State-run Electricity Generating Authority of Thailand (Egat) will inject 11.25 billion baht into its subsidiary SET-listed Ratch Group Plc, Thailand's largest private power generation firm by capacity, to increase registered capital and expand investment in Indonesia, a populous country with high energy demand.
The decision was recently approved by the cabinet, which allowed Egat to make the additional investment in line with its 45% shareholding in Ratch.
Ratch is increasing its registered capital to 22.192 billion baht, up from 14.5 billion baht, in order to partially finance the acquisition of PT Paiton Energy (PE), which operates two coal-fired thermal power plants, with 2,045 megawatts capacity, on Java.
The share purchase is valued around 25.42 billion baht. The transaction is scheduled for completion in the second quarter of this year.
"It is better to increase registered capital than seek more loans, which would cause the company's debt per equity ratio to increase too much, eventually affecting its liquidity," said Egat governor Boonyanit Wongrukmit.
The investment in Indonesia was considered the right move at a time when new power generation assets in Southeast Asia are scarce.
Buying shares in PE would pave the way for Ratch to benefit from a new business opportunity in a country with the highest population in the region, Mr Boonyanit said.
Acquiring two new facilities in Indonesia would also help Ratch increase its electricity generation capacity from domestic and overseas power plants to 10 gigawatts over the next three years.
The company needs to have new facilities as the concession for its ageing gas-fired power plants, which have been operating for almost two decades in Ratchaburi, expire soon.
Ratch's power plants in the province include three thermal power facilities, each with 700MW capacity, and a 1,400-MW co-generation power plant.
In June last year, Ratch bought a 45% share of PE from Mitsui & Co through its wholly owned RH International (Singapore) Corporation Pte (RHIS).
PE's two power plants are located in the Paiton Power Complex, a power-generating hub and a major power source for Java.
Under a power purchase agreement with state-owned electricity firm PT Perusahaan Listrik Negara, the Paiton Power Complex has a remaining period of 21 years to supply electricity to the Indonesian government.
Clean energy will make up 25% of its total capacity in 2025, up from 15% at present, according to Ratch.
