GPSC’s Shareholders Give a Clear Path for the Investment of ฿24bln. in TOP’s ERU Project

The Annual General Meeting of Shareholders on April 1, 2019, of Global Power Synergy Public Company Limited (GPSC) has approved the investment in the Energy Recovery Unit Project by GPSC or a subsidiary through the acquisition of the Energy Recovery Unit (ERU Project), which is a part of the Clean Fuel Project (CFP) of Thai Oil Public Company Limited (TOP) for the acceptance of ownership transfer in the ERU Project at the value of not exceeding USD 757 million or approximately THB 24,113 million upon the completion of the construction of the ERU Project and the Provisional Acceptance Certificate (PAC).

GPSC expects that the construction of the ERU Project will be completed and PAC will be issued in the third quarter of 2023.

The ERU Project uses sludge as main fuel which is a result of the refinery of CFP Project. The ERU Project can generate 250 MW of power and 175 tonnes of steam per hour.

 

Mr. Chawalit Tippawanich, President and CEO of GPSC, stated that the IRR of this investment would be 8% with 25 years Power Purchase Agreement (PPA) between GPSC as a seller and TOP as a buyer.

20% of the payment for the ERU Project or about THB 4.38 billion will be paid in four installments starting from 2019-2022, and will complete the remaining 80% on the day of ownership transfer which should be in the third quarter of 2023.

 

GPSC expects benefits from this investment as follows:
1) The investment in the ERU Project is consistent with the strategic plan in the business operation of GPSC which emphasizes on investment expansion in line with the strategy aiming at leaping growth in and outside of the PTT Group.

2) GPSC will be able to make use of its expertise in the power business in business expansion and bringing about benefits to the business of the group in order to become the true Power Flagship of the group, as well as to extend its power and utility production business which makes use of other different fuels.

3) It is expected that GPSC will be able to expand its production capacity, and will recognize the income in the future after the completion of the construction of the project which will stabilize and strengthen the cash flow and the financial statements of GPSC in a long-term.

4) The investment in the ERU Project will promote the investment for energy security, that is, petroleum pitch from the refinery process will be used as fuel, coupled with the adoption of appropriate technology in the management of by-products which is different from other power plants that are socially and environmentally friendly. As a result, electricity production will make use of resources in an efficient manner and GPSC will have a capability that is different from other power producers.

5) It will increase its capability and potential of its knowledge and personnel in operating power plants that use petroleum pitch as fuel by establishing knowledge and capability in the design, construction, and management of power plants that use petroleum pitch as fuel, as well as the maintenance of such power plants.

 

In addition, GPSC is currently under a financial restructuring to support its plan to takeover Glow Energy Public Company Limited (GLOW) with the amount of THB 140 billion. The source of fund would be from a short-term loan (1 year), then the company plans for a capital increase not exceeding THB 74 billion around the third quarter of 2019, and adjust the short-term loan into a long-term loan.