TRIS Rating Co., Ltd. has affirmed the company rating of Glow SPP PLC (GLOW SPP) and its debentures (COCO#1, GLOW089A, GLOW09OA and GLOW10DA) at "A-". The ratings reflect the company's stable cash flow from long-term Power Purchase Agreements (PPAs), the diversification of its fuel types and the experienced management team put in place by its parent, Tractebel S.A. The ratings incorporate the power plant operation risk and uncertainty about the planned deregulation of the power industry. The "stable" outlook reflects GLOW SPP's reliable cash flow from its long-term PPAs with the Electricity Generating Authority of Thailand (EGAT) and industrial customers. GLOW SPP is expected to continue achieving its operational performance targets while maintaining its acceptable financial position.
TRIS Rating reported that GLOW SPP group is the largest small power producer (SPP) in Thailand producing electricity, steam and treated water using cogeneration technology to supply to manufacturers in the Map Ta Phut Industrial Estate and sell electricity to EGAT. GLOW SPP and its subsidiaries, GLOW SPP2 and GLOW SPP3, have total generating capacity of 814 MW of electricity, 770 tons per hour of steam, 2,010 cubic meters per hour (cu.m/h) of clarified water and 660 cu.m/h of demineralized water. The stability of the company's cash flow is the result of its long-term 21-year and 25-year PPAs with EGAT and contracts ranging from six to 17 years with individual industrial clients. The PPAs guarantee fixed costs, including investment costs, through capacity payments and variable costs, such as fuel and maintenance costs, through energy payments. Capacity payments mitigate the foreign exchange rate risk by adjusting the contract rate to reflect the current exchange rate.
TRIS Rating said GLOW SPP and its subsidiary, GLOW SPP2, had long-term maintenance contracts with their major equipment suppliers to ensure plant performance and stability. However, these contracts were terminated and new long-term contracts were awarded to Wood Group, commencing on 1 January 2005. Its coal-fired plant alleviates fuel procurement risks by reducing the company's dependency on gas. The volume of gas the company consumes shrank from 100% of total fuel to 87% after the coal-fired plant became fully operational in 2000. Furthermore, long-term gas and coal supply contracts alleviate the risk of fuel shortages. As of June 2004, Tractebel owned 99% of GLOW SPP. Tractebel, the energy arm of the Suez group, is one of the world's top ten electricity suppliers and the fifth largest power supplier in Europe, operating 55,000 MW of power generation on three continents. Its turnover was nearly EUR40 billion in 2003. Since acquiring GLOW SPP, Tractebel has appointed a new management team that is well experienced in the global power market. As of June 2004, Tractebel's power plant investments in Thailand involve power capacity of 1,674 MW.
TRIS Rating also said that in 2003, GLOW SPP's operating performance is satisfactory. The company could maintain its equivalent availability factor (EAF) at 95%. Total outages in 2003 improved to 44 days compared with 52 days in 2002, and the average heat rate was slightly better in 2003 at 9,098 British Thermal Units per kilowatt hour equivalent (BTU/kWh eq), improving from 9,169 BTU/kWh eq in 2002. However, its operating income as a percentage of sales decreased from 34.1% in 2002 to 29.5% in 2003 mainly because of refinancing expense in the second half of 2003. This ratio also continued to decrease to 28.5% in the first half of 2004 as a result of rising gas and coal prices.
The new power industry model, namely the Enhanced Single Buyer or ESB system, will be implemented under a cabinet resolution on 9 December 2003. The ESB model is expected to have less impact on existing PPAs than the power pool system because EGAT continues to be the single power purchaser buying from all power producers. However, the details of this model, its impact on existing players, and EGAT's role in the electricity generation business remain to be seen, TRIS Rating said.--End.
Glow SPP PLC (GLOW SPP) Company Rating: Affirmed at A- Issue Ratings: COCO#1: Bt2,200 million guaranteed debentures due 2005 Affirmed at A- GLOW089A: Bt6,500 million guaranteed debentures due 2008 Affirmed at A- GLOW09OA: Bt2,310 million guaranteed debentures due 2009 Affirmed at A- GLOW10DA: Bt3,490 million guaranteed debentures due 2010 Affirmed at A- Rating Outlook: Stable
TRIS Rating reported that GLOW SPP group is the largest small power producer (SPP) in Thailand producing electricity, steam and treated water using cogeneration technology to supply to manufacturers in the Map Ta Phut Industrial Estate and sell electricity to EGAT. GLOW SPP and its subsidiaries, GLOW SPP2 and GLOW SPP3, have total generating capacity of 814 MW of electricity, 770 tons per hour of steam, 2,010 cubic meters per hour (cu.m/h) of clarified water and 660 cu.m/h of demineralized water. The stability of the company's cash flow is the result of its long-term 21-year and 25-year PPAs with EGAT and contracts ranging from six to 17 years with individual industrial clients. The PPAs guarantee fixed costs, including investment costs, through capacity payments and variable costs, such as fuel and maintenance costs, through energy payments. Capacity payments mitigate the foreign exchange rate risk by adjusting the contract rate to reflect the current exchange rate.
TRIS Rating said GLOW SPP and its subsidiary, GLOW SPP2, had long-term maintenance contracts with their major equipment suppliers to ensure plant performance and stability. However, these contracts were terminated and new long-term contracts were awarded to Wood Group, commencing on 1 January 2005. Its coal-fired plant alleviates fuel procurement risks by reducing the company's dependency on gas. The volume of gas the company consumes shrank from 100% of total fuel to 87% after the coal-fired plant became fully operational in 2000. Furthermore, long-term gas and coal supply contracts alleviate the risk of fuel shortages. As of June 2004, Tractebel owned 99% of GLOW SPP. Tractebel, the energy arm of the Suez group, is one of the world's top ten electricity suppliers and the fifth largest power supplier in Europe, operating 55,000 MW of power generation on three continents. Its turnover was nearly EUR40 billion in 2003. Since acquiring GLOW SPP, Tractebel has appointed a new management team that is well experienced in the global power market. As of June 2004, Tractebel's power plant investments in Thailand involve power capacity of 1,674 MW.
TRIS Rating also said that in 2003, GLOW SPP's operating performance is satisfactory. The company could maintain its equivalent availability factor (EAF) at 95%. Total outages in 2003 improved to 44 days compared with 52 days in 2002, and the average heat rate was slightly better in 2003 at 9,098 British Thermal Units per kilowatt hour equivalent (BTU/kWh eq), improving from 9,169 BTU/kWh eq in 2002. However, its operating income as a percentage of sales decreased from 34.1% in 2002 to 29.5% in 2003 mainly because of refinancing expense in the second half of 2003. This ratio also continued to decrease to 28.5% in the first half of 2004 as a result of rising gas and coal prices.
The new power industry model, namely the Enhanced Single Buyer or ESB system, will be implemented under a cabinet resolution on 9 December 2003. The ESB model is expected to have less impact on existing PPAs than the power pool system because EGAT continues to be the single power purchaser buying from all power producers. However, the details of this model, its impact on existing players, and EGAT's role in the electricity generation business remain to be seen, TRIS Rating said.--End.
Glow SPP PLC (GLOW SPP) Company Rating: Affirmed at A- Issue Ratings: COCO#1: Bt2,200 million guaranteed debentures due 2005 Affirmed at A- GLOW089A: Bt6,500 million guaranteed debentures due 2008 Affirmed at A- GLOW09OA: Bt2,310 million guaranteed debentures due 2009 Affirmed at A- GLOW10DA: Bt3,490 million guaranteed debentures due 2010 Affirmed at A- Rating Outlook: Stable