Hongkong Electric International has commissioned its first overseas Greenfield IPP project, a 1,400MW combined cycle power plant in Thailand.
The power plant, with an initial investment of US$890 million (HK$6.9 billion), is located about 100km southwest of Bangkok in Ratchaburi Province and has two 700MW units fuelled by piped gas. Construction work commenced in 2006 and the first unit was commissioned in March this year followed by the second one on 1 June.
“Ratchaburi Power Company Limited (RPCL) represents five per cent of Thailand’s total national installed capacity and is one of the most efficient thermal generating plants serving the Thai electricity market,” said Hongkong Electric International (HEI) general manager Charles Tsai.
HEI, which owns 25 per cent and is the largest foreign shareholder in the joint venture project, is confident that the project will offer significant and stable earnings to parent group Hongkong Electric Holding’s overseas portfolio.
“The project is expected to make a very useful contribution to Hongkong Electric’s group earnings after 2008, when the group’s Hong Kong electricity business operates under the new Scheme of Control Agreement with a reduced rate of return,” Tsai noted.
RPCL will sell 100 per cent of its electricity to the state-owned Electricity Generating Authority of Thailand (EGAT) under an effective 25-year take-or-pay Power Purchase Agreement, offering a secure return while at the same time providing a cost-matching tariff structure indexed to the US dollar.
“We are delighted that despite all the challenges we faced, we have been able to achieve commercial operation of the units strictly in compliance with the delivery schedule of the Agreement,” said Tsai, attributing the success to excellent teamwork among all six shareholders – HEI, Ratchaburi Holdings, Chubu Electric, PTT, Toyota Tsusho and Saha Union, as well as the unfailing support from the construction contracting consortium and the Owners Engineers team, Associated Technical Services Limited and EGAT.
Exceeding environmental expectations
Gaining social acceptance at the construction stage was one of the major issues faced by RPCL. “HEI has been lucky to be able to capitalize on HK Electric’s full engineering potentials and experience in the power sector. Addressing the environmental concerns of the local community, we have introduced at the Ratchaburi plant state-of-the-art emission control installations similar to those in Hong Kong,” Tsai added.
A number of other initiatives have been implemented to promote public understanding and trust. RPCL has committed to setting up a community development fund with one Satang (1/100 of a Thai Baht, US$0.0003) per unit of electricity sold, which is probably the first in Thailand, well before legislation was passed by the Thai Government in December last year requiring similar funds be set up by power companies for future projects.
Meanwhile, RPCL has also been providing support for a number of community building and environmental protection programmes, benefiting tens of thousands of Thai people.
HEI will continue to look for overseas investment opportunities in order to increase the proportion of Group earnings derived from activities outside Hong Kong. “We are studying energy-related investment opportunities in Asian countries including Vietnam, Indonesia and Singapore,” said Tsai.