With the coal industry struggling to cope with low prices and oversupply, Banpu is continuing to diversify into the supply of power. The Thai-based company plans to list its power unit on the Thai bourse in late 2015 or early 2016 to raise funds for regional expansion.
The company is studying details for the IPO of Banpu Power, which has stakes in BLCP Power, a 1434MW coal-fired power plant in Thailand’s Rayong province, along with the 1800MW Hongsa power plant in Laos.
Banpu plans to invest $423 million this year to expand its power and coal businesses. It has diversified into the power business given the strong demand for electricity in Asia.
Banpu’s CEO Chanin Vongkusolkit says the IPO is one of three strategies outlined to boost Banpu’s growth to 2020 with the company to focus on synergies in its regional coal and power business.
“We still have strong growth potential in our coal business in Indonesia and Australia,” he said, adding that Banpu planned to buy third-party coal for mixing and creating premium products. He said demand for electricity in Asia should grow further until 2035.
The company’s current chief financial officer Somruedee Chaimongkol will be appointed Banpu’s next CEO, while Chanin Vongkusolkit will be a director.
Somruedee, who has worked at Banpu for three decades, said that this year the company planned to spend $149 million on the Hongsa lignite power plant in Laos, which is expected to begin commercial operations in the middle of this year.
Banpu will also spend another $192 million on the 40%-owned Hongsa project in 2016 when the company expects to fully realize profit from the $3.7 billion power plant with capacity of 1800MW. The funding will come from cash as Banpu generates earnings before interest, tax, depreciation and amortization (EBITDA) of about $650-700 million a year, Someruedee said.
The power business contributed nearly 20% of Banpu’s 2014 EBITDA, with the rest coming from the coal business. Banpu, which has coal mines in Indonesia, Australia and China, has a production target of 48.5 million tonnes this year, with 30 million from Indonesian mines, 14 million from Australia and 4.5 million from China. The company is also building a new power plant in China that is expected to be operational in 2017.