Glow Energy Plc. Results of 3-Month 2008

Transcription

1 Energy Plc. Results of 3-Month May

2 Key P&L performance indicator for is Normalized Net Profit (NNP) IPP has an outstanding loan in USD* which will be repaid by USD linked operating cash flows Under Thai GAAP the outstanding USD loan is converted at year-end in THB at the then current exchange rate. Any difference in THB outstanding loan amount due to using a different exchange rate compared to last year leads to an unrealized FX gain (THB appreciation) or loss (THB depreciation). Since the USD loans in IPP are served by USD linked cash flows the unrealized FX gains / losses should, in s view, be ignored from an economic point of view. s management has always and consistently focused on NNP ignoring unrealized FX gains / losses (substance over form) Note * IPP entered into a Loans Transfer Agreement with several banks in December 2005, throughout this presentation, such transaction may also be refered to as the refinancing 2

3 Highlights 2008 YTD vs 2007 YTD EBITDA 1,941 MTHB down 10.7% NNP MTHB down 13.2% Electricity sales to industrial customer 822 GWh up 4.6% (36 GWh) Steam Sales to industrial customer 1,415 kton up 7.7% (101 kton) CFB3, a 115 MW coal-fired plant, is under construction. scheduled COD in Q In October 2007 Gheco-one was awarded preferred bidder status under Thai IPP program. Gheco-one is a 660 MW coal-fired IPP with scheduled COD in October owns 65% in this IPP. EPC was signed in April. EIA approval, signing of the PPA and the Coal Supply Agreement and Notice to start construction are all expected by mid-june. In April, finalized negotiation for >200MWeq sales to EGAT and industrial customers. has signed in April our EPC Contract for a 382 MWeq expansion in Map Ta Phut. Signing of the sales contracts, EIA approval, and notice to start construction are all expected within July Note: 1 Consolidated NNP excludes Minority Interest of THB 39 mn 3

4 Summary of Result Cogen Business IPP Business Group Bt mn Q1-07 Q1-08 % Q1-07 Q1-08 % Q1-07 Q1-08 % Gross Operating Revenue (1) 5,398 5, ,586 2, ,984 8, Fuel Costs (Gas, Coal, Diesel) 3,426 3, ,821 1, ,247 5, Other Variable Costs(Water/Chemicals) Gross Profit 1,897 1, ,649 2, Maintenance & Other Operating Costs EBITDA 1,504 1, ,174 1, Depreciation, Amortization and Asset impairments Net Financial Cost (2) Realised FX Gains Taxes Minority Interest (24) (39) 63.5 Normalised Net Profit , Note: 1 excluded exchange gain and interest incomes 2 sum of interest incomes, interest expenses and financial related costs 4

5 Special Events (Non-recurrent bookings) during Q Q SPP3 Depreciation (Coal Plant) from 30 to 40 years. The 2008 YTD positive impact is around 40 MTHB. Q Cogen Other Operating Costs in 2007 YTD, reversal of provision with around 23 positive accounting impact. IPP Reversal of expenses around 5 MTHB positive impact. 5

6 Summary of Economic Indicators Q Q % MW Sold (EGAT + ICs) MW 1,743 1, TPH Sold tph EGAT IPP GWh 1,288 1, EGAT SPP GWh Industrial Customer GWh electricity sold GWh Industrial Customer kton steam sold kton 1,315 1, Average PEA 115 kv PEA Price THB/kWh Average Gas Cost - Cogen business THB/mmBTU Average Gas Cost - IPP business THB/mmBTU Coal Price FOB USD/Ton JPU Freight Price USD/Ton actual Availability - Cogen Business % 95.28% 93.88% Availability - IPP Business % 95.01% 99.23% Unplaned Outage Factor - Cogen business % 1.44% 2.58% Unplaned Outage Factor - IPP business % 0.08% 0.77% IPP Heatrate BTU/kWhe 6,903 6, Allocated Cogen Heatrate (Coal Units) BTU/kWhe 10,109 10, Allocated Cogen Heatrate (Gas Units) BTU/kWhe 8,874 8, Exchange Rate THB/USD

