Thailand's leading integrated petrochemical firm, Integrated Refinery Petrochemical Complex (IRPC), plans to invest US$1.2 billion (Bt42.76 billion) this year for upgrading and expanding its plant and facilities over the next three years.

The plan follows the company's emergence from rehabilitation last year and its renaming from Thailand Petrochemical Industry (TPI) to IRPC.

Chief executive Piti Yimprasert said in an interview with The Nation that the company will spend about $1 billion to upgrade its refinery to improve the quality of its diesel output. This will aim to meet the Euro IV emission standards for new vehicles sold in the European Union countries by 2010.

Another $200 million will go towards establishing a new electricity plant because the production capacity of the existing plant is insufficient.

Piti said construction will start this year and take three years to complete.

In addition, the company will also expand its delivery capacity to its port at Map Ta Phut, from 1.5 million barrels to two million barrels per day, to cater to larger vessels and reduce its logistics costs.

Piti said IRPC will also participate in the coming round of bidding for independent power producers, seeking to construct and operate a coal-powered plant.

"We are confident of winning this bidding because we can take advantage of a good location of 6,000 rai (960 hectares) near to the port [so we can] transfer coal," he said, adding the company already operates a 90-megawatt coal-powered plant.

Half of IRPC's investment budget will come from its cash flow, which has now reached Bt20 billion, Piti said. The other half will either be borrowed from a bank or raised through a debenture issue, whichever offers the lowest interest rate.

Currently, the company's debt to equity ratio is only 0.4:1, after restructuring debts of Bt103 billion last year.

Piti said that by refinancing its debts, IRPC has succeeded in saving interest payments of up to Bt700 million a year. This has improved the company's ability to launch its three-year investment plan.

Meanwhile, the company is joining other companies under the PTT umbrella to introduce integrated management projects to reduce operational and financial costs. So far, IRPC and Thai Oil have launched 14 projects that are expected to reduce the costs of the two companies by Bt200 million to Bt300 million per year, Piti said.

In its efforts to reduce financial costs, it purchased crude oil last year without opening a letter of credit, saving about Bt300 million to Bt400 million.

Piti said IRPC expects to increase its margins this year as a result of its cost-management programme.

In the first nine months of last year, IRPC recorded total sales of Bt166.23 billion and a net profit Bt9.10 billion

Chalida

Ekvitthayavechnukul

Somluck Srimalee

The Nation