Changes to Thai CNG Fuel Market Stimulates New Investment
Scan Inter PCL (SCN), Bangkok-based operator of a fully-integrated natural gas business, has responded positively to the government’s change of policy to allow the private sector to invest in the expansion of the CNG service station network, as well as conditionally floating the CNG price. SCN says it provides the company opportunity to acquire at least 3 more service stations, both within and outside of the gas pipeline areas.
The estimated investment budget is approximately 200 million Baht (USD 5.6m) and this initiative is expected to generate higher CNG revenue, on top of the Company’s existing 7 CNG stations; 4 of which are owned and operated by the Company and 3 of which are under the cooperation with Susco PCL. It is anticipated that the 10 CNG service stations altogether will generate daily sales volume of over 450,000 kilograms, or equivalent to 2,000 million Baht (USD55.7m) annually.
Dr. LitteeKitpipit, Executive Director, Administrative & Marketing Director, SCN, commented that the Ministry of Energy’s policy to float the CNG price, conditional upon PTT’s price guarantee that does not exceed 13.50 Baht per kilogram before floating the price entirely to reflect its true cost in July, is advantageous to the Company since the floated price is expected to be about 50% cheaper than diesel in the long run. This in turn encourages confidence among CNG users and results in higher CNG demand in the future.
Meanwhile, this particular development has allowed other private sector companies and PTT Group to expand their CNG service station network all over the country in order to facilitate more convenience for customers.
Dr. Littee stated with regards to the government’s policy, the Company would still focus on the expansion and acquisition of the CNG service station network both within and outside of the gas pipeline areas through M&A (mergers and acquisitions) deals or investment in the development of at least 3 additional gas service stations.
“The government’s policy … will be able to generate higher revenue from natural gas-related businesses, especially outstanding growth in the natural gas service station business, eventually enabling SCN to become Thailand’s 2nd largest operator with highest CNG sales after the market leader PTT Group,” said Dr. Littee.
https://www.ngvglobal.com/blog/changes-to-thai-cng-fuel-market-stimulates-new-investment-0128