Sakol Energy poised to become a fully integrated power provider

SAKOL ENERGY PLC (SKE), a natural gas provider, has successfully acquired the last biomass licence with high FIT rate as the firm moves to become an integrated power producer after completing three energy deals in three months following listing in the stock market.

Chutchai Sumetchotimetha, chief executive officer, says “Our vision is to become a fully integrated power company and create a highly sustainable business for the long term. Since listing our shares in Stock Exchange of Thailand in November 2017, we have successfully launched three new energy projects. Our latest project is the largest one: the planned acquisition of Mae Krating Biomass Power Plant (MKP) with a capacity of 9.9 megawatts in Prae Province.

MKP has an 8-megawatt power purchase agreement with the Provincial Electricity Authority (PEA) for 20 years at a high FIT rate of Bt4.62 per unit, considered the most attractive rate compared with the rate of Bt1.80 per unit for the recent SPP Hybrid projects.

The company will invest Bt850 million in acquiring 80 per cent of MKP, which also has a 20-year raw material sourcing contract with BP 15 Co Ltd, one of the largest wood pellet producers in the North and with Prae Green Power Co Ltd.

Thus, the company has now secured the raw materials for the power plant for a 20-year period. This project has a high internal rate of return of over 13 per cent with a 7-year payback period. We will start construction work promptly to start commercial operation within middle of next year.”

SKE has also announced the Compressed Bio Methane (CBG) project last month.

It has acquired 75 per cent of shares in RE Biofuel Co Ltd, a CBG producer in Nakorn Ratchsrima. In this project, SKE will act as a producer of CBG by using waste from the tapioca factory.

CBG is the equivalence of NGV and can be used as fuel for vehicles. Also, SKE has signed sales agreement with local logistics firms to off-take its CBG for delivery fleets. As such, the company has secured both the raw materials and customers, ensuring its future profitability. SKE will spend Bt80 million in this project with a 5-year payback period.

The company plans to launch five CBG projects in the next few years as there are around 1,000 large tapioca factories, sugar mills and industrial plants with large amount of waste to be used for producing CBG.

Also in January 2017, SKE signed a contract with the PTT group to start a new NGV Service Station business under a new ex-pipeline scheme, which provides higher return than the programme under which most NGV stations operate. SKE will invest around Bt100 million to open a retail NGV station, along the route of the NGV gas pipeline, in Nakorn Sawan province by the first quarter of 2020.

The implemention of the three new energy projects will make the company an integrated power company with a focus on renewable energy.

This will transform the company from an NGV service provider with two mother stations - compressing NGV for PTT’s truck fleets under 20-year contract, into a renewable power company.

Its core business should resume growth this year as the PTT Group has forecast that sales of NGV should continue to grow from this year as a result of increasing logistics and transportation volumes in line with economic and industrial expansion.

SKE reported a revenue of Bt333.7 million and Bt74 million in net profit in 2017, down from the previous year as a result of lower production.

Source: http://www.nationmultimedia.com/detail/Corporate/30340624