Japan’s Tokyo Gas announced today it has acquired a 28% stake in the operating firm of a 350 MW gas-fired power plant in Thailand. The deal marks the first venture of the Japanese utility into energy markets in Southeast Asia.
Tokyo Gas said in a statement it had bought the stake in Eastern Power and Electric Co – the plant operator – from Total Gas & Power Thailand. A spokesman reportedly pegged purchase costs at “several billion of yen.”
Earnings from the 350 MW power plant asset are expected to remain stable, Tokyo Gas said with reference to a power supply contract until 2023 that the plant operator has in place with state-run Electricity Generating Authority of Thailand (EGAT).
Eastern Power and Electric's Bang Bo power plant, located about 50 km east of Bangkok, started commercial operations in 2003.
Looking abroad amid liberalisation at home
Growing interest of Japanese utilities to invest in overseas markets is partly triggered by fiercer competition at home as the government liberalises the retail power market. As of April 2016, retail electricity sale to households and other small users have been opened to new entrants.
Liberalisation of the power sector is followed by a deregulation of the gas industry. A revision of the Gas Business Law is meant to spin off the pipeline management divisions of city gas firms in Tokyo, Nagoya and Osaka by April 2022, giving new entrants better access to gas pipes.
Competition between power and gas firms is set to rise, which is meant to ultimately reduce the energy bills of industrial and household customers. The energy-intensive Japanese industry is set to benefit the most – and the government hopes this might revive the country’s sluggish economy.