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NEWS UPDATES 2 November 2010

Ratchaburi power looking at Laos

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Ratchaburi Electricity Generating Holding is eyeing equity participation in two more 1,500MW hydropower projects in Laos under its long-term business plan.

It is also planning to invest on existing power plants and coal mines in the Philippines, Vietnam, Indonesia and Australia. Negotiations for one of these deals should be finalised by next year.

"Our plan is to increase the capacity to 7,800MW in 2016, which would require an annual investment of at least Bt30 billion to Bt40 billion," president of the firm, Noppol Milinthanggoon, said. He added that with the low debt to equity ratio of 0.58:1, the company was in a strong position of financing the expansion.

"There's not been much progress so far, because we didn't want to rush. We need to be thorough, to study the cultural environment to avoid investment risks, while the sellers are ready to negotiate with other buyers for the best prices," he said.

While supply from other countries will be consumed there itself, much of the electricity from Laos would be sold to Thailand, where large projects are being held back by growing resistance. Much of the investment, therefore, would be poured into Laos, though Noppol did not mention the name of the target projects. It is reported that Ch Karnchang recently won the Laotian government's approval to proceed with generating power in Xayaburi and it might need partners. The 1,280MW project is expected to require an investment of Bt100 billion.

"We're finalising the deal for a hydropower project with the expectation of taking no more than 50 per cent equity in the project," he said.

The company has so far committed to investing Bt73 billion in four projects in Laos - Nam Ngum 2, Hongsa, Nam Ngum 3 and Xe Pien Xe Nam Noy.

A challenge in building up capacity lies in the difficulty in investing in new largesized projects.

Noppol noted that Thailand would face big problems in the next three decades. Referring to the Electricity Generating Authority of Thailand's data, he said power demand in the third quarter had risen 10 percent and could rise further to 12 per cent in line with the economic growth forecast. Generally, if economic growth goes beyond 5 per cent, demand gets multiplied 1.4 times.

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