Siam Gas snags stake in Myanmar power plant

Siam Gas snags stake in Myanmar power plant

SET-listed Siam Gas and Petrochemical Plc (SGP), Thailand's top liquefied
petroleum gas (LPG) trader, has acquired a stake in a power generating
business in Myanmar.

Deputy managing director Jintana Kingkaew said SGP has acquired a 30% stake
in Myanmar Lighting, a 230-megawatt gas-fired power plant in Mawlamyine, Mon
State.

She said the deal, worth US$48 million (1.63 billion baht), was done via
SGP's wholly-owned subsidiary, Siamgas Global Investment Ltd.

"This investment is an opportunity to expand into other energy businesses
that should bring in rising income and good returns," said Mrs Jintana.

She added SGP is also negotiating another deal to acquire a second power
plant in Myanmar.

The Mawlamyine power plant was built by Singapore-based Asiatech Energy. The
plant was initially designed to produce and supply power for the Myanmar
Electrical Power Enterprise. The project cost $170 million and began
commercial operations late last year.

SGP's expansion into Myanmar comes as energy demand there is expected to
grow in line with the economy.

The company is also eyeing opportunities in the fuel segment.

Mrs Jintana said a drop in LPG prices at a time when the government is
cutting subsidies for it has intensified competition in the domestic gas
market, prompting SGP to diversify into other LPG-related segments and the
energy business.

SGP operates an LPG distribution business for automobiles, controlling up to
50% of the total domestic market. But a drop in oil prices has prompted
motorists to switch to petrol, cutting into LPG sales.

The profit margin in the automobile segment of the LPG retail business
dropped by half to lower than 2 baht per kilogramme, down from the 4-5 baht
seen when oil prices were surging, boosting demand for the gas.

Also pushing SGP's desire to diversify was the entrance of several new
players into the LPG market.

This year, SGP switched to focusing on selling LPG to industrial and
large-scale consumers, including food and beverage producers and department
stores. The company expects rising sales in that segment to help offset a
drop in LPG retailing for the automobile segment, said Mrs Jintana.

With stronger competition, she said the company's revenue in the second
quarter would be lower than the 14.3 billion baht generated in the first due
to falling global propane prices, which dropped to $466 a tonne from $520.

But total revenue for the whole year is expected to grow by 25% to 60
billion baht, from 48.2 billion last year.

Total demand for LPG in the Thai market this year is expected to grow 5% to
3.2 million tonnes, she said.

Last year, 63% of SGP's sales channel were for the export market, said Mrs
Jintana.

SGP shares closed yesterday on the Stock Exchange of Thailand at 14.70 baht,
down 10 satang, in trade worth 51.8 million baht.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1269471/siam-gas-snags-stake-in-mya
nmar-power-plant

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com