7 s Business Overview Cogen Business IPP Business Electricity: 995 (1110) MW Steam: 967 tph 1 Electricity: 713 MW selling to EGAT Revenues Mix Located in MTP petrochemical complex Electricity & steam sale to industrial customers and electricity to EGAT 21 steam and electricity interconnected units-essential for superior reliability 10+ years of operation 70% gas fired, 30% coal-fired 995 MW installed and 115 MW under construction and 382MWeq to start construction in July 2008 Commodity sales 100% gas-fired 65% stake in 660 MW Coalfired IPP to start construction in June 2008 IC Electricity 25% IC Steam 13% 440MW TOTAL REVENUES MIX (Q1-2008) Other (Water) 1% 738 T/H 713 MW 590 MW EGAT (SPP) 28% Critical scale and operational track record are our competitive strengths Thai petrochemic al sector are core customers for Cogen business IPP business is to be the lowest cost producer EGAT IPP 33% 1 Of which 250 tph is back-up capacity 7

8 Availability & Unplanned Outage - Cogeneration 100% 50% 0% Availability Cogen (%) 95.28% 93.88% Q Q Lower availability in 2008 from GE Phase unplanned outage for 25 days in March 2008 due to gas turbine nonrecurrent equipment failure. 5% 4% 3% 2% 1% 0% Unplanned Outage Cogen (%) % 1.44% Q Q Note 1: Availability % equals Hrs/Yr less Planned and Unplanned outage Note 2: Unplanned Outage is sum of forced outage and unscheduled outage Note 3: : Installed Capacity at GE Phase4.1 are 39MW of power and 67tph of steam 8

9 Availability & Unplanned Outage - IPP 100% 50% 0% Availability IPP (%) % 99.23% Q Q Operations performance was very good with close to 100% Availability Factor in Q % 4% 3% 2% 1% 0% Unplanned Outage IPP (%) 0.08% 0.77% Q Q Note 1: Availability % equals Hrs/Yr less Planned and Unplanned outage Note 2: Unplanned Outage is sum of forced outage and unscheduled outage Note 3: B-Inspection for 9 days (two blocks) in March

10 Revenue : Volumes 2,000 1,500 1, EGAT Cogeneration (GWh) % 2,000 1,500 1, IC Power (GWh) % 822 Q Q Q Q ,000 1,500 1, EGAT IPP (GWh) 1,288 1, % 2,000 1,500 1, IC Steam (kton) 1, % 1,415 Q Q Q Q The 4.6% higher electricity sales adds +/- 25 MTHB margin Higher steam sales around 100 kton of steam adds another +/- 25 MTHB Higher use and cost of boiler due to uneconomical production reduces margin by +/- 40 MTHB B-Inspection in IPP in March 2007 and no scheduled maintenance in

11 Prices Gas Prices Stable Average Gas Price - Cogen (Bt/mmBTU) % 215 Q Q kV PEA Price (Bt/kWh) % Q Q Average Gas Price IPP (Bt/mmBTU) 0.6% 206 Q Q Gas prices higher vs last year mainly because of the higher oil prices but offset by THB Appreciation Despite average gas price increase, average steam price decreased by 3.8% due to THB appreciation Under accrued discounts from 2007 effected to Q steam revenue Average PEA price decreased by 2.8% Impact of PEA/Gas Price evolution is 120 MTHB YTD 11

12 Coal & Freight Coal & Freight (USD/Ton) Q Q Freight (USD/Ton) Cost Total (USD/TonJPU) 1, 2 Coal FOB (USD/TonJPU) (Barlow Jonker Index) $/ton in Mar08 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Although coal spot prices rose significantly, Q coal cost in USD rose only 14% as The JPU price will not be adjusted until April % of volume was locked in (USD) at very low prices In THB terms, Q coal cost was approximately 4.5% higher than the same period last year. Increase in Coal FOB (+13.8%) and freight (+15.5%) partially offset by THB appreciation (+9.2%) JPU for April 2008 March 2009 is set at USD 125 / ton, up from last year. Average coal cost (FOB) for Q at USD 52.80/ton and is lower than 2007/2008 JPU as has 17% of its coal fixed at a lower price Estimated YoY impact is 200 MTHB due to higher coal price Coal prices are in USD/Ton JPU (6,700kcal/kg) Excludes Coal Provision 12

