enclosure no. 3

Enclosure No. 3

Capital Advantage Co., Ltd.

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- TRANSLATION – The English Translation of the Independent Financial Advisor’s Opinion has been prepared solely for the convenience of foreign shareholders of Power Solution Technologies Public Company Limited and should not be relied upon as the definitive and official document. The Thai language version of the Independent Financial Advisor’s Opinion is the definitive and official document and shall prevail in all aspects in the event of any inconsistency with this English Translation.

No. 132/2018

December 19, 2018

Subject: Opinion of the Independent Financial Advisor Concerning Asset Acquisition Transaction of

Power Solution Technologies Public Company Limited

To: Shareholders Power Solution Technologies Public Company Limited

Attachment: 1) Business overview and operating performance of Biggas Technology Co., Ltd. 2) Business overview and operating performance of Thai Pipeline Network Co., Ltd.

3) Summary of Memorandum of Understanding (MoU) for Connection and Operation of Petroleum Pipeline Extension to North and Northeast Regions of Thailand.

Business overview and operating performance of Power Solution Technologies Public

Company Limited is presented in Part 1 of the Information Memorandum of Power Solution Technologies PCL., Re: Asset Acquisition Transaction Account 2 (Enclosure No. 2), enclosed

with the notification on the meeting of shareholders.

Reference: 1) Resolutions of the Board of Directors’ Meeting of Power Solution Technologies PCL. No.

7/2018, held on November 22, 2018. 2) Information Memorandum of Power Solution Technologies PCL. Re: Asset Acquisition

Transaction, dated November 22, 2018. 3) Report on capital increase of Power Solution Technologies PCL., dated November 22,

2018. 4) Information Memorandum of Power Solution Technologies PCL. Re: Allocation of

Ordinary Shares in a Private Placement, dated November 22, 2018.

5) Annual registration statement (Form 56-1) of Power Solution Technologies PCL. for the period ended December 31, 2016 – 2017.

6) Audited financial statements of Power Solution Technologies PCL. for the 12-month period ended December 31, 2015 – 2017, and reviewed financial statements for the 9-

month period ended September 30, 2018.

7) Audited financial statements of Biggas Technology Co., Ltd. for the 12-month period ended December 31, 2015 – 2017, and reviewed financial statements for the 9-month

period ended September 30, 2018 (no issuance of the reviewed financial statements). 8) Audited financial statements of Thai Pipeline Network Co., Ltd. for the 12-month period

ended December 31, 2015 – 2017, and reviewed financial statements for the 9-month period ended September 30, 2018 (no issuance of the reviewed financial statements).

9) Memorandum of Understanding (MoU) for Connection and Operation of Petroleum

Pipeline Extension to North and Northeast Regions of Thailand. 10) Affidavit, Memorandum of Association, and other information and documents, including

interviews with the management and relevant staff of Power Solution Technologies PCL., Biggas Technology Co., Ltd., and Thai Pipeline Network Co., Ltd.

Disclaimers: 1) The study results of Capital Advantage Co., Ltd. (“CapAd” or “Independent Financial Advisor” or “IFA”) in this report were based on information and assumptions provided

by the management of Power Solution Technologies PCL., Biggas Technology Co., Ltd., and Thai Pipeline Network Co., Ltd. and the information of the Company disclosed to

the public on the websites of the Securities and Exchange Commission (www.sec.or.th)

and the Stock Exchange of Thailand (www.set.or.th).

Opinion of the IFA -TRANSLATION- Power Solution Technologies PCL.

Capital Advantage Co., Ltd. /52

2) CapAd shall not be responsible for profits or losses and any impacts resulting from this transaction.

3) CapAd conducted the study with knowledge, skills and carefulness on the basis of professional ethics.

4) CapAd has considered and provided opinion based on the situation and information at

the present time. If such situation and information have changed significantly, the study results in this report may be affected.

The Board of Directors’ Meeting of Power Solution Technologies Public Company Limited (the

“Company” or “PSTC”) No. 7/2018, held on November 22, 2018, passed a resolution to seek an approval from the Extraordinary General Meeting of Shareholders No. 1/2019 to invest in the Petroleum Pipeline

Extension to Northeast Region Project from Saraburi to Khon Kaen (the “Project” or the “Northeast

Pipeline Project”), with an approximate investment value of Baht 9,768.82 million. The Project will be operated by Thai Pipeline Network Co., Ltd. (“TPN”), whose 100% ordinary shares are held by Biggas

Technology company Limited (“BIGGAS”), which is a subsidiary of the Company. The investment in the Northeast Pipeline Project is considered an asset acquisition transaction

by a listed company pursuant to the Notification of the Capital Market Supervisory Board No. TorChor.

