THAILAND: Energy companies expand in Southeast Asia

THAILAND: Energy companies expand in Southeast Asia

Thai energy companies are on a roll. The national oil and gas champion, a coal mining and power utility, upstart solar and wind companies, virtually all are expanding across Southeast Asia, applying practices and technology developed at home. Thailand is reaping the benefits of two decades of government energy policies that have supported the sector. Companies are also profiting from oil and gas prices that are recovering from a three-year slump, increasing electricity demand due to economic growth, and renewable technologies that have become competitive with fossil fuels.

Also, while the military junta that has ruled Thailand since mid-2014 has put no stamp of its own on the energy sector, it has targeted infrastructure spending to boost the economy and has prioritized investment in high-tech industries. Long-standing reform policies have turned Thailand’s state energy company PTT into a successful international oil and gas producer, encouraged the development of power producers such as Electricity Generating, and fostered the emergence of renewable startups such as Energy Absolute.

“The power businesses in Thailand have developed expertise in this sector, and are now well-placed to support energy development across the region,” said Robert Grant, Asia Pacific head at Canadian-listed SNC-Lavalin, an engineering and construction firm focused on energy, infrastructure and mining.

The 10 members of the Association of Southeast Asian Nations (ASEAN) together have a population of more than 600 million people, with a collective gross domestic product of nearly U.S. $3 trillion, according to research company Statista.

ASEAN’s energy use rose by 60 percent in the past
15 years, according to the International Energy Agency,
which also says the region’s demand could grow another two-thirds by 2040. Companies aiming to take part in the growth in ASEAN and beyond include B. Grimm Power, a Thai power developer that already has assets in Vietnam and Laos, and Banpu Power, which is building a coal-fired plant in China.

“You can already see increased activity by Thai investors in the ASEAN region,” Grant said.

The expansion has been reflected in the local stock exchange, with shares of energy companies growing nearly
75 percent since the start of 2016, against a broader market gain of less than half that. It’s also sparked a rash of listings, with Thai power companies having raised more than U.S. $2 billion from initial public offerings (IPOs) in 2016 and 2017.

Thailand’s third-biggest generator, Gulf Energy, in December 2017 held the biggest listing the country has seen in a decade, at more than U.S. $700 million. Gulf said it expects revenue to grow by 18 percent in 2018, fueled in part by a major solar investment in Vietnam. The IPO funds will be used to repay loans and finance new regional power plants, it says.  Reuters