SET-listed Bangkok Aviation Fuel Services Plc (BAFS) is diversifying into the renewable energy business by buying seven solar power plants, worth 1.7 billion baht, from Padaeng Industry Plc (PDI), as the aviation industry remains high-risk.
BAFS reported to the Stock Exchange of Thailand yesterday its board of directors approved the takeover of the plants, with combined capacity of 36.4 megawatts, owned by PDI's subsidiaries.
The subsidiaries are ATC Enviro Co (ATCE), PDI Mae Ramat Co (PDIMR) and P.P. Solar (Nong-No) Co (PPS). ATCE operates five solar power plants, with total capacity of 29MW, in Prachin Buri and Samut Sakhon provinces.
The company signed a power purchase agreement between 2015 and 2016 with state-run Provincial Electricity Authority over a period of 25 years.
PDIMR and PPS have run solar power facilities, with capacities of 6.3MW and 1.1MW in Tak and Khon Kaen, respectively, since 2013.
BAFS expects to make a share purchase deal through its subsidiary BAFS Clean Energy Corporation on Dec 9.
The asset acquisition is in accordance with the strategic plan of BAFS, which is expanding its scope because of Covid-19 impact on the company's main source of revenues in tourism and fossil fuels.
Diversifying into electricity generation from such renewable sources as solar power will generate stable revenue and better cash flow as well as reinforce financial stability for the company.
BAFS said the purchase deal is worth the investment and promises high yields.
The company announced in May it planned to diversify into other fields over the next five years. Revenue from its refuelling service accounts for 79% of the total, with the rest generated by non-fuel businesses.
It wants fuel and non-fuel businesses to each generate 50% of total revenue.
ML Nathasit Diskul, vice-president and acting director for business development and marketing at BAFS, said the firm expected the advent of disruptive technology in the refuelling business over the past 4-5 years, so it improved the service and began to diversify.
"It may take a few years before we will see the outcome of new projects," said ML Nathasit.