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ES POWER STARTS ETHANOL PRODUCTION

ES Power, a wholly owned subsidiary of Eastern Sugar Co, will start producing ethanol next month from a one-billion-baht ethanol production plant in Sa Kaeo.

Kittisak Wattanavekin, the deputy managing director of ES Power, said the company expected its investment to break even in 10 to 15 years. The company hopes for one billion baht in revenue when the plant reaches full capacity next year. It expects output of 20 million litres this year generating sales of 400 million baht.

ES Power received a licence in 2006 to produce 150,000 litres of ethanol daily. The plant was designed to use combined technologies from Sweden and the US to be able to use various types of feedstock smoothly. ''We don't face seasonal feedstock supply constraints as we can use either molasses, cane juice or tapioca and have it work smoothly without having to wait for the previous batch to complete,'' Mr Kittisak said.

The plant's location is close to its existing sugar factory and depot in Samut Prakan to enhance logistics efficiency. ''Seventy percent of total production will serve the export market as the demand is greater with a better price,'' said Mr Kittisak, noting the local price for ethanol was 18.01 baht a litre compared to 20 baht for exports. He added that it has secured contracts with buyers in Japan, Korea, Taiwan and India.

ES Power is seeking an additional licence to produce 350,000 more litres daily to better utilise high export market demand and price. ''Medical, paint and cosmetic industries use ethanol in their components, and while the demand is not as great as in the fuel segment, the price is better,'' Mr Kittisak said.

It is expected that the world price for ethanol will increase less than 10% this year, depending on Brazil's production of ethanol and the need for sugar worldwide.

The Thai government's tax treatment of ethanol as a similar class to alcoholic beverages has led to overcapacity in the domestic ethanol market, said Mr Kittisak. He said authorities had failed to promote the product properly to encourage demand. ''Many plants have suspended their operation because of this factor,'' he added.

Currently there are 11 ethanol plants operating out of 47 ethanol licensees, with total production of 1.57 million litres daily.By the end of the year, the addition of ES Power and two other plants should add 640,000 litres for a total domestic capacity of 2.21 million litres daily.

Operators are seeking ways to promote the ethanol market as domestic use is only 800,000 litres daily and total supply has vastly outpaced domestic demand.Thailand is the second-largest ethanol producer in Asia after China. It is also the world's second-largest sugar producer and the largest tapioca exporter, two building blocks extremely useful for ethanol production.

Parent sugar company pursues export riches
VICHAYA PITSUWAN

From : Bangkok Post Thursday August 14, 2008