Myanmar/Thailand: Gunkul makes case for G2G backing for power projects

Myanmar/Thailand: Gunkul makes case for G2G backing for power projects

GUNKUL ENGINEERING is urging the Thai and Myanmar governments to collaborate
in the financing of power-generating projects.

Sopacha Dhumrongpiyawut, chief executive officer of the company, said in an
interview that the national-level collaboration would quicken the
electrification process in Myanmar, which lacks both financial resources and
expertise. Less than 40 per cent of population have access to electricity.

She said a power project could be started quickly if Thailand came up with
investment projects and presented them to Myanmar. Under the
government-to-government deal, she said, the Thai government could then hire
Thai companies for the development. The Export Import Bank of Thailand could
play a key role.

"Myanmar is an attractive investment destination, but government
collaboration will drive this. China has resorted to this model," she said.
"If this strategy is well planned, Thailand stands to reap more benefits as
Myanmar feels more positive towards us."

In 2011, Gunkul struck a memorandum of understanding with Myanmar's Ministry
of Electric Power for a feasibility study for wind farms with 2,930
megawatts capacity in Mon and Kayin states, the Thaninthayi region, the Shan
and Kayah states. Data collection has been ongoing for two years, equipping
Gunkul with enough information for its detailed investment plans.

Sopacha said that the test station in Mon State benefited from strong winds,
but the hilly terrain may pose difficulties for the transportation of
equipment, while a transmission grid is absent in the area.

"It's still not the right time to invest," she said. But she added: "There
is a high chance in Myanmar if the transmission-grid network is improved.
Still, we need a good business model, something that matches the [Myanmar]
government's capacity and its desire to balance energy imports and exports
as well as FDI [foreign direct investment] inflows."

Through a 51-per-cent owned joint venture, Gunkul now operates a 50MW
gas-fired power plant in Yangon. In its third year of operation, it is
operating at half capacity.

The projects in Myanmar will be a key part in allowing Gunkul to achieve its
goal to boost its renewable-generating capacity to 1,000MW within five
years.

Aside from Myanmar, it is also expanding its capacity in Japan and Malaysia.

Sopacha affirmed the plan to grow its investment in Japan from less than
200MW now to 500MW in the next three years. Though tariffs have been cut the
past two years and the number of projects available is lower, there is a
possibility to win another 100MW, she said.

The company will also join a bid in Malaysia for the construction of a 20MW
solar farm.

"We are still focusing on expanding investment in Thailand. But given the
small pool of available demand and a large number of potential investors,
our chance here is very low," she said.

Diversifying into a generating business in 2014, the electrical and
engineering company sat on 403MW capacity in September, on target to boost
it to 500MW by the end of this year.

Sopacha is convinced that the company's financial and non-financial
resources are sufficient to support the business goal.

At present, Gunkul employs about 40 engineers for the operating and
maintenance of more than 30 power plants in Thailand.

Obtaining project financing is a challenge for newcomers in the sector, but
being listed on the Stock Exchange of Thailand offers Gunkul offers various
funding choices, including infrastructure funds.

Sopacha noted that the company at this point saw no need to launch an
infrastructure fund, as revenue from its operational projects were
sufficient to finance new ones.

"We will raise capital only when we are offered the opportunity to invest in
a very large project with attractive returns," she said.

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com