On an area of 100 hectares, beside the Chao Phraya River, in the Bangchak area of Phra Khanong District, Bangkok, an oil refinery to process 5,000 barrels per day was established by the Ministry of Defense. They foresaw the necessity for Thailand to have the capability to carry out the entire process of oil production by itself, in order to influence the price of oil in the marketplace, not letting it be controlled entirely by international oil concerns, and to maintain emergency reserves. After the government was forced to sell its oil refinery to a company from a nation that was victorious in World War II
The oil refinery at Bangchak was completed in 1964. In that same year, the Thai government announced a tax on oil production within the country, so there was only one way to maintain profitability: Expand refining capacity to 20,000 barrels per day. Because the company did not attract enough investment for such expansion, the government offered a 15-year lease on the oil refinery, with the proviso that production capacity must be expanded. Finally, Summit Industrial Corporation (Panama) bid for this lease and successfully expanded production capacity over the next 4 years.
A rise in worldwide crude oil prices then led to a global economic crisis. When the Thai government considered adjusting retail oil prices, there were persistent objections from labor unions and student unions, including a demand for the government to nationalize the oil refinery. When the government did so, the oil refinery was found to have deteriorated substantially, requiring large amounts of fuel and accumulating losses of about 4 billion baht.
The First Step.. Started with Fresh Ideas
Bangchak Petroleum Public Company Limited was established by the Cabinet of Prime Minister Maj.-Gen. Prem Tinsulanon, in order to operate the old Bangchak oil refinery that had accumulated huge losses, and assigned important duties of maintaining energy security for the benefit of the Thai public. The company was established with the following goals:
This brought efficient management and activities that stressed the overall benefit of fostering a secure and progressive business; guidelines of self-reliance; and a corporate culture of creativity, ingraining in all staff that they should be “good people, knowledgeable, to benefit others.” Within 5 years, the company overhauled this failed business to achieve profits of 500 to 800 million baht per year. It became one of the top ten Thai businesses in terms of sales and was praised by influential members of the community as having set a good example, in terms of both organization and people. The company’s success at that time was always credited as a major success of the government.
Toward a Process for Community Relations
Development that comes from learning: This links Bangchak to a cycle of relationships serving as a true foundation for society. Bangchak partnered with the Si Prachan Agriculture Cooperative in Suphanburi Province to establish the first cooperative gas station, which was expanded to support agricultural organizations in the community to become owners of Bangchak gas stations, shops, oil trucks, and sewing activities. This helped them to learn organizational and business management skills with joint community ownership and was one more tiny effort in strengthening community economies, engendering self-sufficiency and a good quality of life. At the same time, the company was able to expand its retail market efficiently and develop product quality, all with the aim of helping to develop society, providing Thais greater opportunities for joint ownership. The Cabinet thus changed the company to Bangchak Public Company Limited. Now, there are more than 500 community organizations that work together in unity and growth with Bangchak, strengthening the economy, improving potential, and providing useful benefits to over 1 million agricultural families around the country.
Realizing a Sufficiency Economy
With its continuous work developing a good quality of life for Thai society, Bangchak embraces the philosophy of a sufficiency economy, in accordance with the suggestions of His Majesty the King. This philosophy directs our operations; for example, we have acted in conjunction with Mongkol Chaipattana Co., Ltd., in the establishment of Lemon Farm shops, which sell natural agricultural products from rural community organizations, providing health benefits to consumers, as well. This has grown into Lemon Farm Pattana Cooperatives, Ltd., providing a mechanism for Thais to help each other establish enterprises and provide benefits to society. Furthermore, Bangchak has assisted in the promotion of guidelines for a sufficiency economy to help communities become self-sufficient and encourage the use of Thai products, in order to save foreign currency. We have encouraged communities to sell their products at shops in our service stations, an additional useful service for Bangchak’s customers.
To the Future with Pride
The next step for Bangchak will continue to follow the principle of “developing a sustainable business, environment, and society” by coordinating community networks, in order to provide a “community platform network for community businesses.” This will lead to the development of organizational or business networks at all levels from local to provincial; and induce business organizations at the national level to belong to the people. Bangchak service stations are also providing opportunities for community business, in order to benefit both urban communities/consumers and rural communities, at the same time strengthening Bangchak itself. Examples of our useful projects include:
The Bangchak Ticket to Thailand, benefiting all parties concerned through an alliance of Thais, giving accumulated points and special discounts for consumers and encouraging donations to charitable organizations.
The Bangchak Community Product Project at service stations in tourist areas. This provides small markets in which communities can manage sales of grass-roots products while at the same time providing an important service to consumers filling up with gas.
Community management of oil-change services, in order to provide work for laborers from nearby areas and thus improving community self-reliance. We have provided an opportunity for the Krung Thai Taxi Cooperative to obtain financial help from the Community Organization Development Institute (formerly the Community Development Office) to rent and manage Bangchak service stations; i.e., to expand business opportunities for communities, from rural to middle-class urban areas.