BAFS ponders pipeline extension

BAFS ponders pipeline extension

Mr Prakobkiat says the potential pipeline extension into Myanmar and China would be Bangkok Aviation Fuel Services' first project undertaken abroad.
Mr Prakobkiat says the potential pipeline extension into Myanmar and China would be Bangkok Aviation Fuel Services' first project undertaken abroad.

SET-listed Bangkok Aviation Fuel Services Plc (BAFS) is mulling an extension of a pipeline project from the North of Thailand into Myanmar and China, with plans to conduct a feasibility study by the end of this year or early next.

Managing director Prakobkiat Ninnad said the project, if carried out, would be the company's first abroad.

He said the route to be studied will extend from the new depot now under construction in Phichit province to Tak through Myanmar and from the Phichit depot through Chiang Rai to China.

BAFS is constructing a fuel pipeline extension from its depot in Bang Pa-in, Ayutthaya through Phichit to end in the northern province of Lampang. The total length of the 8.5-billion-baht extension will be 365 kilometres.

The project is now 12% complete and is projected to be finished and operational by 2019. It will be run by a BASF subsidiary, Fuel Pipeline Transportation (FPT).

Last month, an SET-listed petroleum retailer, PTG Energy Plc, spent 398 million baht to acquire a 9.55% stake in FPT.

If the extension abroad proves viable, construction should begin shortly after the current extension project is up and running.

"We will know the investment costs and whether it is feasible or not once we have finished the study," Mr Prakobkiat said.

The pipeline will help reduce oil transport by road and reduce carbon dioxide emissions from oil trucks by up to 48,000 tonnes a year.

Mr Prakobkiat said that once the new oil pipeline is operational, income from the pipeline usage fee will increase to 30% of total revenue, up from 20% at present. The company's core revenue from aviation refuelling services is forecast to drop to 70% from 80%.

This year, fuel sales volume is forecast to grow by more than 5% to 6 billion litres, in line with rising demand during the peak tourism season, he said.

Total revenue is expected to grow by 5% from 3.7 billion baht last year. If the tourism sector keeps growing at the current pace, the company's revenue is forecast to reach 5 billion baht in 2023.

"Growing tourism is a major factor driving our sales in terms of volume and value," Mr Prakobkiat said.

He said BAFS has allocated 8.39 billion baht for capital expenditure from this year to 2019, mainly for use in pipeline construction.

The company will earmark an additional 700 million baht for the second phase of an aviation hydrant system at Suvarnabhumi airport.

In December, the company established BAFS Innovation Development Co. The subsidiary has registered capital of 5 million baht and is intended to help upgrade technology for the company's existing services and generate new business opportunities.

"[The subsidiary] is meant to add value to our business, enhance efficiency and control costs through innovation and development," Mr Prakobkiat said.

BAFS shares closed yesterday on the Stock Exchange of Thailand at 37 baht, down 50 satang, in trade worth 3.98 million baht.

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