Rayong Purifier secures B400m loan for biodiesel venture

BackAug 24, 2007

Rayong Purifier Plc (RPC) has secured a 400-million-baht loan from Kasikornbank to finance its biodiesel project, which will be handled by subsidiary Pure Biodiesel Co (PBC), according to RPC president Supapong Krishnakan.

Half of the seven-year loan would go to RPC, a medium-sized oil refinery, which will use half as working capital for the biodiesel project and the rest to construct the biodiesel plant.

The plant plans to produce 100,000 tonnes per year of biodiesel 100, a 100% palm oil-based fuel typically known as B100. Construction is expected to finish next August,

Suwinai Suwanhirunkul, managing director of PBC, said the project was planned to serve increased biodiesel demand and comply with the government's policy to promote biodiesel usage.

The government will force motorists to use B2, a mixture of 2% pure biodiesel with diesel, to replace conventional diesel early next year.

The company expects to gain an annual profit of 195 million baht from the biodiesel project with an ambitious break-even point in 2012. It also has plans to double its B100 capacity to a total of 200,000 tonnes.

''Expanding production output would depend on various factors, such as volume and prices of crude palm oil, as well as market demand and future government policy,'' Mr Suwinai said.

''Initially, 30% of B100 will be sold to RPC while the remaining 70% will be sold to other domestic oil refineries.''

PBC plans to export B100 _ especially to Europe, the largest consumer of biofuel _ after the expansion phase is complete.

''As for the raw materials used to produce biodiesel at Pure Biodiesel, the company will use crude palm oil that is abundant in the southern provinces of Krabi, Chumphon, Surat Thani and the eastern provinces of Rayong and Chanthaburi,'' Mr Suwinai said.

''The government currently encourages farmers to increase the cultivation in order to feed the biodiesel industry. We will seek supplies of raw materials to feed our refinery facilities domestically as a priority.''

In the future, the subsidiary would seek to list on the Stock Exchange of Thailand, depending on its performance.

Mr Supapong said the company just sold its oil refinery and tank farms in Vietnam due to restrictions there.

He added that the company also had plans to invest in oil storage tanks in Cambodia. He declined to give further details.

RPC plans to increase its oil trading value to 40 billion baht this year, doubling its original revenue forecast of 20 billion.

In the future, the company hopes to earn 100 billion baht from its trading business following its plan to double production capacity to 34,000 barrels per day from 17,000 barrels now.

''The current capacity does not offer economies of scale. The demand side is what we take into consideration before deciding whether to expand production capacity,'' he said.

RPC shares closed yesterday on the Stock Exchange of Thailand at 3.98 baht, up two satang, in trade worth 377,000 baht.

 

Source: Bangkok Post by Busrin Treerapongpichit
Friday August 24, 2007