Infrastructure & PPPs in Thailand - Q3 2021 Update
THAILAND has proposed interesting PPP concession options for subway PPP, based on recent experience on transport projects in country and the region. There is continued focus on transport sector in the country along with certain concessions being awarded in water and urban infra sectors.
Read more about key developments in Infrastructure and PPPs in the country in our latest insight.
THAI REFINERY CONSIDERS DEBT FINANCING FOR USD 410MN UPGRADE
Thai firm IRPC - the third largest oil refiner by capacity in the country - will consider raising debt for a THB 13.3Bn (USD 410Mn) upgrade of its petrochemical complex. The company will also study financing the project using bonds along with the cashflow generated from its operations.
The project will improve the quality of its diesel output in order to make it compliant with new regulations that will be implemented in Thailand from 1 January 2024. The project will involve the construction of a new diesel hydro treating unit with a capacity of 75,000 barrels per day. The new facility is set to become operational in January 202. IRPC operates a refinery and petrochemical complex in Rayong province, in the eastern part of Thailand, with a total capacity of 215,000 barrels per day.
THAI RAIL OPERATOR COMPLETES USD 402MN GREEN BOND ISSUANCE
Thai rail operator BTS Group has priced a total of THB 13Bn (USD 402Mn) unsecured senior green bonds. The proceeds will be used to refinance company expenses incurred during the past year, including repayment of bond obligations and the operation of Bangkok’s Green Line.
The issuance was oversubscribed 2.1 times. BTS decided to use its greenshoe option to expand the issuance to the final size from an initial target of THB 8Bn. The offering included a THB 1.5Bn three-year bond tranche with a fixed annual interest rate of 1.79%; a five-year bond tranche with 2.53% annual interest rate totalling THB 3.5Bn; and a 10-year bond tranche with annual rate of 3.77% amounting to THB 8Bn. The notes were rated ‘A’ by Thai credit agency TRIS Rating. The issuance was dominated by local investors, with over 95% of buyers located in Bangkok.
THAILAND LAUNCHES PPP FOR BORDER CARGO CENTER
Thailand is preparing to launch a THB 1.3Bn (USD 40Mn) PPP in to develop a logistics center on its border with Laos.
The preferred bidder will hold a 30-year concession for the project, which will support international road freight between the two countries, including a facility to transfer cargo between road and rail transportation. The facility will be located in Nakhon Phanom province and will have an approximate size of 19.3ha.
The logistics center will benefit from trade transportation between Thailand, Laos, Vietnam, and Southern China. It will also serve a nearby special economic zone being prepared by the government. Construction is set to start in 2022 and last until 2024, and the facility will become operational in 2025.
THAI JV AWARDED USD 68MN U-TAPAO FUEL SERVICE PROJECT
A consortium between PTT Oil and Retail (PTTOR) and Bangkok Aviation Fuel Services Public Company (BAFS) will develop a THB 2.3Bn (USD 68Mn) aviation fuel service at the U-Tapao International Airport.
The project will be funded by financial institutions and through shareholder loans. Construction has begun and the project is slated to be operational within four years. PTTOR has been awarded a 30-year concession. The airport is going through an upgrade that will be completed in 2025.
BAFS will own 55% of the aviation fuel project and PTTOR the rest. The agency oversees Thailand's Eastern Economic Corridor programme, which is seeking to transform the provinces of Raygong, Chachoengsao and Chonburi into a regional trade and industrial hub.
RATCH TARGETING TWO MORE POWER DEALS IN 2021
Bangkok-listed Ratch Group aims to acquire two power projects in 2021 with a total capacity of 100 MW. The targets are an operational fossil-fuel plant and a renewable energy facility that is still being developed.
Ratch is looking to increase its portfolio capacity by 584 MW to help achieve its target of reaching 8.8 GW by 31 December 2021. The company had total capacity of 8.3 GW at the end of June, including 1.237 GW under construction.
Ratch posted a net income of THB 4.2Bn (USD 126Mn) for the first half of the year, a 73% on-year increase. The bottom line was boosted by increased electricity demand in Australia and decreased costs and expenses.
THAILAND LAUNCHES MARKET SOUNDING FOR USD 655MN SUBWAY PPP
Thailand has launched a market sounding exercise to prepare the THB 22Bn (USD 655Mn) public-private partnership for a new section of Bangkok’s Purple Line. Private investors can submit opinions to the Mass Rapid Transit Authority (MRTA), the procuring agency. The auction process is set to start in March 2023.
The preferred bidder will procure rolling stock and mechanical and engineering works for the 23.8km section connecting Tao Pun Station with Khru Nai Station. The PPP involves a three-year construction period and a 30-year concession.
The project will include a total of 17 stations - 10 underground and seven elevated.
The MRTA is considering three potential options to develop the PPP, including:
A net cost concession model, in which private investors collect fare revenue and assume the project’s commercial risk.
