Thailand's 2,000 Megawatt a Year Power Growth Pushes Four New Plants and 1,470 Megawatt Laotian Hydro Projects

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Written by Richard Finlayson, International Correspondent for Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). The electrical power generation industry in Thailand is, to put it nicely, in a state of flux. After reversing a decision to buy power from an independent producer, BLCP Power, and deferring decisions on new power projects, the Electricity Generating Authority of Thailand (EGAT) looks as though it will reactivate the power purchase and is revisiting the construction schedules for various power projects.

These developments have been made against a background of a revised power development plan by EGAT, after an estimate of oversupply of electricity in the market in 2006 and 2007 was changed to one of undersupply. Narongsak Wichetpun, the acting governor of EGAT, said that although peak demand at 19,325 MW in March was about 200MW lower than projected, EGAT would not scrap its own $1.23 billion investment plan to build up to four power plants from 2007 to 2009. In this plan Songkhla would be a new 800MW plant, and the established plants at South Bangkok (700 MW), North Bangkok (800 MW), and Bang Pakong (800 MW) would be repowered to higher outputs.

EGAT says that it will also call for bids for a 700 MW independent power plant later this year. The plant would be scheduled to come online in 2007, to meet an expected shortage in power supplies against a backdrop of soaring demand in the country. Local market analysts say that bidding may open much sooner than 'later this year' as the need to fill the power supply gap in southern Thailand is urgent.

Current estimates are that power demand is growing at a rate of 1,200 MW a year. This rate could increase to 2,000 MW a year over the next five years. In addition to the plans to increase domestic generating power, Thailand is importing power from Laos and Perlis, a northern Malaysian province. EGAT has been concerned that power reserve capacity would drop to less than 40% of the total output of 24,000MW under electricity demand pressure. EGAT controls over 15,000 MW of capacity, and independents control 6,500 MW. The (moving) target for capacity by 2016 under the power development plan is 48,271 MW.

Now the purchase of power by EGAT and BLCP Power from the 1,346 MW coal-fired plant under construction at Ma Ta Phut in Rayong province will go ahead, with the first power unit coming into operation in 2006 and the second unit in 2007.

Complications in siting two new plants at Bor Nok (734 MW) and a $900 million coal-fired plant at Hin Krut (1400 MW) have been aggravated by persistent opposition from environmental and community groups. At the beginning of 2004, the Bor Nok plant was scheduled to start producing power in 2007-2008. Recently the decision was made to re-locate the plant to Kaeng Khoi in Saraburri and switch the feedstock from coal to natural gas. The move has precipitated a demand from IPP contractor Gulf Electric (0wned 49% by J-Power) for loss of opportunity caused by delays in starting the project. EGAT is now debating whether to offer Gulf Electric the new 700 MW contact as compensation, without opening bids, or to let the company join the bidding round for the new independent power station. If Gulf Electric fails to get the contract, EGAT would re-start talks on compensation. Gulf Electric is asking for over $98 million for Bok Nor delays.

The Hin Krut plant would still seem to be on a revised schedule to be constructed in Prauchap Khiri Khan, with power production scheduled for 2008-2009.

Another casualty in Thailand's power battlefield is 385 MW Khanom power plant in Nakhon Si Thammarat which has been from the power development plan. It has been displaced by the new 700 MW plant in order to keep the country's power reserve above 15% in 2007.

Under the terms of a Thai-Laos agreement, Laos will supply 3,300 MW of electrical power capacity to Thailand by 2010. There are currently three Laotian projects, totaling 2,000 MW to in the pipeline to provide this supply with more projects needed to make up the balance of 1,300 MW.

One of the current projects is a 400 MW hydro power plant proposed by Gamuda Bhd (BURSA MALAYSIA: 5398) (Petaling Jaya, Malaysia), which has been given the exclusive mandate to carry out feasibility and environmental impact studies on the Nam Theun 1 (NT1) project in central Laos. Construction could start by the end of this year, with completion in 2009. The $395 million dam and generating plant will be built on the Nam Theun River, a short distance upstream from the confluence with the Mekong River. Equipment for the project will be shared by Gamuda with a joint venture partner most likely to be either a Laotian, Thai, or Malaysian company.

This project will be developed concurrently with the $1.1 billion Nam Theun 2 (NT2), a 1,070 MW hydropower project whose backers are looking to confirm guarantees with the World Bank and Asian Development Bank. Ninety-five percent of NT2's power is contracted to EGAT in a 25-year agreement. It will immerse part of the old Ho Chi Minh trail into Vietnam and provide irrigation for farmers in the dry season. Movement of human settlements will probably begin next year, after financing has been completed and construction soon after. Electricite de France (EDF)(35%), EGCO Thailand (25%), Electricite de Laos (25%), and the Italian-Thai Development Company (15%) are the shareholders in NT2. GE is said by local sources to be looking for the $160 million turbine contract.

Strong opposition from global environmental lobbies is anticipated. NT2 is the Laotion-scale version of China's Three Gorges dam and power project.

Thailand's power generation sector is definitely living in interesting times.

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