3.4.2 Connected Transaction between BIC and BLDC
Transaction
BICûs lease in Bang Pa-In Industrial Estate from BLDC for construction ë Rental payment ë Trade account payable
126
Transaction Volume (Million Baht) Accounting Accounting Nature of Transaction/ Period Ended Period Ended Necessity and Justification December December 31, 2012 31, 2013
3.55 0.23
1.04 -
Annual Report 2013
BIC entered into a land lease with BLDC for various utilizations, with the following details: 1) BIC took a lease on an area of 13-3-10.47 rai of BLDCûs land for construction of an office building and temporary residence for staff, with a lease term of three years from June 1, 2011 to May 31, 2014, at the rental rate of Baht 206,642.61 per month. August 2013 was the final month. 2) BIC took a lease on an area of 10-0-2.75 rai of BLDCûs land for installation of electric poles and wiring of 115 kV and 22 kV transmission lines and steam pipeline installation, with a lease term of three years from July 1, 2012 to December 31, 2014, at the rate of Baht 112,000 per rai per year. In the first year, BIC paid rental in the amount of Baht 560,380.80 in proportion to the actual period. August 2013 was the final month. 3) BIC took a lease on an area of 1-3-12.5 rai of BLDCûs land for construction, expansion, utilization, service of maintenance and repair of the natural gas pipeline system, with a lease term of three years from May 3, 2011 to December 31, 2013, at the rental rate of Baht 112,000 per rai per year. October was the final month.
Opinions of the Audit Committee
The Audit Committee was of the opinion that the execution of such transaction was reasonable, as the land lease in the first transaction was for use as its office building and temporary residence for staff, which was considered as normal administration of the construction project.
The land leases in the second and the third transactions were executed to acquire natural gas as the main raw material for use in BICûs Cogeneration Power Plant, as well as for purposes relating to electric poles and steam pipeline for sale of electricity and steam so produced to customers within Bang Pa-In Industrial Estate.
In addition, the rental in the first transaction was reasonable, as it was the rate normally collected by BLDC from lessees for utilization of land of a similar nature. The rentals in the second and the third transactions were reasonable, as they were lower than the land rental rate for natural gas pipeline which BIC paid pursuant to an agreement with the State Railway of Thailand, which was not a related party.