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Asia300

Thailand's Banpu sees a bright future in solar business

Diversification into renewables key to supporting company's core coal operations

Banpu expects coal sales to hit 45 million tons this year, but will increasingly rely on its solar business to pump up revenue. (Courtesy of Banpu)

BANGKOK -- Asia's biggest coal miner, Banpu, expects to see increased revenue from its solar rooftop installation subsidiary, according to Somruedee Chaimongkol, the company's chief executive.

Banpu Infinergy will help the parent take advantage of Thailand's increasing demand for green energy.

In order to deal with the volatility in global coal prices that affect the company's core business, Banpu diversified into the shale gas business a few years ago and also invested in domestic and foreign solar power businesses.

Banpu Infinergy has earmarked $400 million over three years for business expansion in Thailand and other members of the Association of Southeast Asian Nations.

"Our focus is now on solar rooftops for factories, large buildings and department stores, particularly in fast growing areas like central Thailand, the eastern seaboard and the Eastern Economic Corridor, which is expected to grow rapidly in the future," said Somruedee.

She said the solar installation business has been received positively by clients, most of whom are factory owners.

The power generating capacity of Banpu Infinergy's domestic installations totals 12 megawatts with another 97 MW in Singapore, where it partners with Sunseap Group for solar power installations.

Banpu Infinergy looks to increase its total power generating capacity to 300 MW in 2020.

The parent company also invests in Marcellus Shale production in the eastern state of Pennsylvania in the U.S., a venture which is expected to further increase revenue.

"This year we expect our gas production in the U.S. to rise to 200 million cu. feet per day. This could help push up our equity-based revenue two- to three-times more than the current $25 million," said Somruedee, adding that this would also help boost cash flow this year.

For its coal business, Banpu expects to see sales rise to 45 million tons in 2018 from 42 million tons in 2017. But because global coal prices are little changed from last year, this year's increase in coal revenue is expected to be minimal.

According to Banpu, coal remains the company's core business, accounting for about 92% of total revenue, with its power business accounting for 6% and its shale gas business 2%.

Banpu's net income rose more than 4.5 times last year to 7.9 billion baht ($252 million) from 1.7 billion baht in 2016.

However, earnings are expected to be hit by legal troubles, which will force the company to book unexpected expenses in the first quarter of fiscal 2018.

Banpu was ordered on March 6 to pay 1.5 billion baht to Thai-Lao Lignite stemming from a lawsuit filed in 2007. The lawsuit accused Banpu of spreading misleading information about a coal-fired power plant in Laos, in which Banpu holds a 40% stake.

The settlement includes 7.5% interest backdated to July 2007, when the lawsuit was filed, resulting in an unexpected expense of 2.5 billion baht.

But Somruedee said she expected hefty growth in the solar power business -- particularly in solar rooftop installations -- to help offset losses incurred from the court case.

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