RATCH’s “ROCKY ROAD” after Catastrophic Dam Crash in Laos!

It is not as smooth as they think anymore in announcing the financial statement of “Xe-Pian Xe-Namnoy Hydroelectric Power Project” in Laos. This is a 410 MW plant that has a schedule for commercial operation date (COD) in February 2019. Ratchaburi Electricity Generating Holding Public Co., Ltd. or RATCH holds 25% of equity stake (equals to 102.5 MW).

After the collapse of saddle dam D of the project…..

Even though the damage values have not been calculated in a precise number, the damage affects a large area along with many confirmed deaths and still missing. This causes an unavoidably negative impact to the project.

 

What we need to concern is:

1) The damage on the saddle dam D. While an insurance has been made in prior, that does not mean it will cover “all” of the damage. How much RATCH will have to pay remains a question, and will stakeholders continue to invest in this project?

2) How much will it cost to remedy all the victims, casualties, and property reparations?

3) Will the COD get postponed? If yes, then how long?

 

Not to mention the ฿22 billion “loan settlement” from four major Thai banks, which are Krung Thai Bank Public Company Limited or KTB, Bank of Ayudhya Public Company Limited or BAY, Export-Import Bank of Thailand (EXIM Bank) and Thanachart Capital Public Company Limited or TCAP (in the name of Thanachart Bank).

The main issue to be considered is the loan conditions from these four banks, and their due date. Will RATCH pay off the loan during the construction, after finishing, or when the COD starts? If the condition matches the first and second method, RATCH will be in a tight situation. On the other hand, RATCH will be benefited, if the payment starts on the COD, while banks will lose the opportunity in collecting payment. How much needs to be paid will depend on the days that has been put off.

Regarding the 25% (102.5 MW) equity stake that RATCH holds will affect only 1.5% from RATCH’s total of 7,000 MW production. According to this, there should not be any effect to their financial statement in any significant way….

When “Xe-Pian Xe-Namnoy Hydroelectric Power Project” earning faces a rocky road…..

In the psychology of investing, RATCH will need a long period of time to patch up.

 

Xe-Pian Xe-Namnoy Hydroelectric Power Project is a hydroelectric power generation located on the Bolaven plateau, between Paksong city border in Champasak province and Sanamxai city in Attapeu province. The construction started since 2013 and was estimated to be completed in early 2019. Due to the topography, this area is covered with mountains and Kong River’s important waterway.The Laos government offered a policy to built a dam for commercial operation for neighboring countries with the motto “Power Source of Asia”.

 

Currently, there are 4 shareholders in the joint venture of this project, as the following:

1. SK Engineering & Construction Company Limited: 26% Stake
2. Korea Western Power Company Limited: 25% Stake
3. Ratchaburi Electricity Generating Holding Public Co., Ltd. or RATCH: 25% Stake
4. Lao Holding State Enterprise: 24% Stake