20/2551 Re: Rules on Entering into Material Transactions Deemed as Acquisition or Disposition of Assets and the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of

Information and Other Acts of Listed Companies Concerning the Acquisition and Disposition of Assets B.E. 2547 (“Notification of Acquisition or Disposition”). The highest transaction size, based on total

value of consideration criteria, is equal to 152.24% based on reviewed financial statements of the Company and its subsidiaries as of September 30, 2018 (there has been no asset acquisition transaction

for a period of 6 months prior to this transaction). The transaction is deemed as Class 4 Acquisition

Transaction, pursuant to the Notification of Acquisition or Disposition, with the size equal to or higher than 100%, or a Backdoor Listing. However, this transaction meets all requirements stated in Section

24 of the Notification of Acquisition or Disposition for an exemption from reapplying to list on the stock exchange1, as follows:

(a) The acquired business is in a similar line of business or an mutually supporting business to

the Company; and (b) The Company has no policy to make a major change in its core business; and

(c) The group of companies, resulting from the acquisition of assets, is qualified for listing on the Stock Exchange of Thailand (“SET”); and

(d) There will be no material change in the composition of the board of directors, or in the

controlling power, or in the controlling shareholders of the Company. Therefore, the Company is required to prepare a report and disclose information on the asset

acquisition transaction to the SET, appoint an independent financial advisor to provide an opinion to shareholders, and obtain an approval from the shareholders’ meeting with a vote of not less than three-

fourths of total voting rights of shareholders who attend the meeting and are eligible to vote, excluding the votes of shareholders with conflict of interest.

In this respect, the Company has appointed Capital Advantage Co., Ltd. as the independent

financial advisor (“Independent Financial Advisor” or “IFA” or “CapAd”) to provide an opinion to the Company’s shareholders regarding reasonableness and fairness of price and conditions for the said

asset acquisition transaction. CapAd has studied details of the Information Memorandum on Asset Acquisition Transaction of

the Company, information obtained from interviews with executives and the management of the

Company and TPN, and documents received from the Company and TPN, such as assumptions used in the financial projection, the Petroleum Pipeline Extension to the Northeast Region Plan, the

Memorandum of Understanding for the Petroleum Pipeline Extension to the Northeast Region of Thailand between the Department of Energy Business, Ministry of Energy and TPN, documents related

to the transaction, information disclosed to the public, information disclosed on websites of the SET and the Office of the Securities and Exchange Commission (“SEC”), and financial information available

from various websites as a basis for expressing our opinion on such transaction. CapAd does not certify

1 Detail is presented in the Information Memorandum on Asset Acquisition of the Company (Enclosure No. 2 enclosed with this

Notification on the EGM), which is in line with CapAd’s opinion.



or warrant the accuracy or completeness of information provided to us by the Company, TPN, and/or executives, and/or the management of the Company and TPN.

The opinion of CapAd in this report is based on the assumption that all information and documents received are accurate and complete and reflects current operating environment and most

up-to-date information at the time of issuance of this report. However, there may be an incident having

a material impact on TPN’s and the Project’s business operation and financial projection, valuation and analysis of the Independent Financial Advisor, as well as decision of the shareholders on the asset

acquisition transaction. In rendering opinion to the shareholders, CapAd has studied and analyzed the information

mentioned above and has considered reasonableness, price, conditions and all relevant factors with due care and rationale in accordance with sound professional standards and in the interest of the

shareholders.

The documents appended to this opinion report of the IFA are deemed as an integral part of this report and are recommended to be considered by shareholders in conjunction with this report.

CapAd has considered and studied information on the asset acquisition transaction, the details

and results of which can be described as follows:



Abbreviation

“Company” or “PSTC” Power Solution Technologies Public Company Limited “BIGGAS” Biggas Technology Co., Ltd., a subsidiary of the Company “TPN” Thai Pipeline Network Co., Ltd., a subsidiary of BIGGAS and the Company “Thappline” Thai Petroleum Pipeline Co., Ltd. “Thappline Pipeline Connecting Station” Station connecting TPN’s and Thappline’s fuel pipeline in Sao Hai District, Saraburi. “MOU with Thappline” Memorandum of Understanding (MOU) for Connection and Operation of Petroleum

Pipeline Extension to North and Northeast Regions of Thailand between the Company and Thappline.

“Northeast Pipeline Project” the Petroleum Pipeline System to the Northeast Region Project or “the Project” (SRB – KK Pipeline or Northeast Pipeline). “Upper Northeast Region” A region covering 12 provinces, namely Khon Kaen, Udonthani, Loei, Nong Khai,

Mahasarakham, Roi Et, Kalasin, Sakon Nakhon, Nakhon Phanom, Mukdaharn, Bueng Karn, and Nong Bua Lamphu. (organized geographically, with respect to group of provinces expected to use services from TPN’s Fuel Depot in Ban Phai, Khon Kaen.)

