Hemaraj to Invest $573 Million in Thailand's Power Sector

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Hemaraj Land And Development Public Company Limited (BAK:HEMRAJ) (Bangkok, Thailand), a leading industrial estates and power developer, recently announced plans to invest about $573 million over the next five years on expansion projects. The company will invest half the amount in the utility business to double the capacity of the treated potable and industrial water services for its industrial customers. The present capacity is 150,000 cubic meters per day and the expansion is expected to be complete within four years.

During celebrations to mark the company's 20th anniversary, CEO and President David Nardone announced that Hemaraj had formed a 35:65 joint venture called Gheco-One Company Limited with Glow Energy Public Company Limited (BAK:GLOW) (Bangkok) with the purpose of building a 660-megawatt (MW) coal-fired power plant in Mab Ta Phut, Ravong province. Financial arrangements for raising $450 million to set up the power plant have been completed. The total cost of the project has been estimated at about $1.15 billion. According to Nardone, the development would be funded by cash from sales, small loans, bond issues and working capital. The engineering, procurement and construction contractor selected for the project is Doosan Heavy Industry & Construction Company (SEO:034020) (Chahngwon, Gyeongsahngnam). The project is scheduled to be complete in late 2011, and with its commissioning in 2012, the company expects its utilities business to contribute 35% to 40% of its revenue. Gheco-One has already signed a 25-year power purchase agreement with the state-run Electricity Generating Authority of Thailand (EGAT) (Bang Kruai, Nonthaburi). In addition to the Gheco-One project, Hemaraj also intends to invest in two smaller power plants.

Although Nardone expects some slowdown in foreign direct investment in the near future, given the current uncertainty and caution in the global markets, he is confident that the long-term business prospects for both Hemaraj and Thailand are promising. With Thailand and the other Asian nations set to become the centers of growth of the petrochemical and automotive businesses, Hemaraj's expansion plans are in line with the expected increase in consumer demand over the next few decades.

EGAT's power plants are spread across Thailand, and they account for 59% of the nation's total power generating capacity. EGAT has a combined installed capacity of 15,035.8 MW. EGAT sources power from a number of indigenous resources, such as hydropower, natural gas and lignite. The organization also imports power from neighboring countries besides purchasing from private power companies.

In an effort to raise the funds required to finance its upcoming power plant in Wang Noi, EGAT plans to issue a $286 million bond by the end of the year. The $572 million natural-gas-fired power plant is planned to have a generating capacity of 750 MW. Although the project's construction could be delayed by a few months, EGAT does not foresee supply problems, as its power reserves have grown by 13% following a decline in demand.

The funds raised through the bond will also be used to move a 750-MW unit from EGAT's power plant in Bang-Prakong to the south within 2013, with the aim of meeting the power demand in the region. The existing power plant in Chana, Songkhla, can supply only 1,400 MW of the required 1,700 MW.

Among EGAT's projects to generate power from renewable sources is the 2.5-MW wind turbine power plant to be set up in Nakhon Ratchasima. The $4 million project will be built by Gunkul Engineering Company Limited (Yangon, Myanmar) and is expected to be operational from 2009. This will be Thailand's largest wind-turbine power plant and the electricity generated will be fed to the grid. Other projects based on renewable sources are the 78.7-MW hydropower plant and the 1-MW solar power plant to be set up with an investment of about $143 million.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.