Universal Adsorbents & Chemicals Plc (UAC) focuses on investing in the renewable energy industry in Thailand and is an importer and distributor of more than 200 types of chemical products and equipment for companies in the petrochemical, oil and gas and utilities industries. President and CEO Kitti Jivacate discusses the company's strategy and outlook.Why is UAC focusing on the biogas industry?
Kitti: Aims for 21 CBG projects in the North
Biogas is clean energy similar to other renewable energies but there are several more positive elements such as the ability to reduce waste and emissions, which help the environment and communities in Thailand. As well, biogas helps farmers in areas where it's difficult to grow other common crops such as tapioca, corn or rice, because the Napier grass grown to fuel biogas plants offers a high yield that can be cut six times per year, as we have experienced at our own plantation in Chiang Mai. Also, with the government promoting this industry by expanding the target of power production from biogas from 600 Megawatts to 3,600 MW, this is an opportunity that we cannot afford to miss.
How are UAC's current investments in the renewable energy sector progressing?
Our first joint venture, Bangchak Biofuel Co Ltd, has performed very well. It is currently operating above its capacity of 360,000 litres per day and we are exploring expanding it. We are also about to commission a compressed biomethane gas (CBG) project in Chiang Mai that takes the waste from pig farms and creates purified gas by adjusting the composition to create compressed natural gas. PTT has signed an offtake agreement for the resulting CNG with us for 15 years. We are also about to commission a petroleum production project in Sukhothai, with associated gas from the oil well flared and separated at our plant to make several products supply to PTT and other companies. And we have a joint venture with Hydrotek that manufactures and distributes water supply, water treatment and purified water to industrial zones.
How many additional projects is UAC looking at within the renewable energy sector?
Our aim is to have a total of 21 CBG projects in the northern and northeastern regions of Thailand. UAC's role will be a combination of investor, contractor, operator and maintenance provider depending on the nature of each project. We have also ensured that we have the necessary capital in place as we successfully completed a rights offering, public offering and issued warrants to investors. In addition to these 21 projects, we will continue to be aware of other opportunities that may present themselves within the sector.
How will UAC act as an engineering, procurement and construction (EPC) contractor for this sector?
We have just formed a JV with Sebigas, an Italian company with a long track record in the biogas industry in Italy. The aim of the company will be to build biogas plants for groups that are active in this industry. We decided to expand into EPC because the Energy Ministry has announced plans to expand biogas from 600 MW to 3,600 MW and UAC cannot invest in power production for every project. However, we now have the technology and the expertise and therefore can provide construction services as well.
What are the biggest risks facing your business today?
The expansion of the business requires additional manpower so we have to be able to recruit fast enough to ensure that our projects are able to be commissioned in a timely manner. Also government regulations and business laws in Thailand are outdated and need to be modernised in order to ensure that businesses such as ours can operate efficiently.
What impact will the Asean Economic Community have upon your business?
I believe that the AEC will have a positive impact on our industry as today energy prices are regulated or subsidised by the government. Once the AEC comes, over time free-market pressures will result in price increases that should benefit UAC. Also our neighbours may need biogas in the future and once UAC has a proven successful track record in this industry, then we may have the opportunity to expand there as well.
Where do you expect to see UAC in five years from now?
We are focusing on "Energy Transformation for the Future" and as such, UAC will be more of a renewable energy company. We aim to continue our trading business of chemical products and be an established investor in the renewable energy industry as well as a full-service provider in the biogas industry.
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