a Krabi coal-fired power plant and deep-sea port are expected to be revoked
after delays pushed construction costs higher.

The Electricity Generating Authority (Egat) may have to open a new bid if
the new environmental and health impact assessment (EHIA) is completed
within the next two years.

Saharat Boonpotipukdee, Egat's deputy governor and spokesman, said that
while a 2015 auction awarded Italian Thai Development Plc and Power
Construction Corporation of China the contract to build the power plant at a
cost of 32.2 billion baht, the consortium may not end up with the job.

In addition, Ital-Thai Marine Co was awarded the contract to build the
deep-sea port at a cost of 9.3 billion baht. But the company has informed
Egat that it must relinquish the project because construction costs have
risen past what was quoted in 2015.

Mr Saharat declined to give further comment on whether the consortium would
reject the power plant project for the same reason.

But a source at the Energy Ministry deemed it very likely that the
consortium will not go on with the project at existing construction costs.

The auction for the construction of the 800-megawatt coal-fired power plant
opened in 2015, with a target to begin operations by 2021.

But the project was strongly opposed by civilian groups and villagers,
forcing the central government to delay it with an order, demanding Egat
conduct a new EHIA, which is expected to be complete within two years.

Mr Saharat said a new auction could be opened to seek a new firm for the
construction during 2018-19, after which building would begin in 2020, with
operations to start in 2023.

He said Egat is also expected to call bids for the construction of two units
of a coal-fired power plant in Songkhla's Chana district with a combined
power generating capacity of 2,000MW soon.

Egat yesterday announced a plan to invite private investors to join the
development of new renewable power project over the next 20 years since the
government has ratcheted up Thailand's renewable energy target to 40% of
total power-generating capacity by 2036, up from the current 15-20%.

Egat deputy-governor for policy and planning Paruhus Vongthanet said Egat
will ask for approval from energy policymakers by July this year before
announcing regulations to let private firms to jointly develop renewable
power projects soon.

Mr Paruhus said Egat plans to allocate a budget of 150 billion baht for
developing its own renewable projects. The budget was trimmed down from 200
billion baht in the previous plan.

To address the need to raise renewable power capacity, he said Egat planned
to develop solar farms with a combined capacity of 900MW, biomass at 598MW,
wind power at 230MW, mini-hydro power at 165MW and a biogas and
waste-to-power project at 108MW.

Egat currently has a renewable power-generating capacity of 514MW.

The first step to attracting private investment is to set a target over the
next five years to allow private firm to join development projects with a
combined 180MW capacity worth a total investment of around 9 billion baht.

Most projects open for private firms to develop are floating solar power
projects, mini-hydro power projects and energy storage units, he said.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1273235/costs-set-to-torpedo-krabi-
power-deals

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com