Cooperative Service Station: A shared value between Bangchak and communities


Bangchak Petroleum Public Company Limited

 
Bangchak has around 600 cooperative stations in its network scattering around the country, which have provided benefits for over 1.2 million households in the agricultural sector for over 25 years

INTRODUCTION

Many Thai farmers are found to stay remote from petroleum product manufacturers. They have to buy oil through several levels of middlemen and could inadvertently buy adulterated or unreasonably expensive products. Even worse, oil products are not sufficiently available in some areas. Having recognized the problems, Bangchak encouraged Thai farmers to run their own petrol stations so that they could be assured of good quality products with fair price. The concept of cooperative station was then framed in a bid to help farmers, who are the majority of the Thai society, upgrade their quality of life. Operated by local cooperative ventures or by each community’s own members, cooperative stations are intended to help strengthen community economy, thus making local people able to stand on their own feet. The first station of its kind was opened in 1990 in Supan Buri province.

Benefit for Thai agriculturalists include buying high quality petroleum products of international standards delivered direct to them from Bangchak refinery, farmers are provided with commercial skills, which can be of further use, cooperative stations can help strengthen the business of cooperative ventures, and cooperative stations can help increase competition in the local oil market, of which the benefit falls on general consumers. For Bangchak there is opportunity to expand its oil retail network to increase sales volume of finished products from Bangchak refinery. The cooperative station is a business model which delivers a shared value to the society through the business process and products (finished oil products), which reflects a support for farmers’ economic strength.

FRAMEWORK AND STRATEGY

Revenue, profit, and return on investment: Bangchak takes into consideration marketing potential of each location and cooperative management efficiency before making a decision on investment.

Suitable investment: Bangchak makes a consideration and decision on the form of investment. To reduce investment cost, some areas and resources of the cooperative are used.

Profit for cooperative members: In addition to high quality petroleum products delivered in correct volumes, cooperative members are given suitable shares of profit.

Support for modern management: Support is given for modern management in marketing, accounting, and IT areas.

ACHIEVEMENT AND IMPACT

Bangchak’s cooperative station project has continuously been developed due to the business nature that fits the Thai society. The project has been well supported by all parties, namely oil users and government agencies involved leading to its progress and successes. Today, Bangchak has around 600 cooperative stations in its network scattering around the country, which have provided benefits for over 1.2 million households in the agricultural sector for over 25 years. A working capital of more than 10,000 million baht is now flowing and creating extra income for farmers while helping to alleviate their hardship when crop prices are low and enhancing tangible income generation among farmers. In addition to dividends and rebates from oil purchases, members of the cooperative are given shares of profit from the cooperative business, which come in the form of social welfare, such as scholarships, financial support for the elderly, and medical assistance. Under the project, training on farming and other supplementary occupations is provided to help enhance community self-dependence.

FUTURE DIRECTION

Following the project success, Bangchak has a policy to further raise the potential of cooperative stations to make them more competitive in the oil retail industry. To materialise the policy, Bangchak pushes for station rebranding, which involves station face-lifting and clean toilets while having some non-oil businesses included in the station. All types of fuel will be made available at cooperative stations. The stations’ appearance will be standardized to make it more appealing to consumers. Customer base will therefore be expanded from cooperative members to general motorists. In response to the government’s promotion on clean energy, Bangchak has looked into a joint investment with an agricultural cooperative in a community solar farm. If the project can be up and running as planned, agricultural cooperatives will be able to go beyond the oil business to make more income for the community.
Bangchak Petroleum Public Company Limited is a Thai energy company dealing with imports of crude oil for refining into finished petroleum products. Alternative energy has now been included in Bangchak’s business in response to the growing environmental concern. Throughout three decades of its operations under the corporate culture that values development of a sustainable business in parallel with the environment and society, Bangchak allows communities to take part in its business