8/11/06 (The Edge News)  - Sugar Bun Corporation Bhd’s wholly owned sub-subsidiary Borneo Energy Sdn Bhd will receive US$9 million (RM33.21 million) in service fee per annum from Thailand’s biodiesel producer Suntech Palm Oil Co Ltd, for the provision of management and technical services.

In a statement on Nov 8, Borneo Energy’s holding company Borneo Oil & Gas Corporation Sdn Bhd executive director Abdul Hamid Ibrahim said Sugar Bun’s revenue would be boosted, as Borneo Energy would receive a service fee of US$750,000 per month estimated to commence from December 2006.

Suntech is one of the largest biodiesel producers in the region with a maximum production capacity of approximately 50,000 tonnes per month or 600,000 tonnes per year.

On Nov 2, Borneo Energy entered into three separate service agreements with Suntech, Siam Gulf Petrochemical Co Ltd and Transtech Energy Company Ltd for the provision of management and technical services.

However, the final quantum of service fees payable to Borneo Energy for the agreements with Saim Gulf and Transtech were still being negotiated.

Abdul Hamid said Borneo Energy would offer its expertise in the management of Siam Gulf’s existing refinery in Petchaburi Province, Thailand, and assist Siam Gulf’s expansion to produce 50,000 barrels of biodiesel per day from the current 30,000 barrels.

“The execution of the service agreement with Transtech is also part of our overall strategy for the oil and gas business whereby we will also be able to distribute our biodiesel through the existing 200 service stations owned by Transtech,” he said.

Abdul Hamid also said Borneo Energy would provide advice and undertake feasibility study to acquire up to another 500 service stations for Transtech.

“The oil, gas and energy-related sector under Borneo Oil and its subsidiaries will drive the growth of Sugar Bun from now on,” he added.

Meanwhile, Sugar Bun’s share price continued to fall on Nov 8. It closed 19 sen lower to RM1.58.

Sugar Bun shares have come under selling pressure since Nov 6 on talk that financial institutions were withdrawing the share-margin financing for the counter.