Bangkok--1 Nov--Siam Commercial Bank
The Electricity Generating Authority of Thailand (EGAT) has appointed Siam Commercial Bank as the financial adviser to study the possible establishment of an infrastructure fund for a combined-cycle power plant. The power plant fund, the first of its kind in Thailand, will serve as an alternative source of capital for future business expansion, which could help ease the country's public debt.
EGAT Governor Soonchai Kumnoonsate said the Ministry of Finance had a policy of encouraging state enterprises to find alternative sources of funds for development of the country's basic infrastructure so they do not need to worry about public debt. Because of this, the State Enterprise Policy Office, under the ministry's supervision, had EGAT consider establishing an infrastructure fund which could serve as a source of funds for basic infrastructure development.
To abide by the policy, he said, EGAT planned to set up an infrastructure fund by counting on the future revenue and cash flow of the Northern Bangkok Power Plant's combined-cycle power unit as assets for fund mobilization. The proceeds from the fund raising will be used to invest in development of EGAT's power plant construction project and the transmission system expansion project to boost electrical system stability, which is vital to national development. The move will help stimulate the country's economy and ease the government's fiscal burdens.
SCB has been entrusted to act as the financial adviser to study and work out the guidelines and methods for establishing the infrastructure fund. It is an alternative fund-raising channel without the need to incur public debt. More importantly, EGAT still owns the combined-cycle power unit and has the power to manage its operation and maintenance scheme.
The plan to establish the fund will be set as a mechanism for fund raising only and will not lead to the privatization of EGAT. Initially, the fund will be at least 10 billion baht in its size with a maturity of 15-25 years, he said.
Mr. Arthid Nanthawithaya, Head of SCB's Wholesale Banking Group, said: “The Bank has the great pleasure and honor of being entrusted to study ways to establish an infrastructure fund for EGAT. It is engaged in the process of considering guidelines and methods for fund mobilization through the fund.
“We are of the view that the fund should have a balanced size and offer proper investment returns to investors because it will not have a significant impact on EGAT in terms of fund-raising costs or power bills. We will focus on offering investment units of the fund for sale to local investors so that they have a participatory role in developing the country's basic infrastructure. It is expected the study of the establishment of the fund will be completed in 120 days and proposed to the cabinet for consideration. The subscription of investment units will take place within 180 days after the cabinet gives the green light for the establishment of the fund,” he said.