Thai energy major PTT to invest $1.83b over next 5yrs, to explore hotel biz

The logo of PTT is pictured at an exhibition hall in Bangkok, Thailand, May 12, 2016. REUTERS/Athit Perawongmetha

Thailand’s leading energy conglomerate PTT Group plans to invest 65 billion baht ($1.83 billion) over the next five years to expand its oil business and diversify into bio-fuel and bio-chemical industry.

It plans to invest 40 billion baht to develop biochemical products and the rest 25 billion baht to expand the number of petrol stations in domestic and overseas. It will also spend on upgrading existing petrol stations.

PTT and its subsidiaries currently have over 100 billion baht cash in hand, and the investment is part of a strategy to diversify risk.

“We are drafting a master plan for developing a biofuel and biochemical industrial hub, which should be completed by this year end. The study will cover from upstream to downstream production chain as well as marketing and distribution,” Chansin Treenuchagron, senior executive vice president for PTT’s petrochemical unit, told media.

Revenue from bio-plastic products is expected to account for at least 2 per cent of the total by 2020, he said.

The company also urged the government to support its biofuel and biochemical investment by granting tax incentives.

“The production cost of bioplastic is twice or thrice higher than non-bioplastic products. Therefore, the tax incentives will lower the cost and make the selling price more reasonable, which will encourage people to shift to use more environmentally-friendly products and increase demand. At the same time, this industry will also help raising farmers’ income,” he added.

PTT has a joint venture project with Japanese giant Mitsubishi Chemical to set up the first Polybutelene Succinate (PBS) production plant with an annual production capacity of 20,000 tonnes. The plant is scheduled to start operation in the second half of this year.

Meanwhile, its subsidiary PTT Global Chemical Pcl (PTTGC) is also working on Polylactic Acid (PLA) production plant project. PTTGC and its potential partner, NatureWorks, have been negotiating with the Thai government for tax incentives. However, there is no further progress on this project as on date.

PBS and PLA, key raw materials for biodegradable plastics, can be produced from sugar or cassava, which are abundant in Thailand.

Meanwhile, PTT Group is in talks with three to four hotel chain operators to open budget hotels in its petrol stations to increase its retail business revenue.

Auttapol Rerkpiboon, senior executive vice president of PTT’s oil business unit, said that it plans to open hotels in 50 stations by 2020.

The investment will be excluded from the 25-billion-baht budget for its oil business, he said.

The listing plan of its retail business is expected to be completed in the fourth quarter this year.

PTT plans to expand the number of its petrol stations from 1,450 to 1,575 by the second half of the year. It will also increase the number of its petrol stations in overseas from 160 to 200 by the end of this year and to 500 by 2020.

Also read:

Thailand’s PTTGC to set up $143m JV for bio-plastic industrial estate

Thailand’s PTT studies proposal for retail business IPO

Thai PTT reviews investment plan as weak oil prices hurt revenue