SCI Annual Report 2015

SCI Electric Public Company Limited
amount really produced in the rate of 70 per cent of average electricity charge. Besides, if the period of 3 years is over
and the Company can produce electricity less than the Base Energy, the Company will have to produce electricity in
compensation to EDL in the part of lacking production. The calculation of electricity charge in the 4th year will be calculated
after deducting with the compensation to EDL (in the case that the production in the 1st – 3rd years is lack). The
electricity charge will be calculated as stated in the contract without having to pay for the expense. Even though this
condition lasts only 3 years, after the 3rd year, the Company will negotiate with EDL in the condition of electricity charge
payment in each year. The contract may follow the Base energy. This depends on the agreement made with Lao’s
electricity authority. Although the Company receives cash from the electricity sale stably, the record of income of the
Company will be made following the real electricity amount which will affect the income recognition in the dry season
when the amount of electricity production is less. Therefore, the Company has the risk from the unstable income recognition
from the fluctuation of water amount. However, in the 1st – 3rd years, the Company has no risk on the stable of cash
flow as the money is paid stably in each year. In the 4th year, the Company will negotiate to agree in the payment of
remuneration for the electricity charge for the following years which may affect the received cash flow and the income
recognition of the Company as well. The amount of electricity production and the income recognition of the Tat Slane
Dam in 2013 - 2015 were as follows:
(small) hydroelectric power plant - Tat Slane Unit 2013 2014 2015 (6 months)
Target Capacity* GWh/Year 15 15 15
Utilization GWh/Year 14.3 14.1 9.0
Rate of capacity % 95.3 94.0 60.0
Income gained from (small) hydroelectric power plant Million baht 28.90 30.39 21.55
Financial Risk
1. Risk from the insufficient circulating fund
The Company has to use the circulating fund for studying the project. There must be the expense in conducting the
feasibility study, hiring the outsource consultant, and there must be the expense before the project has been approved.
The Company has to find sufficient sources for circulating fund. Moreover, there is also the project which the Company
has to pay for the expense in advance partly and if the Company receives the money from the Hirer in delay, the
Company will encounter the problem of circulating fund shortage. The fund has to be found from other sources in time.
Previously, the Company had to plan for the financial management on the money gained from the hirer and the money
had to be paid to the seller of raw materials and the sub-contractor to be in the period which the Company could
collect the wage from the hirer accordingly.
In case of the project of providing and installing the equipment improving the power distribution system in Lao PDR,
the Company will coordinate in providing the source of loan for the hirer to gain financial support from the financial
institute in the type of Project Finance. Therefore, the hirer can request for the loan to be paid to the Company following
the installments of job from the deposit, delivery, until the job completion. Previously, the Company was financially
supported in circulating fund from financial institutes continually as the project was feasible and the borrower was Lao’s
electricity state enterprise with the Lao government as the guarantor.
2. Risk from the fluctuation of foreign currency exchange rate
According to the electricity sale and purchase contract made with EDL, Tat Slane Power Co., Ltd. producing and
selling to EDL including the project of electricity system development in Lao (PDSR), the income is in US dollars. In 2014 and
2015, the Company earned income equaling to 42.82 million US dollars and 16.80 million US dollars, respectively, and the
expense was 33.29 million US dollars and 14.23 million US dollars, respectively. If the US dollar exchange rate significantly
changes, the income of the subsidiary and the financial statements of the group of companies will be affected. However,
the Company also paid in US dollars in Lao PDR as for the project made in Lao PDR, the hirer will pay the wage mainly in
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