Of the total investment, Bt1.26 billion will go towards building a plant with a production capacity of 300,000 litres a day. It will use 100,000 tonnes of crude palm oil a year as raw material for biodiesel production.

President Wiwan Boonyaprateeprat said 70 per cent of the funds for its biodiesel plant had been borrowed from Siam Commercial Bank. It will start construction in April and take 18 months to complete.

The company will also spend Bt900 million to set up a 9.95-megawatt power plant, generating electricity from palm bunches, that will start operation in July.

She said the company has already signed a contract to sell an annual 8.8 megawatts of electricity to the Electricity Generating Authority of Thailand for 25 years.

The remaining Bt60-million investment will focus on a facility producing electricity from wastewater from the process of extracting palm oil. It will have a production capacity of 1.5 megawatts.

After these three projects are completed, the company plans to enter the Stock Exchange of Thailand to mobilise funds to build an oleo complex, which will produce more value-added products.

The oleo complex will be used to extract substances such as fatty alcohol and fatty acid, used as raw materials in producing personal- and home-care products.

The company has hired Asia Plus Securities as its financial assistant.

However, Wiwan said palm-oil supplies were the main criteria to consider in setting up the complex because they are insufficient at present.

She said that she has talked to government authorities about expanding palm plantations in Surat Thani province.

There are 800,000 rai of palm plantations in the province, but they can be expanded up to 1.2 million rai.

Last year, demand for palm oil was 14.57 million tonnes, while supplies were only 6.2 million tonnes.

The shortfall had to be imported from other countries, particularly Malaysia .

Palm prices in Malaysia are cheaper than in Thailand. The average price for importing palm oil from Malaysia last year was Bt17 per kilogram, while Thailand's price was Bt25.

"The government should solve this problem quickly before most manufacturers turn to import palm oil from Malaysia to reduce their production cost," Wiwan said. "Otherwise, local palm farmers will face a tough situation in the future."

Chalida  Ekvitthayavechnukul

The Nation

Surat Thani