13 Summary Cash Flows Statement Ending 31 March Mar Bt mn vs 2007 Net profit 1,350 1, Depreciation (26) Amortization Exchange loss (gain) (247) (471) (223) Other non-cash items (9) Change in net working capital (891) (511) 379 Net cash from operating 935 1, Of the THB 3,532mn* ending cash balance of 31 March 2008 THB 2,937mn is in Cogen THB 595mn is in IPP Purchase of PP&E (907) (476) 431 Other cash from investing (1,031) (1,233) (202) Net cash from investing (1,938) (1,709) 229 Total debt repayment (1) 0 1 Total debt issuance Change in financial lease (9) (10) (0) Debt issue expenses Advance received for share Dividends paid 0 (45) (45) Net cash from financing (10) FX loss (gain) of cash and cash equiv (2) (4) (2) Net change in cash (1,015) (510) 505 Beginning balance 4,368 4,043 (325) Ending balance 3,352 3, All Figures in THB Millions Ending Balance 3,532 Bt mn excludes current investments of 2,918 Bt mn which are mostly cash in reserve accounts 13

14 Notable up coming cash movements in 2008 Debts Repayment GE pays scheduled repayment THB 1,300mn in Apr-08 THB 1,300mn in Sep-08 GIPP pays scheduled repayment USD 11mn in Jun-08 USD 11mn in Dec-08 Capex for projects under construction CFB3 Payment : THB 4,000 mn in full year 2008 (already paid 735 MTHB ) Phase5 Payment : THB 3,200 mn in full year 2008 GHECO-one Equity Contribution : none Dividend Payment Bt/share in May 2008 or THB 1,542 mn Funding Plan is currently finalizing its funding plan for 2008 It expects to raise THB 6,000 8,000mn to finance its capital expenditure and funding needs for 2008 to Q

15 Summary of Results EBITDA 3,000 2,000 1, ,174 Consolidated EBITDA (-233 mn / -10.7%) 33 (266) 1,941 Q Cogen IPP Q ,000 2,000 1,000 0 Cogen EBITDA 1, mn -17.7% 1,238 3,000 2,000 1, IPP EBITDA +33mn +4.9% 703 Q Q Q Q All Figures in THB Millions 15

16 Key Drivers EBITDA 1,800 1,600 1,400 1,200 1, , Cogeneration EBITDA Analysis (-266mn / -17.7%) (9) (25) (41) Q Maintenance Right of Use, LT Rental Others IPP EBITDA Analysis (+33mn / +4.9%) 18 Higher availability +27 Diesel Margin +30 Energy Margin +28 Fx Impact (49) Salary & Wages (31) Others (11) GM Impact COGEN Q GM Impact IPP Maintenance Q B-Inspection 9 days in Q1-07 Higher gas cost and lower PEA prices (120) Boiler (40) Fx (63) Volume +50 (191) 703 1,238 Q All Figures in THB Millions 16

17 Key Drivers Normalized Net Profit 1, Cogen Normalized Net Profit mn -24.9% 653 1, IPP Normalized Net Profit mn +33.7% 341 Q Q Q Q ,200 1,100 1,000 1, Cogen +33 IPP Cogen Depre. +26 Minority Interest from IPP (15) (233) 800 Q Finance Expenses Income Tax Other EBITDA Impact COGEN/IPP Q All Figures in THB Millions 17

18 Financial Highlights 18

19 Key Financial Indicators : Outstanding Debts Cogen Repayment Profile (MTHB) IPP Repayment Profile (MUSD) 2,600 2,310 3,490 2,965 Room for releveraging, minimum tenor 4 years 2, Consolidated Group MTHB 25,000 20,000 15,000 10,000 Gross Debts 5,000 Net Debts1 - Q Q Total Gross consolidated Debt was 20,029 MTHB in Q versus 22,096 MTHB in Q Total Debt Repayments in Q none Total Debt Issuances in Q none Note1 : Gross Debt - Cash 19

