Thailand’s state-owned utility to issue first sustainability bonds

Thailand’s state-owned utility, the Provincial Electric Authority (PEA), is issuing its first sustainability bond worth one billion baht (US$35 million) to support the development of renewable energy projects and improve energy access across the country.

The five-year bond, backed by the Asian Development Bank (ADB), will be issued on August 21 to Thai institutional investors, marking a major step towards developing a robust and sustainable bond market in Thailand.

The proceeds will support PEA’s Sustainability Program, which aims to develop renewable energy projects, such as microgrid development, as well as climate resilience and adaptation initiatives, such as submarine cables to remote islands. PEA will also use the funds to improve energy access, particularly in areas without access to electricity, and improve the quality of life of beneficiaries.

ADB Thailand Country Manager Anouj Mehta said the transaction underscores the development bank’s commitment to supporting pioneering ESG-focused capital market issuances by state-owned enterprises and private corporations that align with the ASEAN Taxonomy for Sustainable Finance, a regional framework for assessing sustainable activities.

“The PEA demonstrates the critical role that utility operators play in supporting the country’s decarbonization, given the power sector’s significant contribution to Thailand’s greenhouse gas emissions,” Mehta emphasizes. “We hope to create more sustainable bond issuances, increase public and private capital mobilization, and support sustainable and transition finance in the region.”

According to PEA Governor Supachai Ek-Un, the state-owned enterprise has committed to achieving carbon neutrality by 2037, 13 years ahead of the national target, and net zero emissions by 2065, in line with Thai government policy. He says that in partnership with ADB, PEA has developed a sustainable finance framework that is aligned with international and regional standards, aimed at building investor confidence and aligning with the Sustainable Development Goals (SDGs). “PEA will issue sustainable development bonds and promote both green and social finance,” he adds.

ADB provided technical assistance through the Green, Social, Sustainable and Other Labeled (GSS+) Bonds Initiative for Southeast Asia, a collaboration between the Asian Bond Markets Initiative (ABMI) and the Asean Catalytic Green Finance Facility (ACGF). ABMI is an initiative by the governments of ASEAN, the People’s Republic of China, Japan, and the Republic of Korea to develop local currency bond markets. ACGF is an initiative of the ASEAN Infrastructure Fund to accelerate green infrastructure investment in Southeast Asia.

PEA is responsible for supplying electricity to 74 provinces of Thailand (except Bangkok, Samut Prakan and Nonthaburi), which are served by the Metropolitan Electricity Authority.