Export Credit

Egco mulls provisions

Busrin Treerapongpichit
Bangkok Post
August 19, 2003

Electricity Generating Plc (Egco) might have to set aside loss provisions to cover investment risks in the US$1.2-billion Nam Theun 2 project given current uncertainties following the withdrawal of Electricite{AAC} de France (EDF) from the Laotian hydropower project.



EDF pullout raises risks in Laos project

Egco president Kraisi Karnasuta said the company had invested 561 million baht in the Nam Theun 2 project.

“We are assessing the risk of the project collapse. If it’s considered high-risk, we might have to set aside a provision or write down capital in the last quarter of this year to cover the risk,” he said.

Mr Kraisi said several energy firms had been approached to take part in the project, including Ratchaburi Electricity Generating Holding, to take over EDF’s stake in Nam Theun 2.

The project’s remaining shareholders are seeking new partners. Investors with expertise in hydropower projects would be a priority.

Mr Kraisi said, however, that EDF had not stated its final decision on whether it will
pull out its whole interest in the project. EDF holds a 35% stake in Nam Theun 2 while SET-listed Egco and state-owned Electricite{AAC} de Laos (EDL) each hold 25%. Listed contractor Italian-Thai Development Plc holds the remaining 15%.

EDF’s withdrawal was announced abruptly on the eve of the planned signing of a power-purchase agreement between the Electricity Generating Authority of Thailand (Egat) and the developers in Vientiane last month.

Mr Kraisi said the 1,070-megawatt Nam Theun 2 hydropower project had strong potential since it would have a long-term power purchase agreement with Egat.

He also said Egco was set to borrow two billion to three billion baht in 2004 and 2005. The loans, likely to be bank facilities, would be used to finance further capacity expansion,
including a 385MW expansion phase in the Khanom plant in southern Thailand and further investment in Nam Theun 2 if its new shareholding structure was concluded.

Egco also plans an additional investment in the relocation of the 734MW Bo Nok plant from Prachuap Khiri Khan to Saraburi. Egco holds a 30% stake in Gulf Power Generation
Co, the contractor of the proposed Bo Nok plant.

It also plans to invest in more high-potential independent power projects. Sakda
Sreesangkom, Egco’s senior executive vice-president for finance, said the company’s potential to borrow remained high since its debt-to-equity ratio was only 0.71 times.

“If necessary, we can increase borrowing up to five billion baht,” he said, adding that the
company’s planned further investment would also be facilitated by cash in hand of up to three billion baht, and long-term stable revenue.

Egco last week reported second-quarter net profits of 1.57 billion baht, up from 1.02 billion the year before. First-half profit rose to three billion baht from 2.27 billion. The company’s shares closed unchanged yesterday at 63 baht in trade worth 19.5 million baht.

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