Hydro Power sector and Norochcholai

[trader1024]

How do you think the future operations of Norochcholai is going to affect the Hydro Power sector? I know most hydro companies have long standing agreements with the government to supply electricity but when they come to an end and the coal power plant is fully operational will they still need to buy from the hydro power plants? Probably not imo. Ideas?

[chinwiTop contributor]

It is worth to buy our own power inside the system. To import coal we have to export foreign exchange.

I do not see any threat. Coal power and CEB hydropower is not enough.
Threat is there to thermal sellers.
Somehow they may not offer rate increase easily.

Actually the real problem is non matching distribution system. You can't connect your power to the existing grid line at some places. i.e. ECB cannot get your power until they correct the grid investing some big cost. Recently HPFL faced this obstacle and construction and linking was delayed.

[trader1024]

Thank you for the insight. Much Appreciated.

I agree. But what about the price of a unit of hydro power vs unit of coal power? As far as I know currently the CEB is buying electricity from private companies at a high rate due to contracts signed a long time back. When Norochchalai becomes fully operational ,it will be cheaper to generate using coal than buying from hydro companies. (Also this is SL where getting votes in the next election is more important than conserving foreign currency lol ).

So What do you think about that? Do you think they will keep these contract in the long term?

disclosure: I am looking to invest for mid-long term in the hydro sector, but this is the only problem i'm having :/