Aviation-fuel growth target cut

Corporate April 05, 2014 00:00

By The Nation

2,890 Viewed

Bangkok Aviation Fuel Services Plc (BAFS) has reduced its fuel sales growth target this year from 4.5 per cent to 3.5 per cent in view of the prolonged domestic political situation which has kept various airlines from increasing the number of flights to a

BAFS is also waiting clearer signals from the state with regards to the investment in the aviation fuel pipeline (FPT) to the northern region.

BAFS has completed the feasibility study and is ready to proceed with this Bt6.5 billion investment, according to the company’s director and chief executive ML Supadis Disakul.

For first quarter this year, BAFS reported 3.9 per cent growth in the volume of aviation fuel refuelling and 6 per cent revenue growth.

The political situation caused a reduction in the number of passengers visiting Bangkok and has had a greater adverse impact on short-route flights than the longer route ones.

In the absence of the prolong0d political conflict, the volume of fuel sold should grow by 3.5 per cent, which was satisfactory relative to other industries, Supadis said.

The Bt6.5 billion fuel pipeline investment to the North is expected to yield 12 per cent internal rate of return.

The investment will be split into one and two phases.

The first phase will involve laying a 12-inch diameter aviation fuel pipeline which will link with the fuel pipeline in Bang Pa-In an Phitsanulok, for a total distance of 387km and a maximum fuel transport capacity of nine billion litres a year.

The oil deport is located at Phitsanulok. The required construction budget is Bt3.5 billion and it will take 30 months to complete.

The second phase will involve the laying of 10-inch diameter aviation fuel pipeline from Phitsanulok to Lampoon – a total distance of 316km and a maximum fuel transport capacity of five billion litres a year.

The oil deport is located at Lampoon. The required construction budget is Baht 3 billion and will take 30 months to complete.

The benefit of the fuel pipeline to the North would be lower fuel prices for users in the northern region due to the much lower transportation costs.

However, if the government does not approve the BAFS investment, the company will acquire fuel transport by trucks.

BAFS will still be price competitive due to lower transportation cost, which the connection from Bang Pa-In offers in the form of a 50km shorter distance over other alternative routes.