EGCO Group places importance on the project selection criteria which have been set to ensure quality investment together with prudent overseas asset management to suit the business environment of the target countries including political and socio-economic policies and directions that could impact its business on a regular basis.
2016 saw an ongoing growth in the demand for electricity in the Asia Pacific region. Many countries embraced a diversified energy portfolio, shifting to investment in renewable energy power projects while maintaining a portion of their investment in coal-fired power plants to ensure power supply security. Meanwhile, there has been a growing number of business operators entering the electricity industry, originating from both the energy sector and other business sectors. This indicates that robust growth opportunities lie ahead for us, albeit with greater competition as well.
As for the local electricity industry outlook, the government has recently launched the Thailand 4.0 policy, an innovation-led economic development policy, leading to the consideration of guidelines for development and supply of energy resources to match increasing demand. However, according to the 2015 Thailand Power Development Plan, most IPP and SPP power projects already have commitments with the government for the next 10 years. Such conditions are viewed by EGCO as a headwind to domestic growth. As such, EGCO has focused on expanding its business in overseas markets, especially in 4 countries where EGCO has been able to secure a solid market position, namely Philippines, Lao PDR, Australia, and Indonesia. Thanks to its capabilities and competitive advantages that are key to its success in regional markets; its management and employees with knowledge and expertise in managing electricity power plants of various sizes and types; and its overseas investment strategy on partnership with local high-performance businesses, EGCO continues to deliver solid returns to its shareholders and generate a higher income as a leading power producer while capturing long-term growth opportunities.
2016 was another year in which EGCO achieved steady growth through its earnest and consistent implementation of 3 key strategies deployed since 2011: management of commercially operated power plants at maximum efficiency; management of in-progress projects for timely completion; and commitment to tapping into investment opportunities, especially in countries where the Company has strong presence. Project selection criteria have been set to ensure quality investment together with prudent overseas asset management to suit the business environment of the target countries including political and socio-economic policies and directions that could impact its business on a regular basis.
EGCO satisfactorily achieved a return on investment at a rate higher than its target for most of its commercially operated power plants while maintaining plant efficiency at the required level. The Company completed the construction of the two new projects which started their commercial operations as scheduled, being 930MW Khanom Unit 4 power plant in Nakhon Si Thammarat and 80MW Chaiyaphum Wind Farm wind power plant in Chaiyaphum.
As for its investment activities, EGCO achieved continuous success in its overseas investment through strategic partnerships with Star Energy Group Holdings Pte. Ltd. and AC Energy Holdings, Inc. in acquiring shares in “Salak” and “Darajat” geothermal power plants in Indonesia and share transfer is expected to be completed within Q1/2017. In addition, EGCO indirectly purchased additional shares in Masinloc Power Partners Co., Ltd. (MPPCL), resulting in the increase of shareholding in “Masinloc” coal-fired power plant to 49%.
Apart from its strong performance management framework, EGCO pays attention to sustainability development through achievement of a balance between economy, environment and society. In 2016, EGCO adopted an additional policy and guidelines on taxation to ensure organized taxation management in accordance with local and international laws. In supporting sustainable development of its stakeholders, EGCO extended its anti-corruption policy to cover its group companies and prepared a code of conduct for its trading partners as well as criteria for their compliance. This was to promote ethical operations among its business partners, countering of corruption, responsibility for communities and society, and occupational health, safety and environment.
All of these achievements have made EGCO widely recognized by various agencies. In 2016, EGCO received a number of awards, including the Investors’ Choice Award by the Thai Investors Association according to the evaluation score for its 2016 shareholders’ annual general meeting with full scores for the eighth consecutive year. EGCO was also rated “Excellent” according to the Corporate Governance Report of Thai Listed Companies (CGR) by the Thai Institution of Directors. The Company passed the evaluation criteria of “Thailand Sustainability Investment (THSI)” set by the Stock Exchange of Thailand with its outstanding performance in Environmental, Social and Governance aspects and the Company received the 2016 Sustainability Report Award at the “Outstanding” level for the third consecutive year by the Thai Listed Companies Association in collaboration with the Office of the Securities and Exchange Commission and the Thaipat Institute.
Our success would not be realized without the continued support and trust from our shareholders, investors, business partners, customers, communities, and other stakeholders across all sectors. On behalf of EGCO’s Board of Directors, management and employees, I would like to extend my sincere thanks to all of you and promise that our Company will continue to exercise prudence in its business undertakings, adhere to the good corporate governance principle, take responsibility for its stakeholders, and strive for sustainable growth in the years to come.
Mr. Sombat Sarntijaree
Chairman of the Board of Directors