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Published on March 4, 2008

PTT will spend more than Bt1 billion this year on upgrading facilities at 200 service stations on minor Bangkok roads and upcountry.

The move is part of its plan to increase non-oil income at a time when its retail-oil marketing margins are in the negative range.

PTT earlier spent Bt300 million to renovate 800 stations on major Bangkok roads and in other big cities.

Vitaya Wangchitaruck, executive vice president for retail marketing, yesterday said the strategy was considered vital, because oil prices continued to rise, and in order to soften the effects on consumers, PTT could not raise its own prices as quickly as expected.

"Profits from the oil and non-oil businesses used to be equal, but today the oil business generates no profit, while the non-oil business's margin is more than 50 per cent. Our plan can be a way to reduce losses. Some stations now generate more income from the non-oil business," Vitaya said. The 200 stations will be developed along the lines of three formats.

First, premium stations in urban areas will be turned into community malls or one-stop service centres. The number of such stations will be raised from 18 now to 20.

Second, most of the stations will undergo minor changes, with retail shops being introduced along with green areas and clean toilets.

Third, some will undergo even more minor changes, in which a small shop and more toilets are introduced.

After the upgrade, PTT's non-oil revenue is expected to rise 20 per cent. Retail rents will be raised another Bt100 million a year from about Bt300 million now, while the upgrade is expected to increase oil sales at the stations by 100,000 litres a month.

Also this year, PTT will spend Bt550 million on rebranding its Jet stations nationwide. The company is considering whether to replace all Jiffy stores in the stations with more 7-Eleven convenience stores or create its own brand.

"Negotiations on revenue-sharing with CP All should be concluded this month," he said. CP All, operator of 7-Eleven convenience stores, previously won a 10-year contract to run them in all PTT stations. The contract, which ends in 2012, stipulates that 85 per cent of revenue goes to PTT.

Jiffy stores generate monthly revenue of Bt2.2 million each, while 7-Elevens generate Bt1.2 million each, due to their different size.

Watcharapong Thongrung

The Nation