20 Key Financial Indicators DSCR IPP DSCR Cogen D/E Ratio Conso Interest Coverage Ratio Cogen Q Q long term target is to maintain the following DSCR of not less than 1.65x D/E of not more than 1.0x but allowing for temporary hike if due to consolidation effect during construction ICR of not less than 5.0x Note : DSCR = (EBITDA) / (Principal + Interest + Financial Charge) D/E = Total Outstanding Debts / Total Equities ICR = (EBITDA) / (Interest) 20

21 2008 Action Plan 21

22 2008 Actions Plans The strong THB, high coal prices and the temporary dip in electricity prices (in environment of rising gas price) is putting pressure on the Group s performance. All else equal: A 10% change in the THB/USD exchange rate will have THB 400mn impact to the NNP A coal price movement of 10 USD/ton will have THB 50mn impact (NNP) in 2008 and THB 200mn in This year s jump to 125 USD/Ton JPU as of April will have YoY impact of +/-200 MTHB PEA/Gas Margin impact expected to be 750 MTHB (-250 MTHB of Gas and 500 MTHB of PEA) We have therefore pushed forward several initiatives to try and address the performance (Explained in following slides). These measures are in addition to other cost savings measures (estimated at MTHB) in our daily activities. We hope the combined effect of all these savings on performance improvements to be +/-750 MTHB 22

23 2008 Actions Plans (cont d) Biomass will try to source biomass for use in It is estimated that we can replace up to 20% of annual coal consumption with the biomass fuel, which can be mixed immediately with coal without modification to our exisiting boiliers. IPP postpone C-inspection to mid-december Scheduled Maintenance in August for block 1 and September for block 2. Unit 1 Unit 2 Current Maintenance Schedule August 1 September 3, 2008 Sept 8 Oct 12, 2008 New Maintenance Schedule November 28 December 31, 2008 January 1 February 3, 2009 We have obtained consent from the insurers and co-ordinated the shift with Alstom Shifting of this major maintenance would increase operating hours (availability) at no depreciation cost. We will consider this prolonged useful life of part as permanent 23

24 2008 Actions Plans (cont d) Postpone Steam Turbine outage on CFB 2 Postpone ST inspection until 2009 but not annual boiler inspection which will be done as planned CFB 2 Current Schedule (40 days) May 27- July 5 New Schedule (19 days) May 27 June 19 Consent from insurers and GE received Heat Rate Optimizer Asset Optimization department has internally developed the tool for optimizing overall fuel expense. It has been tested. It optimizes every hour the dispatch based on revised steam & electricity load forecasts. 24

25 Growth Outlook 25

26 Growth in the IPP Business 26

27 Growth Opportunities : IPP Business On 7 December 2007, GHECO-One was announced as a winning bidder by the Ministry of Energy for a 660 MW coal fired IPP project GHECO-One will be 65% owned by Group and 35% by Hemaraj Project details may be summarized as follows Super critical coal fired plant with net output of 660 MW Total capex for the project is estimated at USD 1,150mn Debt to equity ratio of 70/30 NTP in June 2008 COD in October 2011 The project is funded with back-ended equity. Total equity contribution of around USD 225mn (back ended, largely in 2011) Status: EPC Signed; EIA expected to be obtained in coming weeks; PPA, Coal Supply Agreement (CSA) and start of construction expected in June

28 GHECO-One project benefits from synergies 660 MW supercritical pulverized coal fired plant High efficiency (low fuel consumption) One of cleanest coal fired plants in the world Will reduce NOX and SOX emissions in Map Ta Phut A major strength of this project is that it is able to utilize many existing infrastructure of. Shared Infrastructure includes: Coal receiving terminal. Conveyor system to transport coal from port to site. Sea water intake and discharge channel. Power transmission facility (GIS and transmission line). Laboratory building. Water treatment facilities. The project is a joint venture with Hemaraj. will take 65% stake in the project. As of construction will manage the company as if it is a wholly-owned subsidiary Fully integrated in the operating structure, standard and philosophy of Group. Access to Suez expertise. will be compensated for its shared infrastructure and management 28

