SET-listed Ratch Group, the power generation arm of Electricity Generating Authority of Thailand, expects positive business prospects for its coal-fired thermal power plants in Indonesia after acquiring them from Mitsui & Co for US$590 million.
Mitsui & Co is a major shareholder in PT Paiton Energy, which owned the power generation facilities.
The purchase was previously scheduled for the second quarter of last year, but was postponed. Ratch completed the transaction recently.
Under the new investment, Ratch's wholly-owned subsidiary acquired a 36.26% share in PT Paiton Energy from Mitsui & Co and a 65% share in the operation and maintenance division of IPM Asia Pte, the operator of the power plants, said Nitus Voraphonpiput, newly appointed chief executive of Ratch.
The coal-fired thermal power plants have combined power generation capacity of 2,045 megawatts.
Choosri Kietkajornkul, former chief executive of Ratch, said earlier the decision to invest in PT Paiton Energy was based on the investment target's reasonableness, the deliverability of expected returns and the overall benefits to the company.
The Paiton power plants are essential for the stability of Java's electrical system in Indonesia, accounting for 6% of the total power generation capacity, according to Ms Choosri.
PT Paiton Energy's power plants entered into power purchase agreements with PT Perusahaan Listrik Negara, the state-owned electricity company. The agreements will remain in effect for 20 years.
The purchase will also offer an opportunity for Ratch's ongoing investment expansion in Indonesia, including renewable energy projects.
According to Ratch, the new asset purchase will be financed by capital spending, which comprises internal working capital and loans from financial institutions.
The company also announced late last year it aims to expand its business in Australia, Vietnam and the Philippines, which all support renewable energy development.
In Australia, Ratch sees investment potential and opportunity in renewable energy projects that can sell electricity to the Australian government, which plans to achieve a net-zero target in 2050.