Ubon Bio Invests 6 Bil. Baht to Expand New Plants to Take Lead in Ethanol Market

Ubon Bioethanol has joined forces with Thai Oil and Bangchak to invest six billion baht to build a new 900,000-liter/day ethanol plant to take the leadership in the market with a total production capacity of 1.3 million liters/day. The company has also planned to be listed in the SET in the third quarter of 2017 to raise capital to expand its 600 mil.-baht Napier grass-based biogas power plant. While ethanol margins have dropped to only 0.50 baht, the rise in oil demand has helped keep ethanol afloat.

Mr. Dechapon Lertsuwanroj, President of Ubon Bioethanol Group, has revealed that the company is investing in an additional cassava-based ethanol plant with a capacity of 900,000 liters/day in an extended area of its existing plant in Ubon Ratchathani. With approximately six billion baht of investment, this joint venture will have Bangchak Petroleum PLC and Thai Oil PLC as co-investors and has already applied for investment promotion from the Board of Investment (BOI). Of the increased capacity, 98% will be dedicated to domestic demand, while the remaining 2% will be exported to the Philippines during some periods. Because ethanol consumption is expected to rise continuously while the domestic production capacity remains stagnant, this presents an ideal opportunity for expansion to accommodate this new trend. After the expansion, Ubon Bioethanol will take the lead as Thailand’s largest ethanol producer with a total capacity of 1.3 million liters/day.

The current total ethanol demand is 4 million liters/day, while the total production capacity stands at 5 million liters/daily, meaning that only 80% of the capacity is exploited and more opportunity for expansion in this market remains to be seized. Also, with further clarification on the implementation of the Alternative Energy Development Plan (AEDP) for 2015-2036, which aims to boost the consumption of biofuels to 30 percent or an equivalent of at least 11.3 million liters of ethanol in 2036, the future will look even brighter for ethanol. However, any decision of the government to lower the goal will inevitably affect investment plans. The decrease in oil prices has also reduced ethanol margins to only 0.50 baht/liter. However, ethanol sale has risen on the back of the rebounding oil demand.

Dechapon adds that the company is in preparation to be listed in the Stock Exchange of Thailand (SET) in the third quarter of 2017 to raise capital for the new ethanol plant and expects to issue 20 percent of its shares for the initial public offering (IPO). Furthermore, it has also planned to become a completely green company by developing a biogas plant that relies on Napier grass as feedstock. Ubon bioethanol has dedicated an area of 2,000 rai to growing Napier grass and is looking to expand its plantation area to 6,000 rai. Napier grass will be fermented to produce gases, which will feed power generators not exceeding 10 MW in capacity. Expected to require 600 million baht of investment, the biogas plant will generate power for use in the plant only and not for sale to PEA.

The current total daily ethanol production capacity of five million liters is derived from 21 plants, divided into nine molasses-based plants with the total capacity of 1.9 liters/day, one plant using cane juice and molasses as feedstock with the capacity of 230,000 liters/day, four using cassava and molasses with the total capacity of 850,000 liters/day, and seven cassava-based plants with the total capacity of 1.4 million liters/day.

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