29 develops new coal-fired plant located at s MTP Site Coal Stock yard GIS GHECO-One Proposed area Water Intake Channel Water Discharge Channel Existing Coal Conveyor System Port 29

30 Growth in the Cogeneration Business 30

31 Our competitive advantages Critical scale of operations Strategic location Competitive Position Established track record Customer Empathy 31

32 Steep increase in steam and electricity sales as a result of third petrochemical phase (as of 2010) and our competitive positioning Steam (MTON) Power (GWH) Total Steam sold to I/C Total Power sold to I/C

33 MW Contracted 2008YTD (Not in-service) Cogen Contract Capacity YTD 12.5 MWeq 2 Note 1: Industrial customers and EGAT SPP 2: But negotiation for an additional 200 MWeq are finalized 33

34 Growth Opportunities : CFB3 115 MWe CFB3 expansion with capex of THB 7,000mn under construction Construction began in January 2007 Approximately THB 5,500mn of capex remaining between 2008 and 2009 (75% and 25%) As of Q1-2008, the project remains on budget and on schedule Target date for commercial operation remains on target with CoD expected in December

35 Growth Opportunities : Phase 5 Following the above mentioned growth outlook, will plan for a large scale expansion An expansion of 382 MWe is planned with the following details Total Capex (USD) 500 mn EPC Signed in April EIA July 2008 NTP July 2008 COD September 2011 Offtakers Large scale industrial customers and EGAT Finalized sales negotation +/-200 MWeq 35

36 Growth Outside Thailand 36

37 Growth Opportunities : HHPC is looking at the possibility of acquiring a 67.5% stake in Houay Ho Power Company Limited (HHPC) from Suez HHPC is a 138 MW hydro project, The project began commercial operation in 2002 HHPC has a 27 years PPA which has another 21 years left in its PPA It is estimated that the transaction could be completed in August

38 Growth Opportunities : Others s mandate has been expanded to include investment outside of Thailand. will look at investment opportunities in the power business in Laos and Cambodia (except for generation projects based in such countries but targeting sales into Vietnam). will also follow key customers when they pursue petrochemical projects in South East Asian countries, but only to the extent that a full operational integration in 's activities makes sense and allows for synergies. is not open to invest in Myanmar. 38

39 Summary of growth plan COD Cogen 115 MW Coal COD Aug 11 IPP 660 MW Coal hold 65% COD Sep 11 Cogen 382 MWe gas (Including EGAT SPP 74 MW) Cogen 115 MW Coal Capex 220 MUSD or 7,000 MTHB IPP 660 MW Coal Equity Contribution MUSD or 7,200 MTHB Cogen 382 MWe Gas Capex 500 MUSD or 16,000 MTHB Capacity as of 31 December ,965MWe. Capacity in 2012 after Phase 5 CoD 2,890 MWe or an increase of around 50% Note1 : IPP Capex at 1,150 MUSD; D/E 0.7/0.3; 65% Stake 39

40 Share Price Performance From 1 January

41 Q&A 41

42 Appendix 42

43 Drivers for changes in EBITDA /NNP in 2008 is USD/THB FX and as of 2010 it will be USD/THB FX and coal Volatility 1 THB/USD FX Equity returns largely in USD. +/- 10% = MTHB Volatility 2 Coal Prices Changes in coal & freight prices not fully passed through in revenues. +/- 10 USD/ton = 50 MTHB in 2008 and 200 MTHB in Volatility 3 Sector Regulation Government interventions in the sector may impact our results. Opportunity 1 Cogeneration Growth Third petrochemical phase will, as of 2010, offer a lot of potential for new electricity and steam sales to petrochemical customers. Opportunity 2 Coal-Fired IPP (Odin) New IPP awarded. PPA signing expected in June takes 65% stake in a 660 MW coal-fired IPP. Other Opportunity for COD around Cogen expansion in other SEA countries? Cambodia/Laos? 43

