EGATi invests in Indonesia buying shares of the coal mine

          EGAT International Company Limited (EGATi) expands business by investing in the coal mine in Indonesia to access to fuel resource and earn more income supporting the future growth of the company. Supplying the coal to EGAT is one of the company’s business plan, but the company also needs to join competitive bidding with fairness and transparency.

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          Mr. Watchara Hemruchatanun, President of EGATi said that the company’s investment in share of Adaro Indonesia (AI), a coal mine in Indonesia which was approved by the Thai cabinet in October 25, 2016 followed the investment strategy of EGATi as an affiliate of EGAT with 100% share. The company is EGAT’s representative investing in power project and related business to supply electrical power to Thailand as a way to strengthen the power system security of Thailand. Previously, EGATi was trusted by Vietnam’s Government to invest in Quang Tri 1 power project with the capacity of 1,320 MW and commercial operation date expected in the year of 2022-2023. That contributes to the necessity to prepare sufficient coal supply. As the cabinet approved EGATi’s investment project in AI, the reduction of the risk of fuel supply for Quang Tri power plant was managed, and the company’s goal would be achieved.

          Moreover, this investment will enhance the company’s strength and reduce the dependence on EGAT’s budget in the future. Presently, EGATi’s investment still needs EGAT’s budget. Investing in AI will enable the company to own the property and raise the funds for future business expansion, which could reduce the burden on EGAT’s investment.

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          “To invest in the coal mine is our good opportunity as the coal price has dropped, while in the future it is expected that ASEAN or Southeast Asia will consume more coal. Moreover, many countries around the world still have plans to construct new coal-fired power plants such as 35,000 MW in Indonesia and 55,000 MW in Vietnam. The company will make the profit from selling coal to various power plants as well as EGAT’s power plants in the future through the EGAT’s procurement process which is the national bidding with transparency and fairness between the buyer and sellers. However, it is possible that the company might not have sufficient coal to join the competitive bidding.

          Mr. Watchara Hemruchatanun further stated that AI owns the source of high-quality sub–bituminous. Its brand is well known globally in the name of Envirocoal among 12 countries including Japan, Korea, China, Hong Kong, and Spain. According to the statistic in 2015, AI holds the third largest coal reserves and is the second largest coal producer in Indonesia. AI is able to make profit continuously even when the coal price has plummeted. EGATi determined to invest the total amount of 325 million US dollars or 11,700 million baht. The investment budget is divided into 2 amounts. The first amount of 164 million US dollars will be paid in 2016 accounting to 11-12 percent of the whole investment budget, while the rest of 161 million US dollars will be paid in 2022-2027 which is the returns EGATi will receive.

          Apart from this investment, EGATi is considering to develop the coal power plant projects in Laos, Cambodia, and Indonesia with the total capacity of 3,000 MW. EGATi has also invested in hydropower plant such as Nam Ngiep 1 hydropower project in Bolikhamxay, Laos, whose dam and power plant construction is in process, with the capacity of 289 MW and commercial operation date expected in 2019. In this project, EGATi owns the 30% share.

          Moreover, EGATi is developing a Salween Hydropower Project (Mai Tong) situated at Mai Tong, Shan State, Myanmar with the capacity of 3,000 MW in which EGATi owns 30% share. The project’s feasibility study to mitigate the impact on environment and society is in process. Another project is Hutgyi Hydropower located in Pha-an Province, Kayin State, Myanmar with the capacity of 1,360 MW in which EGATi owns 36% share and waits for the final decision from Myanmar Government.