Gunkul makes case for G2G backing for power projects

Sopacha Dhumrongpiyawut, chief executive officer of the company, said in an interview that the national-level collaboration would quicken the electrification process in Myanmar, which lacks both financial resources and expertise. Less than 40 per cent of population have access to electricity.

She said a power project could be started quickly if Thailand came up with investment projects and presented them to Myanmar. Under the government-to-government deal, she said, the Thai government could then hire Thai companies for the development. The Export Import Bank of Thailand could play a key role.

“Myanmar is an attractive investment destination, but government collaboration will drive this. China has resorted to this model,” she said. “If this strategy is well planned, Thailand stands to reap more benefits as Myanmar feels more positive towards us.” 

In 2011, Gunkul struck a memorandum of understanding with Myanmar’s Ministry of Electric Power for a feasibility study for wind farms with 2,930 megawatts capacity in Mon and Kayin states, the Thaninthayi region, the Shan and Kayah states. Data collection has been ongoing for two years, equipping Gunkul with enough information for its detailed investment plans. 

Sopacha said that the test station in Mon State benefited from strong winds, but the hilly terrain may pose difficulties for the transportation of equipment, while a transmission grid is absent in the area.

“It’s still not the right time to invest,” she said. But she added: “There is a high chance in Myanmar if the transmission-grid network is improved. Still, we need a good business model, something that matches the [Myanmar] government’s capacity and its desire to balance energy imports and exports as well as FDI [foreign direct investment] inflows.”

Through a 51-per-cent owned joint venture, Gunkul now operates a 50MW gas-fired power plant in Yangon. In its third year of operation, it is operating at half capacity.

The projects in Myanmar will be a key part in allowing Gunkul to achieve its goal to boost its renewable-generating capacity to 1,000MW within five years. 

Aside from Myanmar, it is also expanding its capacity in Japan and Malaysia.

Sopacha affirmed the plan to grow its investment in Japan from less than 200MW now to 500MW in the next three years. Though tariffs have been cut the past two years and the number of projects available is lower, there is a possibility to win another 100MW, she said. 

The company will also join a bid in Malaysia for the construction of a 20MW solar farm. 

“We are still focusing on expanding investment in Thailand. But given the small pool of available demand and a large number of potential investors, our chance here is very low,” she said.

Diversifying into a generating business in 2014, the electrical and engineering company sat on 403MW capacity in September, on target to boost it to 500MW by the end of this year. 

Sopacha is convinced that the company’s financial and non-financial resources are sufficient to support the business goal.

At present, Gunkul employs about 40 engineers for the operating and maintenance of more than 30 power plants in Thailand. 

Obtaining project financing is a challenge for newcomers in the sector, but being listed on the Stock Exchange of Thailand offers Gunkul offers various funding choices, including infrastructure funds.

Sopacha noted that the company at this point saw no need to launch an infrastructure fund, as revenue from its operational projects were sufficient to finance new ones. 

“We will raise capital only when we are offered the opportunity to invest in a very large project with attractive returns,” she said.