Japan Bank for International Cooperation (JBIC) has signed a loan agreement to finance the Kaeng Khoi II combined cycle gas turbine power generation project with the Gulf Power Generation Company, a Thai corporation wholly owned by Gulf Electric Public Company, a company incorporated in Thailand in which Electric Power Development Company and others have an equity stake.
The loan, which totals an aggregate amount of US$713mn, was co-financed with 12 financial institutions, including commercial banks such as Mizuho Corporate Bank and the Bank of Tokyo-Mitsubishi.
The loan will provide long-term project financing funds for the construction and operation of a combined cycle gas turbine power generation plant (1,468MW) located in Saraburi, 110km northeast from Bangkok.
The electricity produced by the plant will be sold to the Egat Public Company, a utility company in Thailand, for a period of 25 years.
To date, power demand in Thailand has been steadily growing, with the exception of years 1998-99 when it plunged in the wake of the Asian currency crisis. Demand registered 7% growth on average during the most recent decade and according to the Thai ministry of energy, power demand is projected to continue to rise, reflecting the country’s robust economic growth.
It is forecasted that peak demand in 2015 will increase to 40,978MW, twice the size it was in 2004 of 19,326MW.
To meet this strong demand, the government of Thailand has drafted a plan to enhance power generation capacity and designated the power sector as one of the priority industries for investment in an effort to lure vigorous private investment. In line with this government policy, the project is undertaken on a build-own-operate (BOO) scheme and will thereby contribute to stable power supply in Thailand.
Japanese firms find the power markets in the rapidly growing Asian countries promising for their investment destination, and are actively making or considering making investments in independent power producer (IPP) projects in Thailand and other Asian countries.
This project is the second IPP project to be undertaken in Thailand through the use of JBIC’s project finance. JBIC intends to extend continued financial support for power generation and other investment projects by Japanese companies in Asia.