Bangchak draws up Bt87.5bn investment plan through 2019
Bangchak Petroleum Public Co has devised a long-term investment plan of Bt87.5 billion for 2012-2019, covering both its 3E and alternative energy businesses.
The company’s president, Anusorn Sangnimnuan, said the plan was divided into two phases, Bt26 billion during 2012-2014, and another Bt61.5 billion during 2015-2019.
The first phase includes investment of Bt15 billion in existing and new solar plants and another Bt4 billion in its 3E (Efficiency, Energy and Environment Improvement) project. The latter is aimed at improving operating efficiency, reducing energy consumption and being environmentally friendly to make it a five-star refinery. The 3E project’s first phase is expected to be finished in 2015, which will help boost its refinery margin by US$1 to $2 a barrel (Bt31-Bt62).
This 3E project is expected to yield at least 15 per cent investment return and break even within three years.
The firm will spend another Bt6 billion in the first phase on biofuel projects and another Bt1 billion on palm and cassava plantation projects.
The second phase requires investment of Bt61.5 billion in 2015-2019, of which Bt7.5 billion will be the total administrative budget, Bt4 billion will fund continuing development of 3E projects and another Bt50 billion will be used to create additional solar plants with combined 380 megawatts of capacity and new businesses such as foods or other high-yielding projects.
The company expects EBITDA (earnings before interest, tax, depreciation and amortisation) this year of Bt7 billion (excluding oil inventory earnings), up from Bt6 billion last year (excluding oil inventory earnings). The EBITDA is expected to grow to nearly Bt10 billion in 2014 and Bt20 billion in 2020.
Its solar power plant in Bang Pa-in, Ayutthaya with 44MW capacity will resume operation in July after being hit by last year’s floods. The construction of the second phase of a solar plant in Chaiyaphum with 50MW capacity is expected to be finished in December. Construction of the solar plant in Bang Pahan, Ayutthaya, with 75MW capacity is expected to be complete in the first quarter next year.
The company will issue debentures worth Bt3 billion late this year. They carry a maturity rate of between seven and 10 years. The proceeds will finance its investment in new solar plants and 3E projects. It issued debentures worth Bt3 billion in April and witnessed oversubscription.
Anusorn added that as part of its long-term investment plan, the company plans to reduce the EBITDA ratio of the high-volatility refinery business to 50 per cent in 2015 and to 35 per cent in 2020 from an estimated 70 per cent this year, while the EBITDA of the power-plant business would increase to an expected 20 per cent this year.
Anusorn estimated that the refining margin (excluding inventory earning) in the second quarter should be an average $6-$7 per barrel, down from the first quarter, given falling oil prices. It will also undertake an annual maintenance of the refinery on May 25 to June 23 to boost refining efficiency, which will result in a drop in average capacity to 73,000 barrels per day in the second quarter. After the maintenance, capacity will be raised to 110,000 barrels per day, which will result in average capacity this year of 98,000 barrel per day, up 12,000 barrel per day from last year.
The company expects losses from oil inventory of $10 per barrel in the second quarter, but this will not affect its financial performance, given that the oil price is expected to rise in the fourth quarter. If the average Dubai crude oil price is higher than $106 per barrel at year-end, it will not suffer a loss from oil inventory. The company has already hedged against crude oil price changes.