A gross cost concession model, in which the government collects user fees, and offers availability payments to the private investor.
A modified gross cost concession, in which the state also receives user fees and offers a service fee to the concessionaire but adds financial incentives if the project's ridership increases.
THAILAND TOLL ROAD OPERATOR DMT PLANS PPP GROWTH
Bangkok-listed toll road operator Don Muang Tollway Public Company (DMT) plans to expand its portfolio of transportation assets. It will seek investment opportunities emerging from the country's master plan of intercity motorways, which involves the construction of approximately 6,000 km of roads between 2017 and 2036.
It flagged interest in the following projects:
The 38km Bang Khun Thian-Bang Bua Thong section of the M9 expressway in Bangkok, valued at THB 64.8Bn (USD 2Bn).
The 119km M8 expressway, with a total cost of THB 79Bn, connecting Bangkok with Cha Am district.
The 25km Bang Khun Thian-Ban Phaeo section of the M82 expressway in Bangkok, with a total cost of THB 48.3Bn.
The 18km M5 expressway in Bangkok, with a cost of THB 40Bn.
A THB 14.1Bn expressway on Phuket Island, with an extension of 4km.
The company is also interested in three public-private partnerships to develop service areas in the M81, M6 and M7 expressways.
DMT currently operates a 21km road connecting downtown Bangkok with the Don Muang Airport.
THAILAND'S ABSOLUTE WINS 59 MW COMMUNITY POWER PROJECT
The Electricity Generating Authority of Thailand has chosen 18 of Absolute Clean Energy's biogas projects with a collective capacity of 59 MW to participate in the country's community-based power plants scheme. Absolute Clean's 18 plants will sell 50 MW of power to EGAT as part of the Community Power Plants for Local Economy Project.
EGAT has chosen 48 projects with a view to obtaining 700 MW from private producers in total. The community power project is designed to promote power generation through natural resources and waste to energy projects.
Bangkok-listed Absolute Clean owns a portfolio including biomass, biogas, co-generation power plants, municipal solid waste power and solar power plants. The company owns assets with a capacity of 450 MW and is seeking to reach 1 GW of energy capacity by 2024.
THAILAND'S BANPU PLANS 50% INCOME FROM RENEWABLES BY 2025
A unit of Thai energy company Banpu plans to boost its clean energy investments to achieve capacity of 1.6 GW across the Asia Pacific by 2025. Banpu NEXT - which currently owns a regional portfolio of more than 1 GW of rooftop solar and wind power - is looking to increase renewables' contribution to its earnings to more than 50% by 2025 as part of a five-year business roadmap. The company will focus on five core businesses: renewable energy, energy storage, energy trading, e-mobility, and smart energy, it will expand its customer portfolios across domestic and overseas markets. It will also increase its energy trading volume to 1,000 gigawatt-hours and grow the energy storage business.
Banpu's renewables portfolio comprises of about 824 MW of wind and solar power assets in Thailand and overseas, as well as about 250 MW in solar rooftop, carports, and floating solar projects.
TEAM CONSULTING AWARDED THAI HOSPITAL WATER CONCESSION PROJECT
Bangkok-based consulting and engineering services firm TEAM Consulting has won a long-term contract to build and operate a water treatment and supply project at a hospital branch in the Nakhon Sawan province of Thailand.
TEAM will invest in the construction, installation, management, production, and maintenance of the project at the new branch of Sawanpracharak Hospital. The project will also include the pipeline, water treatment plant, and the distribution system.
The clean water will be sold for a period of 25 years and the company will receive a water fee based on actual usage, without revealing the financial details of the project. The hospital is expected to have a maximum water demand of 2,400 cubic meters per day and will be opened to the public in 2022.
The water concession - which will supply water to the hospital branch's medical staff, some of whom will also live onsite - aims to promote private investment in the water treatment and supply system in the country.
BANGKOK'S ORANGE LINE RETENDER CLEARS LEGAL HURDLE
The long-awaited THB 122Bn (USD 3.7Bn) Orange Line PPP in Bangkok has cleared a major legal hurdle with Thailand’s Supreme Administrative Court dismissing a lawsuit against the procuring agency. The agency will now issue new bidding documents for the PPP in October 2021.
The multibillion-dollar PPP was originally launched a year ago, but transport operator BTS Group challenged the process after the MRTA decided to introduce changes to the procurement criteria during the tender process. The new guidelines gave more weight to the technical expertise of the bidders, putting BTS at a disadvantage.
The concessionaire was to build the 13.4km western section of the Orange Line, connecting the Thailand Cultural Center and Bang Khun Non stations. The PPP also included the operation and maintenance of the entire 35.9km line for 30 years, starting from when the eastern section would become operational in 2023. The entire line is estimated to serve more than 430,000 passengers per day.
List of Transactions - Thailand Q3 2021
List of Upcoming PPP Projects - Thailand Q3 2021
Source: Inframation, YOG INFRA analysis
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