44 Highlights of Energy s Finance Strategy Criteria Capital structure Strategies/highlights Lowest cost of of debt at at maximum loan tenor Take advantage of of yield curve and lack of of power company bonds to to access long-term bond market for maximum tenor (currently 77 year) Manage D/E and DSCR and ICR in in order to to maintain credit rating of of A- A- Actively maintain optimal capital structure Avoid USD debt except if if OCF to to serve debt is is in in USD Active management of of foreign exchange and interest rate risk Risk management Dividend policy Try to to limit dollar-link revenue stream in in order to to lower earnings volatility as as a a result of of FX FX movements Keep expansion capexin in USD to to reduce FX FX risk exposure provided there is is no no unrealized FX FX gains/losses - - NEW Target pay-out ratio of of 50%, subject to to investment plans and other considerations Dividend practice was to to declare 1.5 Bt/share in in 2005 real terms and return cash to to shareholders when no no planned use of of funds 44

45 Diversified Revenue and Stable Cash Flow Diversified Revenues Stable Cash Flows TOTAL REVENUES MIX (Q1-2008) Customers Term Tariff Structure IC Electricity 25% IC Steam 13% 440MW Other (Water) 1% 738 T/H 713 MW 590 MW EGAT (SPP) 28% EGAT IPP (existing) EGAT SPP IC Electricity 25 years years 15 years (typical) Capital compensation in contract remains high until 2013 Capital compensation remains flat during contract life PEA price has upward potential EGAT IPP 33% IC Steam 15 years (typical Flat capital compensation during contract life 45

46 Strategic Outlook & Growth Fuel Mix Thailand Power Generation 12% 8% Year % 2% 6% 66% 0% 7% 12% Year % 1% 9% 69% 5% Hydro Natural gas/lng Fuel oil Lignite Imported coal Renewable Others Hydro Natural gas/lng Fuel oil Lignite Imported coal Renewable Others Market Share 7% 2% 4% Year % Year % 1 5% 45% 32% 55% 32% EGAT IPP SPP Neighbour EGAT IPP SPP Neighbour Note 1 : Included CFB3 115MW, Cogen Expansion 380MW and GHECO-One 660 MW 46

47 Business Analysis: Market evolution in IPP Market: Thailand maintains single buyer model with 5-6% CAGR no pool model considered Parameter and Output Under 2006 Load Forecast Study GDP (%) Peak (MW) Growth (%) Energy (GWh) Growth (%) , , Average year , , % 7% 6% 5% 4% 3% 2% 1% 0% 4.6% 2.6% 4.8% GDP growth Peak power demand growth Peak Demand (MW) 6.9% 6.4% 5.6% 5.2% 5.3% 5.0% 5.0% 5.0% 5.1% 5.8% 5.9% 5.8% 5.5% 5.5% 5.3% 6.1% 5.8% ,000 38,000 36,000 34,000 32,000 30,000 28,000 26,000 24,000 22,000 20,000 47

48 Debts Structure Debt 2008 (as of 31 Mar 2008) USD % THB MUSD Amount MTHB IPP 100% 0% Cogen 0% 100% - 12,955 1 Note: 1 shown in Financial Statement 48

49 Availability Payments IPP Versus SPP (EGAT) IPP - availability payments SPP (EGAT) - capacity payments APR1n APR2n APRtotal Gas-fired Coal-fired GHECO-One - availability payments APR1n APR2n APRtotal Note: Loan tenors today much longer than late 90ties. Therefore new coal-fired IPP will have flatter EBITDA profile. 49

50 Key Financial Numbers EBITDA Normalized net income¹ Cash from operations Cogen EBITDA IPP EBITDA 9,052 8,605 8,371 2,885 2,492 2,561 4, Cogen 4,602 1,212 IPP 4, ,149 6,225 6,290 5,879 6,167 6,044 1, ,238 3,337 3,390 3, , Q Q Normalized net income excludes unrealized FX gains/losses Q

51 Balance Sheet funding of the coal fired IPP equity injection and the funding of the phase 5 cogeneration expansion Debt and cash (THB million) Consol. Repayment profile of existing debt (THB million) Debt (SPP) Debt (IPP) Cash 26,915 8,376 22,417 20,381 20,029 8,970 7,580 7,074 4,293 18,539 13,447 12,801 12,955 3,656 3,318 (6,146) (6,138) (5,753) (6,450) 3, Q ,594 Shareholders book equity (THB million) 24,696 26,123 30,032 28, Q Note: Historical debt balance shown above are slightly different from amounts in balance sheet as balance sheet liabilities are net of certain deferred transaction or issuance expenses 51

