Union Petrochemical in JV to make solvents

The new plant is expected to start operations in two years' time.

Perajed Suwannapasri, deputy managing director, said yesterday that Union Petrochemical would hold 70 per cent and the partner would hold the remainder. A memorandum of understanding will be signed in October.

Plant construction will start early next year, he said.

Union Petrochemical will no longer import solvents once it has its own plant. Eighty per cent of the capacity will serve the domestic market.

Perajed said Union Petrochemical would like the factory to have an annual capacity of 40,000 tonnes, but its partner prefers 60,000 tonnes in order to meet the local demand for solvents, which is growing by more than 10 per cent per year.

Union Petrochemical has, therefore, decided to review its feasibility study on capacity. The joint venture would need funds of Bt300 million for an annual capacity of 40,000 tonnes, he added.

Perajed declined to name its partner, but said the company was experienced in chemicals production and needed a strong distributor, for which Union Petrochemical fits the bill.

If the plant's capacity is 40,000 tonnes, the joint venture should generate revenue of Bt1.2 billion to Bt1.4 billion per year, said Perajed.

Meanwhile, Union Petrochemical has approached Asia Part with a view to taking over the bunker-oil company. A deal is expected this year at a cost of Bt8 million, he said.

Asia Part has good connections with heavy industrial companies, but lacks a supply network.

Perajed said the acquired fuel-oil business would contribute revenue of Bt10 million per month.

Moreover, Union Petrochemical will enter the ethanol business by negotiating with local producers to become their distributor.

The company has a sales target of Bt2.8 billion for the year, up 33 per cent from last year's Bt2.1 billion.