President Adithep Bisalbutr said the rising cost of factory construction had prompted the company to adjust its expansion plan for its recently opened MEG plant, which currently has an annual production capacity of 300,000 tonnes.

Initially, the company planned to double the plant's capacity to 600,000 tonnes by 2008. However, the rising costs and decelerating demand for MEG, a raw material used in the textile and plastic industries, will see the company increase capacity by only 95,000 tonnes over the period.

PTT Chemical recently opened the first MEG plant in Thailand, operated by TOC Glycol Co Ltd, which is wholly owned by PTT Chemical. TOC and has registered capital of Bt5.395 billion. The factory required investment of Bt9.9 billion.

TOC Glycol's plant produces ethylene oxide and ethylene glycol, principally in the form of MEG, a key material in the production of polyester fibre for the textile industry and polyethylene terephthalate plastic.

Adithep said the cost of construction has skyrocketed recently, requiring additional investment in TOC's expansion. Therefore, the company has chosen to "de-bottleneck" by decelerating its expansion plan, which will now require only US$58 million (Bt2.2 billion).

"We will adopt a self-sufficiency policy, using our own money for the expansion plan. The money being spent may seem moderate but it is well-suited to the changing business environment," he said.

The increased production is aimed at replacing imports. By 2008, local demand for MEG is expected to reach 451,000 tonnes annually, compared to 426,000 tonnes this year.

PTT Chemical plans to invest a total of Bt45 billion to Bt46 billion in the next four years. The investment plan may be further adjusted in line with the performance of PTT's gas-separation plant. The company recorded first-half revenues of Bt34.58 billion, up 43.7 per cent on year. Net profit for the period was Bt8.321 billion, up more than 51 per cent on year.

Watcharapong Thongrung

The Nation