SET-listed Ratchaburi Electricity Generating Holding (Ratch) has formed a partnership with Italian-Thai Development (ITD) for coal-fired power plants producing almost 4,000-megawatts in Dawei, Burma.
A memorandum of understanding signed yesterday gives Ratch 30% ownership of a new company to be formed next year and ITD 70%.
In the first three years, three small-power-producer projects will be developed with a capacity of 130 MW each.
Six 600-MW units will also be built under the agreement, but Noppol Milinthanggoon, Ratch's chief executive, declined to give a time line.
The investment cost is US$1.5 million per megawatt. Ratch is also keen on related joint projects in Dawei including a deep-sea port, said Mr Noppol. Dawei, also known as Tavoy, is in southern Burma, west of Thailand's Kanchanaburi province.
SET-listed ITD, Thailand's biggest contractor, has signed a separate agreement with the Burmese government for the 10-year project, with the first phase worth $8 billion.
The entire project could be worth $58 billion.
"Mainly, these power plants are aimed at serving electricity demand in Burma for the many infrastructure projects expected to be built. The surplus will be used to strengthen Thailand's power security," said Mr Noppol.
ITD may partly offload its ownership in the project to other partners.
PTT Plc, Thailand's top energy conglomerate, is also keen to take part in the Dawei Development Project.
Mr Noppol said the Dawei project is among four foreign investments that Ratch has been negotiating, three of which are expected to be concluded next year.
Apart from Laos, Australia and Burma, Asean countries such as the Philippines and Indonesia have been singled out as investment destinations for Ratch.
In addition to power plants, the company holds stakes in coal mines in Australia and Indonesia.
Ratch predicts its generating capacity will increase from an expected 5,180 MW this year to 6,660 MW in 2016.
Foreign projects now account for 30% of Ratch's portfolio.
Thailand's largest private power producer has earmarked 12 billion baht to expand its business next year including through acquisitions.
Mr Noppol said the company's financial strength gives it room to invest in such projects.
Ratch has a debt-to-equity ratio of 1:1 and net debt to equity of 0.5:1.
Cash on hand amounts to 7-8 billion baht, while shareholder approval has been granted to issue 7.5 billion baht worth of debentures.
The company will spend 3 billion baht by next June to raise its ownership in Ratch-Australia Corporation, which was renamed from Trans field Services Infrastructure, to 80% from 56.16% now.
The power producer yesterday posted a third-quarter net profit of 1.23 billion baht, down by 1.7% year-on-year due to foreign exchange losses.
Revenue nonetheless increased by 31.6% to 14.7 billion.
Nine-month earnings edged up by 1.7% year-on-year to 4.31 billion baht, while revenue surged 2.9% to 35 billion.
Mr Noppol said the severe flooding will pressure Ratch's financial performance in the fourth quarter, as many factories and households struggle.
Electricity consumption was relatively flat year-on-year in the third quarter compared with a normal annualised growth rate of 4-6%.
Meanwhile, seven remaining projects by Solarta, a solar farm joint venture 49% owned by Ratch, have been postponed until early next year due to the floods.
Only the first 3-MW phase of a total 34.25 MW is operational.
Ratch shares closed yesterday on the SET at 41 baht, down 25 satang, in trade worth 214 million baht.
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