PTG Energy Plc (PTG), a SET-listed oil retailer, and Eiamburapa Co (EBP), a top producer of tapioca products, have teamed up to develop what they say will be the world's first facility that makes ethanol from cassava pulp.
The project has an investment budget of 1.5 billion baht.
A new company called Innotech Green Energy Co (IGE), in which PTG holds a 60% stake and EBP owns 40%, will run the project. Construction is due to start next year.
Commercial operation is expected to begin within 2020 with a capacity of 200,000 litres per day.
IGE has signed a licensing agreement to use technology developed by Sapporo Holdings Co, Japan's top brewery, for commercial production of ethanol.
Sapporo is the owner of a yeast breed that can produce sugar from cassava pulp.
The signing ceremony was held yesterday in Bangkok to mark the start of the project to run an ethanol production facility in Sa Kaeo's Wattana Nakhon district with a daily output of 200,000 litres.
PTG president and chief executive Pitak Ratchakitprakarn said the new technology to produce ethanol from cassava pulp is expected to lower costs by three baht per litre.
He said PTG expects an average of 470,000 litres of ethanol per day for gasohol products in its retail business.
Demand for ethanol for gasohol production would rise to 670,000 litres in 2018 and reach 1.5 million litres in 2020.
"We chose to invest in the new technology to produce ethanol from cassava because we want to reduce the risk of relying on a single feedstock such as molasses," said Mr Pitak.
PTG announced it will expand the number of oil stations nationwide to 3,200 within 2020, up from 1,757 this year.
He said EBP has huge amounts of cassava pulp waste, which can produce as much as 1.4 million litres of ethanol per day.
With its abundance of cassava pulp, EBP may consider developing a second production facility in Wattana Nakhon soon.
PTG is also looking for conventional ethanol production facilities in a greenfield project via mergers and acquisitions, said Mr Pitak.
He said PTG has earmarked 4.5 billion baht capital expenditure this year. The lion's share will go to adding a further 350 oil stations, 300 million baht to raising the number of Punthai Coffee Shops from 80 to 150, 750 million baht for expanding Max Mart convenience stores and 350 million baht for oil truck transportation.