OPG turns focus to Laos for oil palm plantation

OPG turns focus to Laos for oil palm plantation

OPG Tech Co, a local palm oil trader, is gearing up for oil palm plantation and biodiesel production in Laos after seeing limited business opportunities in Thailand.

OPG plans to develop the plantation on a 16,000-hectare plot, about 100,000 rai, over a few years to increase biodiesel production to 120,000 litres daily.

Apisit Rujikeatkamjorn, chairman of the board, said the company has planted crops in Laos for seven years through a subsidiary firm, Laos Agrotech Co (LAT), in which OPG holds an 85% stake, with a local partner owning the remainder.

LAT has a plantation area of 1,600 hectares (10,000 rai), producing 30,000 litres of biodiesel a day.

Mr Apisit said OPG wants to diversify its business to the upstream segment for crude palm oil, but building such a presence domestically is hard because there is insufficient plantation land.

In Laos, LAT holds a 30-year concession on its land lease for the business.

Moreover, LAT's research and development team, looking for an appropriate oil palm strain for that country, has unearthed a variety dubbed Lao Viang I, developed for drier weather, Mr Apisit said.

"We plan to develop a second generation of Lao Viang I, with a tentative budget exceeding US$1 million," he said. "The commercial plantation should make it to market by 2020 with more than 100,000 sprouted palm trees."

He said LAT plans to raise funds to finance its ambitious business plan of listing on the Lao Securities Exchange.

KT ZMICO Securities is LAT's financial adviser, and the company expects to float 20% of shares for an initial public offering (IPO).

"LAT has already submitted a filing for the IPO," Mr Apisit said. "After the IPO is finished, OPG will dilute its ownership to 68%, with the local partner owning 12%."

The Lao government supports biodiesel energy, he said, in particular B10, a diesel with 10% methyl ester content.

LAT also holds licences from the government to operate as a palm oil crusher, biodiesel producer and provider of micro-credit for plantations.

OPG expects total revenue this year of 17 billion baht, up from 12 billion in 2017, thanks to the expansion in Laos and improvements in Thailand.

OPG is the owner for domestic cooking oil brands Kham and Mungkorn, which have been marketed since 2015. Previously the company operated as an original equipment manufacturer for a palm oil crusher in Samut Prakan.

The fluctuation of palm oil prices forced the company to diversify to food and drinks to hedge against price instability.

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