Egat turns to banks, debt market
Utility confident of raising Bt 150 bn
The Nation, 21 September, 2004
Watcharapong Thongrung
The Electricity Generating Authority of Thailand unveiled plans yesterday to borrow between Bt144 billion Bt 154 billion overthe nextfiveyears, ratherthan banking on the proceeds from its delayed listing.
Egat deputy governor for finance Santad Jirayuwat said yesterday that the energy authority should have no trouble borrowing the funds without listing on the Stock Exchange of Thailand , or obtaining a loan guarantee from the Finance Ministry.
"We can issue bonds, or opt for a syndicated loan to finance our investmentplans, coupled with our revenue," Santad said.
Over the next five years, Egat plans to finance four new power plants with a combined capacity of 3,000 megawatts, requiring an investment of Bt64 billion, as well as invest in new transmission lines at a cost of Bt8o billion-Bt9o billion.
Santad said that with an appropriate power-price structure, Egat would have no problem sourcing the loans, even without a Finance Ministry guarantee.
"The liquidity surplus [in the domestic banking sector] should remain next year and many banks should be ready to lend us money," he said.
The government is expected to come up with a revised power-price structure by the end of this year, which should allow Egat to charge buyers at a rate that will enable it to use at least a quarter of its revenue to repay debts and finance new investments.
Egat's privatization plans have been stalled since April, after the government caved in to protest demands from disgruntled employees. The energy body's previous governor resigned, and was replaced recently by Kraisri Karnasutra. On October 3, Egat directors will meet to discuss possible options concerning the listing. "After the meeting, the picture should be clearer on how we can finance future investments," said Kraisri.
Egat plans to spend Bt14 billion next year and Bt20 billion in 2007. Higher investment funding will be allocated for the following three years. According to Santad, all projects should be financed through baht-denominated loans as all of Egat's revenue is in baht.
"We are confident of our ability to secure funding, following success in issuing Bt4.8 billion in bonds to financial institutions in August," he said. The bond coupon rate is 40 basis points above that of government treasury bonds.
Despite higher fuel costs, Egat expects to reap before-tax-and interest earnings of Bt50 billion in fiscal 2004, ending this month, close to the amount it recorded last year. However, the weaker baht against the US dollar is expected to result in a Bt2-billion foreign-exchange loss.
Egat has total liabilities of Bt120 billion, against Bt3o0 billion in assets. However, Egat will have to shoulder the financial burden of a delayed rise in energy rates since oil prices soared.
The power price structure, which is being drawn up for Egat by PricewaterhouseCoopers, is expected to include a mechanism that will enable Egat to adjust its energy charges in line with fuel costs for the first time in three years.
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