Infrastructure & PPPs in Thailand - Q2 2022 Update
YOG INFRA Q2 2022 insights
THAILAND has taken notable steps to promote penetration of EVs in the country, with multiple fiscal incentives announced across the EV chain, including batteries and EV charging infrastructure. This will help the country to progress towards its goal to be carbon neutral by 2050. Couple of greenfield transport projects have also been identified for implementation via PPP modality.
Read more about key developments in Infrastructure and PPPs in the country in our latest insight.
Thai Developer to seek project debt for Biogas Plants
Bangkok-listed power developer Absolute Clean Energy (ACE) will seek project finance later this year for a portfolio of 18 biogas plants. It will initiate discussions with local commercial lenders after the power purchase agreements (PPA) are signed. ACE initially targeted to sign the PPAs for each project with the state-owned Electricity Generating Authority of Thailand (EGAT).
The projects, with an approximate cost of THB 4.7 Bn (USD 138 Mn), were awarded by the EGAT last year. Company will seek approval at the annual shareholders meeting later this week to raise its borrowing limit to THB 20 Bn from THB 5 Bn.
The total capacity of both operational and under-development projects is about 528 MW. It aims to reach 1 GW of capacity by 2024.
Thailand’s BOI revises EV incentives
Thailand Board of Investment (BOI) has approved improved incentives for the country’s electric vehicle (EV) sector as well as supporting infrastructure, primarily charging stations. According to the changes, smaller and compact EV charging stations qualify for a three-year-period tax relief. This amendment is in addition to a five-year company tax break available for investment in charging infrastructure with at least 40 chargers, out of which, at least one-fourth of them are DC chargers.
Furthermore, the BOI has removed the requirement for ISO certification as well as a restriction that prevented investors from receiving additional advantages from other agencies. Investing in EV charging tech has also been made easier. EV Smart Charging System investors can either submit an Implementation plan or connect to the EV Charging Network Operator Platform.
Thailand plans Bangkok Grey Line PPP
The Bangkok Metropolitan Administration (BMA) is looking to launch a bidding process in the next two years for a monorail line to be built in a public-private partnership (PPP). The Grey Line project will require an investment of about THB 28 Bn (USD 820 Mn). The administration expects to initiate the procurement process in 2024.
The monorail line will link the Vacharapol area in northern Bangkok to Thong Lor in the Sukhumvit business area. The BMA is considering three investment models: PPP net cost, PPP gross cost and PPP modified gross cost. The project will take four years to construct and is scheduled to start operations in 2030.
It is expected to have a ridership of 97,000 a day in its first year, with a capacity to accommodate 8,000-20,000 commuters an hour during peak periods. The line will generate a daily revenue of THB 2.66 Bn with fares likely to range from THB 16 to THB 42.
Major energy firms to transition to clean fuel in Thailand
Thailand-based TPI Polene Power (TPIPP), Bangchak Corporation and PTT Exploration and Production Public Limited Company (PTTEP) have announced plans to transition away from fossil fuels towards clean energy and offset carbon emissions from operations. The announcements are in line with the Government of Thailand’s aim of achieving carbon neutrality by 2050.
TPIPP, a waste-to-energy project developer in Thailand, has announced its goal to replace fossil fuels with refuse-derived fuel (RDF) in its operations by 2025. The company has earmarked around THB 8.3 Bn over the next five years to develop and expand the capacity of its RDF-fired power plants and modify existing coal-fired power generators to operate on RDF. Currently, TPIPP operates eight power plants with a combined capacity of 440 MW.
Bangchak Corporation has also announced that the company and its subsidiaries are aiming to achieve carbon neutrality by 2030 and net-zero by 2050. The company plans to achieve this by implementing carbon reduction programmes, including carbon credit trade.
Government of Thailand plans new USD 2.3 billion highway project
The Government of Thailand has announced plans to undertake a USD2.33 billion highway project linking Saraburi and Nakhon Nayok and reduce congestion on the existing Phahon Yothin Road (Highway 1) in Bangkok. The proposed road project is currently awaiting approval from the Expressway Authority of Thailand (EXAT).
Contract to construct the Chalong Rat to Nakhon Ayeok-Sarabur Expressway is expected to be awarded in 2023, with construction work scheduled to commence in 2024. The highway will be constructed in four phases and is expected to open to traffic in 2026.
BOI approves THB 209 billion worth of projects in Thailand
The Board of Investment (BoI) has approved THB 209.5 billion worth of infrastructure projects in Thailand. This includes the THB 36.1 billion battery electric vehicle (BEV) project proposed by Horizon Plus Company, a joint venture (JV) company comprising Foxconn and PTT Public Company Limited (PTT).
Promotional incentives for investments in the production of EV batteries have been awarded to a total of 16 projects with a combined investment value of THB 4.82 billion. Three additional projects have been approved for investment in high-energy density batteries, totalling THB 6.75 billion.
Investments in the development of smart systems for use in industrial estates and zones will now qualify for promotional incentives. Projects that are approved will receive an eight-year corporate income tax exemption, while those that are located in the Eastern Economic Corridor (ECC) will benefit from a five-year, 50 per cent corporate income tax cut.
Banpu to shift to cleaner fuel sources
Thailand-based Banpu Corporation has announced plans to shift away from fossil fuels in favour of cleaner fuel sources and has earmarked its windfall profits from operations to finance this transition. By 2025, the corporation is aiming to reduce the share of revenue generated by coal from roughly 67 percent to 50 percent. This will be lowered in favour of increased natural gas and electricity production, as well as green technology such as solar and carbon capture.
Banpu has earmarked investments of between USD 800 Mn and USD 1.3 Bn till 2025 to expand its gas and green energy portfolio. The company is also exploring opportunities to develop its floating and rooftop solar portfolio, as well as gas-fired power plants and pipelines .
List of Transactions - Thailand Q2 2022
Source: Inframation, YOG INFRA analysis
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