52 Social Responsibility and Sustainable Growth 52

53 Vision The scope of our business has widened. We now have more focus on profitable growth but the scope of has now been changed to include IPP development in Laos and Cambodia and cogeneration growth in South East Asian countries. Due to our good contacts with major national and international petrochemical groups and our expertise and operational track record we should be well placed to target expansions in the cogeneration business both in Thailand and abroad. The expansions in Laos and Cambodia will be more challenging since most of them require the signing of contracts with EGAT for projects that are not subject to public bidding. We will start active prospecting on these new opportunities 53

54 Mission Create value for our shareholders and customers in a sustainable manner through: a. Reliable products and services b. Operational excellence c. Profitable growth d. Committed and knowledgeable employees e. A network of expertise Perform the business in a sustainable relationship with the environment and with the society: a. Environmentally responsible projects b. Develop the quality of life of communities in areas where we do business c. A prime focus on environment health and safety of our employees, contractors and the surrounding communities d. Provide expertise and support to the development of the Thai energy sector if valued by the authorities 54

55 Controlling environmental impact of our activities is part of our Mission operates highly efficient plants and cogeneration technology. The load factors are high so there is no wasted capacity. Low emission levels of the new IPP project designed not only to meet Thai standards but to be one of the world s cleanest coal fired power plants. Emissions of IPP expansion easily meets new Thai standards and would meet some strictest standards in the world The new coal-fired expansion and, to a lesser extend the gas-fired cogen expansion, will make Map Ta Phut a healthier and cleaner place to live in since both the cogen and IPP expansion will actually reduce SOX and NOX emission levels in MTP. Full compliance with the 80/20 rule in Map Ta Phut. This focus is not new. Our existing coal fired plants would even comply with the applicable European Union regulations on the NOX and SOX emissions. Ash is recycled in the cement industry and fly ash is used for brick production used by local communities. We were also always transparent in continuous measuring and reporting of our emission levels as we were one of the few companies to have a Continuous Emission Monitoring System (CEMS). 55

56 Both the cogen and IPP expansion will actually reduce SO2 and Nox emission levels in MTP! tons/year 12,000 10,000 8,000 6,000 4,000 2, NOx SO2 Present Emission After improvement impact of new SPP Cogen + IPP 0 56

57 Emissions of IPP expansion easily meets new Thai standards and would meet some strictest standards in the world. NOx Emission (Coal fired) ppm Word Bank Standard (95%) EU Standard (95%) New EU Standard (95%) Existing Thai Standard (100%) New Thai Standard (100%) New IPP (100%) SO 2 Emission (Coal fired) 600 ppm Word Bank Standard (95%) EU Standard (95%) New EU Standard (95%) Existing Thai Standard (100%) New Thai Standard (100%) New IPP (100%) 57

58 Several environmental initiatives were launched in 2007 The new coal-fired IPP Will contribute 100 MTHB per year to an energy fund serving local communities within 5 km radius. In January 2007, participated in the Environmental Good Governance Project organized by Map Ta phut Industrial Estate (MIE). In this project, each facility has to submit the Emissions Reduction Program consisted of air and wastewater emissions and industrial waste generation with target number to be reduced and timeline of target accomplishment. The MIE Auditors with the local representatives have visited each plant on a quarterly basis to follow-up progress and effectiveness of the programs. The overall audit results at Rayong Facilities were in the range between very good and excellent. Based on the good performance at each facility, Rayong received the Green Flag of Environmental Good Governance Company from MIE on 29 January In addition SPP2&3 installed an emission display board in front of the plant to online report the air emissions to public. This is to demonstrate transparency in our environmental reporting system. Rayong Facilities has achieved major reduction of chemical and water consumption (which also resulted in +/-70 million Thai Baht cost saving). Majority of chemical reduction was driven by the reduction of sodium hypochlorite (NaOCl), an oxidizing biocide injecting to once through seawater cooling stream. 58