SET-listed compressed natural gas (CNG) trader Sakol Energy Plc (SKE) is entering renewable power generation in a bid to double revenue from 333 million baht in 2017 to 650 million by 2020.
SKE's revenue has relied on CNG trading for almost a decade. The renewable power business is part of a business diversification into various energy resources.
Managing director Jakkraphong Sumethchotimetha said SKE has set aside 850 million baht to develop biomass projects, the first being planned in Rong Kwang district of Phrae province at a development cost of 285.6 million baht.
SKE set up Mae Krathing Power Co to handle the 9.9-megawatt biomass power plant, for which it was granted Board of Investment incentives. The plant will operate under a 20-year power purchasing contract for 8MW.
"The 285 million baht is the remaining cash of 396.75 million baht received from SKE's initial public offering last November, and we decided to allocate it to renewable business," Mr Jakkraphong said.
The plant is expected begin commercial operation in the third quarter of 2019.
Mr Jakkraphong said SKE spent 85 million baht to develop compressed biomethane gas (CBG) in Nakhon Ratchasima.
CBG is set to become another fuel option. Made from the wastewater of a local tapioca flour mill, the methane serves as fuel to generate electricity.
Both CNG and CBG can fuel vehicles and generate power.
RE Biofuel Co has been set up to take charge of the CBG business. Initial production and distribution will have a capacity of nine tonnes a day to sell under 10-year contacts.
"We will start operations in October," Mr Jakkraphong said.
SKE plans to invest in five further CBG-related projects in Nakhon Ratchasima over the next three years.
By 2020, revenue from CNG business will decline to 60% of the total, while renewable power will account for 40% of revenue.
SKE is conducting a feasibility study of CNG gas stations along the gas pipeline owned by PTT Plc, the national oil and gas conglomerate.
PTT has developed new gas pipelines in the North and Northeast that begin operations soon.
"SKE aims to allocate the 30 million baht left over from IPO cash, which is expected to be sufficient for the next project," Mr Jakkraphong said. "With the CNG capacity of 30 tonnes daily, SKE will seek local partners to form joint ventures."
SKE performs CNG operations under the auspices of PTT via private mother stations.
SKE has two such stations: in Chiang Rak Noi subdistrict, Pathum Thani province with a capacity of 350 tonnes a day, and in Tha Maprang subdistrict, Saraburi province with a capacity of 400 tonnes a day.
SKE expects 2018 revenue to grow by 20% to 400 million baht. It posted first-half revenue of 172.5 million baht, up 5.8% year-on-year, but net profit fell 20% to 30.7 million baht as operating costs increased.
SKE shares closed yesterday on the Stock Exchange of Thailand at 1.27 baht, up two satang, in trade worth 1 billion baht.
