EGCO: From Power Plant to Pipeline Business

It was an interesting move from Electricity Generating Public Company Limited (EGCO) on the investment worth 3,000 million baht to acquire a 44.6% stake of Thai Pipeline Network Company Limited who provides oil pipeline system to Northeastern region of Thailand. The investment is an expansion to a whole new business sector for EGCO.

 

EGCO is the top five electricity producer in the market, having IPPs that have already been commercialized 5,315 MW while another three projects for a total of 331 MW will commercialize in succession from 2019-2022.

Up until now, EGCO has been expanding its business in foreign countries nonstop such as Laos, the Philippines, Indonesia, Australia and South Korea. But all of its businesses are electricity-related.

Thus, it was a very interesting move to see EGCO invested in a Thai company in a different business sector. Which led to the questions; is this EGCO’s profession? And what is the value of this company?

 

Looking three years back, Thai Pipe was at a loss. In 2016, the Thai Pipeline recorded a loss of 635,095 baht from a total of 1,491,677 baht in revenue. In 2017, the company recorded a loss of 72,818,537 baht from a total of 723,041 in revenue while recorded a loss of 1,189,545 baht from a total of 1,952,097 baht in revenue in 2018.

The financial statement of the Thai Pipeline could turn out not much better than it already is due to the investment in the pipeline system remains. After the completion, it could be the time to gain profit for Thai Pipeline which delivers oil to the companies starting from Saraburi Province to Khon Kaen Province, totaling 342.8 km, able to deliver 5,443 million liter of oil per annum and is in the middle of expansion to phase 2 to 7,338 million liter per annum.

The project is in the middle of the construction and expected to be commenced in the fourth quarter of 2021. EGCO expects the business to bear wonderful and sweet fruit in the long term.

 

The move was not so different than RATCH that shook hands with BTS Group Holdings Public Company Limited (BTS) and Sino-Thai Engineering and Construction Public Company Limited (STEC) to invest in infrastructure, rapid train and motorway.

It would not be a surprise if EGCO will continue to invest in some other businesses.