19/01/2007 (Nation Multimedia) - Maximising the potential of its palm-oil processing by-products, Vichitbhan Group, the country's leading palm-oil crushing concern, is investing almost Bt2 billion to set up biogas and biomass energy businesses, as well as a fertiliser plant.

The energy businesses are expected to generate income soon through the sale of electricity to the Provincial Electricity Authority (PEA), while the fertiliser will be supplied directly to palm oil growers and used on the firm's own plantations.

Palm-oil crushing millers, mainly in the South of Thailand, are expanding into the power-production business. The strategy is designed to gain maximum benefit from such palm-oil by-products as vapour, fibres, shells and kernels. The income generated helps the millers offset the risks posed by traditionally volatile palm oil prices.

Vichitbhan Group runs separate palm oil crushing mills under its Vichitbhan Palm Oil and Vichitbhan Plantation companies.

Krisada Chavananand, managing director of Vichitbhan Palm Oil, said the investment is part of a five-year business plan focusing on the palm-oil and energy businesses, ending in 2011.

Of the total investment, Bt460 million will be spent on renovation and expansion of facilities at Vichitbhan Palm Oil, which will install modern crushing processing lines. It will invest Bt300 million to set up the biogas power plant and another Bt1 billion in the biomass plant.

Another Bt160 million will be spent to set up a biogas power plant at Vichitbhan Plantation's manufacturing base. The plantation was established in 2005, as the group's second crushing mill, with an investment of Bt500 million.

Krisada said using the by-products of palm-oil crushing to produce power not only reduces production costs, but also turns waste into a value added product.

"We need advanced technology at the processing mill to ensure both high quality palm oil and less waste. In addition, we no longer have to shoulder the cost of handling our waste," Krisada said.

The group has adapted a computer-control system designed for oil refineries, scaling it down to fit the processing plants. This fully automated, computerised processing has increased efficiency, Krisada said.

The group has an average combined crude palm-oil production of 250,000 tonnes per year. Of that, 60 per cent to 70 per cent is exported, with the remainder bound for the local market.

The success of the investment plan will be a key factor in deciding whether to list the group on the Stock Exchange of Thailand in the near future, Krisada said.

Krisada, who is also president of the Palm Oil Crushing Mill Association, said the palm-oil industry has a bright future thanks to the rising demand for alternative energy sources. However, he said, the government needs to implement a clear policy on bio-diesel, particularly in terms of selecting fuel crops and enforcement of regulations.

"Having a clear policy will create a price guarantee for palm-oil growers and a supply of palm oil for bio-diesel producers," he said.

Thai palm-oil growers have endured fluctuating prices for decades due to uncertain demand and production problems. In recent years, the government has promoted biofuel products, boosting both palm fruit and crude palm-oil prices. The palm bunch price was quoted at Bt3.6 per kilogram last Tuesday, while crude palm oil fetched Bt23-Bt23.5 per kg.