Ratch Group Plc, Thailand's largest private power generation firm by capacity, has stressed its recent acquisition of 2,045-megawatt (MW) coal-fired thermal power plants from PT Paiton Energy (PE) in Indonesia was appropriate given the scarcity of power generation assets for sale in the market.
The company said the purchase was needed as concessions for Ratch's ageing gas-fired power plants in Ratchaburi are due to end over the next several years after almost two decades of operations.
Ratch needs to find new power generation facilities, said chairman Boonyanit Wongrukmit, who is also governor of the state-owned Electricity Generating Authority of Thailand (Egat).
Ratch is a privately run power generation arm of Egat, which holds a 45% share in the company.
Ratch's gas-fired power facilities in Ratchaburi include three thermal power plants, each with a capacity of 700MW, and a co-generation power plant with a capacity of 1,400MW.
Their combined capacity makes up almost half of Ratch's total capacity of 7,215MW.
Mr Boonyanit said sales of fossil fuel- and renewable energy-based power generation assets in Thailand are rare.
Buying operational facilities overseas is difficult because of fierce competition caused by price wars, he said.
The purchase of coal-fired thermal power plants in Indonesia will lead to new business opportunities for Ratch because that country has the largest population in Southeast Asia and massive power demand, said Mr Boonyanit.
The company previously announced it bought a 45.5% share in PE from Mitsui and Co, through its wholly-owned RH International (Singapore) Corp Pte Ltd, in a move to increase its power generation capacity.
PE Paiton units 3, 7 and 8 are located 150 kilometres southeast of Surabaya in Indonesia's East Java.
Transactions for the share purchase are scheduled to be completed by March next year.
Ratch did not disclose the value of the asset purchase.
"Funding the purchase by increasing registered capital is better than requesting new loans because the company's debt-to-equity ratio will become too high, affecting its liquidity," Mr Boonyanit said.
On June 22, the Ratch board approved the company's plan to increase registered capital from 14.5 billion baht to 22.19 billion by issuing ordinary shares.
However, after the announcement of the capital plan, Ratch shares dropped significantly by almost 10% in a few hours, from 50-51 to 44-45 baht a share.