Electricity Generating Plc (Egco), Thailand's first independent power producer, has decided to sell all 74.19% of its stake in Egcomp Tara Co, a tap water producer in central Thailand.
A total of 1.6 billion baht is expected from the sale, which was approved by the executive board yesterday and will be put for shareholder approval in the third quarter.
President Sahust Pratuknukul said the move was part of plans to raise funds for an expansion of Egco's electricity business.
All the shares will be sold to Universal Utilities Co, wholly owned by SET-listed Eastern Water Resources Development and Management Plc, Thailand's largest private raw water producer.
Mr Sahust said spinning off its water assets would not negatively affect the company's investment plan, as it still owns 18.7% of Eastern Water, which has rapidly expanded in recent years.
The company has earmarked 29 billion baht for capital expenditure this year and 19 billion for next year excluding mergers and acquisitions, he said.
Egco's power projects for the next two years include co-investment with the Philippines' Masinloc Power Partners Co in a 630-megawatt coal-fired power plant on that country's Luzon Island, due to start operating in 2018.
It will also continue development of two geothermal power plants with Indonesia's Star Energy Geothermal Pte, due to start in 2018 and 2020, and continue with its Xayaburi hydropower plant in Laos, scheduled to start in 2019.
In Australia, it plans to expand its wind farm project with Boco Rock Wind Farm Co to a power generation capacity of 113 MW.
Egco is also negotiating with Manila Electric Co for a joint project with the latter's San Buenaventura Power Ltd (SBPL) subsidiary, which was granted a power purchase contract last month by the Philippine government.
SBPL now has power generating capacity of 455 MW, and the joint project is expected to start operating in 2019.
Domestically, Egco will continue operating its three small power plants — two in Pathum Thani and one in Ratchaburi — and restart its retired gas-fired plant in Nakhon Si Thammarat's Khanom district.
Benjaphol Suthwanish, a research analyst at KK Trade Securities, said the spin-off plan came as no surprise and had been foreseen by investors.