BBGI to make decision on biofuel-based production facility

BBGI, a biofuel subsidiary of Bangchak Corporation, plans to conclude a biofuel-based production investment early next year.

The announcement for the expansion has been pushed back repeatedly. BBGI has delayed making an investment decision since last year because the biofuel market has been unfavourable, due to the global economic downturn.

At present, BBGI makes ethanol and methyl ester.

Chief executive Pongchai Chaichirawiwat said BBGI will not abandon the plan and the company remains in talks with strategic partners to form a joint venture. He refused to name the partners. Mr Pongchai said the new project will make higher-value products on top of biofuels in several sectors such as medicines, foods, biodegradable plastics and cosmetics.

The project will require an investment of 6 billion baht.

“The construction period will take three years before the production plant begins operations, so the budget requirement is not urgent,” Mr Pongchai said.

He said BBGI is also postponing a listing on the stock market because the biofuel supply over the last two years has been in a huge surplus, so BBGI doesn’t need to raise funds through an IPO.

BBGI planned for a 1.55-billion-baht investment, funded by the IPO, to increase ethanol production capacity to 800 kilolitres per day (KPD) from 500KPD and expand biodiesel production capacity to 1,000KPD from 930KPD.

The plan has to be postponed for various changes, or BBGI would otherwise not carry out the plan, Mr Pongchai said.

Another reason to put off the plan was a surplus of crude palm oil over the last two years. That situation resulted in record low prices of crude palm oil, below 15 baht per kilogramme.

The surplus is expected to continue in the next few years.

BBGI is a joint venture of Bangchak Corporation and Khon Kaen Sugar Industry. Bangchak owns 60% and Khon Kaen Sugar owns 40%.