Thai Tap Water Supply (TTW) has earmarked Bt20 billion for a five-year project, which will emphasise green energy.
According to TTW’s managing director Sompodh Sripoom, Bt2.73 billion would be invested in the Nam Ngum 2 hydropower project, with the payment due next month. The 30-per-cent stake in CK Power, a unit of Ch Karnchang (CK) that operates South-east Asia Energy (SEAN) and its Nam Ngum 2 hydroelectric plant in Laos, would cost Bt2.76 billion in total. The investment in CK Power, which has been entirely financed by a bank loan, marks the company’s first investment in the power sector and its first project outside Thailand.
“The investment would immediately boost our net profit by Bt190 million this year,” he said, adding that the company would seek growth from energy projects in light of saturated demand for tap water.
“We want to grow our earnings by more than 7 to 8 per cent per annum. So far, the growth rate has been too small. Our study, based on overseas companies’ experiences, shows that if we operate in the water business and invest more in energy projects, our earnings could grow by 15 per cent per annum on |average in the next five years,” Sompodh said.
He explained that diversification would also help cut down on risks. At present, it supplies 95 per cent of tap water under a concession from the Provincial Waterworks Authority and the rest to clients in the Bang Pa-in Industrial Estate. Such concentration poses a business risk.
After the huge investment, annual investment in the fifth year is expected to increase from Bt4.8 billion to Bt7.8 billion.
Aside from CK Power, TTW is also planning to invest in small alternative-energy projects with a capacity of less than 10 megawatts. Energy projects of this size will supply power to the Provincial Electricity Authority and will be subject to fewer regulations than ones with capacity of more than 10MW.
Sompodh added that the company was also interested in solar power.
“The problem now is that the Energy Ministry has received a large number of investment applications.
The purchase quota is full. We will need to wait until the ministry runs a check on the applicants and takes back the quota from those who are not serious about the investment,” he said.
Aside from solar power, TTW is also eyeing wind and biomass projects.
TTW’s management recently revealed to stock analysts that it aims to purchase 25-year rights to operate and manage treated water and wastewater services - a deal that should be sealed by the second quarter of this year.
Somkiat Pattamamongkolchai, TTW’s accounting and finance director, said the company would finance the investment through bank loans and bond issuance. It will issue Bt3.5-billion refinancing bonds on February 20 and 21.
Bualuang Securities said recently that it expected investment in CK Power and the 25-year water-treatment management rights to add 3 to 4 per cent to its earnings for 2012-2013. The house forecasts its 2012 earnings at Bt2.15 billion or Bt0.54 per share. Last year, it earned Bt2.11 billion in net profits.
