Page 134 - PEA_AnnualReport_2016

7. Disclosure of financial instruments
7.1 Credit risk

Credit risk arises when accounts receivable do not comply with the terms and conditions of credit
agreements, causing losses to Provincial Electricity Authority. Also, a concentration exposure in credit portfolios
is regarded as an important aspect of credit risk. Most of Provincial Electricity Authority’s accounts receivable
are uristic person and natural person, however, there has been no signifcant losses that affects fnancial
statements in the past. Therefore, it is assumed that Provincial Electricity Authority has no credit risk.

In case of fnancial assets recognition in the statements of fnancial position, book values of the assets
presented in the statements of fnancial position represent the maximum amount of exposure to the credit risk of
breach of contract by Provincial Electricity Authority.

7.2 Interest rate risk
Interest rate risk arises when interest rate changes and may have a negative effect on operations of

rovincial lectricity uthority, however, most of rovincial lectricity uthority s loans have fxed interest rates
and rovincial lectricity uthority s loans are not signifcant amount except as mentioned in ote 5.16.

7.3 Foreign exchange rate risk
Foreign exchange rate risk arises when there is a change in foreign exchange rates and may effect on

rovincial lectricity uthority and its subsidiary s fnancial position in current and following years. owever, most
of Provincial Electricity Authority’s transactions are incurred in Thai Baht, therefore, changes in foreign exchange
rate do not have signifcant impact on rovincial lectricity uthority and its subsidiary s assets and liabilities.

7.4 Fair value of fnancial Instruments
rovincial lectricity uthority and its subsidiary estimate fair value of fnancial Instruments by using
following assumptions :

Cash and cash equivalents, short-term investments, trade accounts receivable and trade accounts
payable have book values approximate of their fair value due to their short-term period of settlement.

8. Contingent liabilities
As at December 31, 2016 and 2015, Provincial Electricity Authority was sued 1,751 cases and 83 cases,

respectively, with total amount in dispute of Baht 4,566.32 million and Baht 2,193.70 million, respectively.
rovincial lectricity uthority was fled in lawsuits including a lawsuit on lease computer software packages
for using in its core business. Portalnet Co., Ltd., is authorized by its joint venture partner SPIES, sues Provincial
Electricity Authority to the Central Administrative Court on November 22, 2010 on cost of using computer software
prior to the commencement period of computer software leasing of Baht 1,868.71 million plus an accrued interest
at the rate of .5 percent per annum from the date of fling the petition onwards. The Central dministrative Court

has dismissed the case. Currently, the case is on the proceedings of the Supreme Administrative Court. And,
PEA legal department predicts that Provincial Electricity Authority will win the case.

9. Approval of financial statements
These fnancial statements were approved for issuance by overnor on arch 16, 201 .

134 SMART PEA
Annual Report 2016 Provincial Electricity Authority