PTT Plc, the national energy conglomerate, has unveiled a new phase of reinvestment aimed at establishing fresh ventures for future gains, recognising the saturation of its traditional businesses in driving growth.
Auttapol Rerkpiboon, President and Chief Executive Officer of PTT Plc, said the need for reinvestment is due to the saturation of the company's original ventures, primarily in the oil refinery and petrochemical sectors, which have limited potential for future income growth.
Therefore, there is a need for new investments and the "sowing of seeds" for new businesses. This reinvestment process will take some time before these new ventures can bear fruit, and there is no guarantee that every seed sown will grow and yield results. However, it is hoped that a portion of the investments will yield benefits and become a new revenue wave for PTT.
In this new wave of reinvestment, PTT is focusing on investing under the theme of "Future Energy and Beyond". Future energy investments include businesses related to electric vehicles (EVs), electric vehicle batteries and future energy sources, such as hydrogen. The "beyond" category encompasses businesses beyond energy, such as AI and robotics, lifestyle, life science, nutrition, logistics and pharmaceuticals.
According to the strategic direction of PTT, the company is targeting 30% of its net income to come from future energy. The company has set aside capital expenditure worth a billion baht for investment in future energy and beyond businesses from 2023–2027.
The company plans to lower the greenhouse gas emissions of its group by 15% from the 2020 level by 2030. PTT also aims to reach its carbon neutrality goals by 2040 with net zero emissions of greenhouse gases by 2050.
Mr Auttapol said these new businesses are expected to show substantial results within the next 3–5 years.
Some of the investments made by PTT have already started to yield good returns, such as the pharmaceutical business in Taiwan, where PTT, through its wholly-owned subsidiary Innobic, has become a major shareholder in Lotus Pharmaceutical Co. This business is generating profits worth more than a billion baht for PTT, primarily due to the production and sale of cancer medications in the United States.
Mr Auttapol said PTT's reinvestment strategy is purposeful. Every investment made by PTT is seen as a way to create a new S-Curve for the country, generating employment opportunities and fostering new technologies.
While the government has policies regarding new S-Curve industries, it is crucial for the private sector to drive and materialise these initiatives, he said.
Thailand's traditional heavy industry, petrochemicals, which once brought prosperity to the nation, cannot be the sole focus any more. New industries and technologies must be developed, he said.
Mr Auttapol also mentioned PTT's support for the research and development of "Manee Daeng", an innovative anti-ageing drug, in collaboration with medical professionals from Chulalongkorn University. The drug has shown promising results in animal trials and is preparing to undergo human trials both within and outside of Thailand.
Despite reinvestment in new businesses, the CEO highlighted PTT's strong commitment to ensuring the country's energy security from the very beginning. For instance, he said, during the start of the Russia-Ukraine crisis, PTT promptly purchased and stored 4 million barrels of oil when the price per barrel was more than US$100 (3,638 baht). This strategic decision was made to secure the country's energy supply and bolster consumer confidence even though it led to losses when prices dropped.
In addition to oil reserves, PTT has initiatives to support the public during energy price crises, such as fixing prices for natural gas vehicles and liquefied petroleum gas, and extending loans to the Electricity Generating Authority of Thailand to stabilise electricity costs.
However, Mr Auttapol acknowledged that while PTT operates as a state enterprise, it is a listed company and part of the capital market. Consequently, PTT must strike a delicate balance between fulfilling its role as a state enterprise and upholding its efficiency as a listed company. "We are cautious not to subsidise energy prices to a degree that could jeopardise our financial stability or affect our credit rating. We must approach these matters with great care," he said.