Kaeng Khoi 2

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The Kaeng Khoi 2 power plant project was a 1,468 MW natural gas-fired plant located in Saraburi province, and was developed by Gulf Power Generation. The plant was to supply power to the Electricity Generating Authority of Thailand (EGAT, the state-owned utility) under a 25-year power purchase agreement, with the power sales tariff starting at around Baht 1.685/kWh (US$ 4.1 cents/kWh). Fuel would be supplied by the Petroleum Authority of Thailand under a 25-year gas supply agreement, with the plant to receive 125 million cu ft a day of natural gas for the first 734MW with the figure rising to 250 million cu ft a day from March 2008. The plant was to replace Gulf Power Generation’s 734 MW coal-fired IPP project at Bo Nok in Prachuap Khiri Khan province, which was cancelled after it ran into vehement local and environmentalist opposition. Gulf Power Generation was a subsidiary of Gulf Electric Public Company Limited (GEC) which was a joint venture between the partially divested Electricity Generating Company (EGCO) of Thailand (50%), Japan Electric Power Development Company Limited (EPDC or J-POWER) (49%) and Mit Siam (1%). EGCO was set up in May of 1992 as a holding company to divest some of the assets of the state-owned Electricity Generating Authority of Thailand (EGAT). In November 1994, EGCO floated 204 million shares, or 51% of the company, at 22 baht each, raising US$178.5 million and effectively making it a privately run company. The shares made their debut on the Thai stock market in January of 1995. Although EGAT retained a 48% interest in EGCO, the company was to be run as a separate entity and was to be out of the EGAT's sphere. In July of 1998, Hong Kong utility firm China Light and Power Co. Ltd. (CLP Power) acquired a 14.9% stake in EGCO for US$241 million. As of 2004, the stake holders of EGCO were EGAT (25.41%), CLP Power (22.42%), Thai investors (30.09%), and foreign investors (22.08%). In December 2005, Gulf Power Generation reached financial closure for the plant, after years of delays caused by a series of problems relating to the plant’s site and fuel choice. The first phase of financing was completed on November 15, 2004 when Gulf Power Generation signed off on Baht 35.5 billion (US$866 million) worth of loan facilities for the project. A Baht 28 billion (US$683 million) loan facility was being extended by seven local financial institutions including the Thai Military Bank, Siam City Bank, Bank of Ayudhya, Bank of Asia, BankThai, UOB Radanasin Bank and the Government Savings Bank. In addition, a Baht 7.5 billion (US$183 million) standby letter of credit facility was signed with six foreign financial institutions including Barclays Capital Securities (Thailand), Bank of Tokyo-Mitsubishi, BNP Paribas, ING Bank, Mizuho Financial Group and Sumitomo Mitsui Banking Corporation. However, final financial closure was conditional on the second phase of financing completed in December 2005, with the Japanese Bank for International Cooperation signing a long-term loan agreement to co-finance the project with the other financial institutions. The construction was completed and the Block 1 entered into commercial operation in May 2007 and the Block 2 in March 2008 respectively. The engineering, procurement and construction contract for the project was awarded to Japan's Mitsui & Co, which was to procure the equipment from France's Alstom and operate the plant under a 12-year contract upon its completion. In 2006, Gulf Electric Group secured THB30 billion in financing to help finish building the Kaeng Koi 2 power plant. Of the total package, THB17 billion funded by six local banks - TMB Bank PCL (TMB.TH), Siam City Bank PCL (SCIB.TH), Bank of Ayudhya PCL (BAY.TH), United Overseas bank (Thai) PCL (UOBT.TH), BankThai PCL (BT.TH) and Government Savings Bank. The remaining THB13 billion will be provided by Japan Bank for International Cooperation, Mizuho Corporate Bank Ltd., the Bank of Tokyo-Mitsubishi UFJ, DZ Bank, Fortis Bank A.S. (FORTS.IS) and ING Bank.