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Thai regime beckons private investors for renewable assets

Thailand’s Bureau of Investment has approved four investment projects in renewable energy sector assets. 

Thailand did not wait on Cabinet approval of the $609 million infrastructure fund announced last month nor its infrastructure trust regulations expected early next year to launch BHT80 billion (€2.0 billion; $2.4 billion) worth of investment projects (23 in total) of which almost BHT4.9 billion will go to four infrastructure assets: a bio diesel fuel power plant and three renewable power companies.

The investment initiatives target assets located in long-standing trade centres along well-trodden trade axes and may be a prelude to an intensive divestment programme set to benefit foreign investors from global and regional markets. The programme is expected to focus on transportation refurbishment, enhancement and construction.

“The promotion of capital markets as an alternative financing channel for business of all types and sizes will be carried on along with the development of financial literacy for people from all walks of life,” said Securities and Exchange Commission secretary-general Vorapol Socatiyanurak in the SEC’s 2015 plan issued last week.

The investment promotion entails tax incentives such as corporate income tax exemption, import duty exemption on machinery equipment, double deductions from the costs of transportation, electricity and water supply, and import duty exemption on raw or essential materials used in productions for exportation etc.

Non-tax incentives are of two kinds: land ownership rights for investors and permission to bring private sector expertise such as advisors, technicians and engineers into the projects promoted by the BOI.

Bangchak Biofuel Public Company Limited, a bio diesel fuel manufacturing firm in central province Phra Nakhon Sri Ayutthaya, with approximate generating capacity of 172 million litres, is valued at BHT975 million.

Earth-tech Environment Company Limited is valued at BHT1.36 billion. The fuel derived electricity company, based in central province Saraburi, currently generates nine megawatts (MW) annually and is still under construction.

Two Central-West province companies based in Nakhon Sawan Ruampol will also benefit. Bio Power Company Limited and Kaset Thai Bio Power Company Limited will receive respective investments of BHT1 billion and  BHT1.5 billion to boost their current 60MW electricity/330 tons per hour (tph), and 50MW electricity/250 tph steam production capacities.

The government has pledged non-interference in these promoted projects, saying that it would not nationalise or undertake competitive activities to those supported by private investors, nor would it monopolise the sale of products similar to those sold by investors supporting the promoted investment segments, or distort competition on those sales via either export restrictions or import duty exemptions.

The move is one of several measures the junta government has taken to boost investment in cash-strapped infrastructure segments, alongside under-performing transportation assets.

A phone interview with an official from the State Enterprise Policy Office ten days ago revealed that the planned $609 million, 20-year baht-denominated closed-ended infrastructure fund – the first public infrastructure vehicle in the country, which was announced early last month – had undergone last minute revisions, postponing the Cabinet’s approval. The source refused to confirm the cause of the delays.