“Mid and Partial Lower Northeast A region covering 4 provinces, namely Chaiyaphum, Yasothorn, Amnat Charoen, and Region” Ubon Ratchathani. “NEPC” National Energy Policy Council. “DOEB” Department of Energy Business, Ministry of Energy. “MoE” Ministry of Energy. “ONEP” Office of Natural Resources and Environmental Policy and Planning, Ministry of Natural

Resources and Environment. “MOU with DOEB” Memorandum of Understanding (MOU) for the Petroleum Pipeline Extension to the

Northeast Region between DOEB and TPN. “EIA” Environmental Impact Assessment report. “CSR” Corporate Social Responsibility report. “PTT” PTT Public Company Limited. “PTTGC” PTT Global Chemical Public Company Limited (A company under PTT Group). “TOP” Thai Oil Public Company Limited (A company under PTT Group). “SPRC” Star Petroleum Refining Public Company Limited (A company under PTT Group). “ESSO” ESSO (Thailand) Public Company Limited. “PTG” PTG Energy Public Company Limited. “Bangchak” Bangchak Corporation Public Company Limited. “FPT” Fuel Pipeline Transportation Limited. “PSTC-W1” Warrant to purchase newly-issued ordinary shares of PSTC No. 1. “Independent Financial Advisor” or Capital Advantage Co., Ltd. “CapAd” “SEC” The Securities and Exchange Commission. “SET” The Stock Exchange of Thailand. “Notification of Acquisition or the Notification of the Capital Market Supervisory Board No. TorChor. 20/2551 Re: Disposition” Rules on Entering into Material Transactions Deemed as Acquisition or Disposal of Assets and the Notification of the Board of Governors of the Stock Exchange of Thailand

Re: Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition or Disposition of Assets B.E. 2547 and the amendments.

“IRR” Internal Rate of Return. “NPV” Net Present Value. “Payback Period” Period of time required to reach the break-even point. “WACC” Weighted Average Cost of Capital.



Executive Summary

The Board of Directors’ Meeting of Power Solution Technologies Public Company Limited (the “Company” or “PSTC”) No. 7/2018, held on November 22, 2018, passed a resolution to seek an approval

from the Extraordinary General Meeting of Shareholders No. 1/2019 to make an investment in the

Petroleum Pipeline Extension to Northeast Region Project (the “Project” or the “Northeast Pipeline Project”), from Saraburi to Khon Kaen, with an approximate investment value of Baht 9,768.82 million.

The Project will be operated by Thai Pipeline Network (“TPN”), whose 100% shares are held by Biggas Technology Company Limited (“BIGGAS”), a subsidiary of the Company.

The Northeast Pipeline Project is the extension from the existing petroleum pipeline of Thai Petroleum Pipeline Co., Ltd. (“Thappline”)2 at Thappline’s Depot in Sao Hai District, Saraburi. The

pipeline is branched out to the northeastern region through Saraburi, Lopburi, Nakhon Ratchasima, and

Chaiyaphum, and ended at TPN’s 150 million-litre Depot in Ban Phai, Khon Kaen, covering a total distance of 350 Km. The Project will use pipeline with 16-inch diameter and commence construction in

the second quarter of 2019. The construction is estimated to take approximately 30 months and the Project is expected to commence operation in October 2021.

The highest size of the Asset Acquisition Transaction, based on total value of consideration

criteria, is equal to 152.24% based on reviewed financial statements of the Company and its subsidiaries as of September 30, 2018 (there has been no asset acquisition transaction for a period of 6 months

prior to this transaction). The transaction is deemed as Class 4 Transaction, pursuant to the Notification of Acquisition or Disposition, with the size equal to or higher than 100%, or a Backdoor Listing.

However, this transaction meets all requirements stated in Section 24 of the Notification of Acquisition or Disposition for an exemption from reapplying to list on the stock exchange.

Therefore, the Company is required to prepare a report and disclose information on the Asset

Acquisition Transaction to the Stock Exchange of Thailand (“SET”), and obtain an approval from the shareholders’ meeting with a vote of not less than three-fourths of total voting rights of shareholders

who attend the meeting and are eligible to vote, excluding the votes of shareholders with a conflict of interest.

In this respect, the Company has appointed Capital Advantage Co., Ltd. as the independent

financial advisor (“Independent Financial Advisor” or “IFA” or “CapAd”) to provide an opinion to the Company’s shareholders regarding reasonableness and fairness of price and conditions for the said

asset acquisition transaction. CapAd has considered the reasonableness of the Asset Acquisition Transaction and opined that

the investment in the Northeast Pipeline Project of TPN is deemed as a continuing project from the

investment in BIGGAS and a pilot project to enter into the petroleum pipeline business, which will generate a recurring income and, hence, ensure strong and sustainable growth in TPN’s performance.

It will also help to diversify risk associated with the Company’s current operating income as well as respond to the Company’s policy to develop into other promising fuel energy business segments which

have a strong growth potential. The Northeast Pipeline Project will not only generate benefits to TPN, BIGGAS and the

Company, but also help to enhance the country’s energy security. The Project corresponds with the

Ministry of Energy’s policy to promote an extension of the petroleum pipeline to the northern and northeastern regions to cater for the growing fuel demand in such regions. The Project will contribute

to a broader coverage of petroleum pipeline, enhancement of the country’s fuel transport efficiency, development of petroleum transportation infrastructure in the regional areas, and availability of

additional fuel reserves for the country. The Project will also help to promote the free trade policy under

which all fuel traders can access the service at an equal fee rate, while remaining competitive with road/rail fuel transport. Moreover, it will help to preserve the environment and national resources,

reduce road accidents, and respond to higher petroleum consumption in ASEAN, thus enhancing the country’s competitiveness in the move towards becoming a regional energy hub and connectivity with

neighboring countries in the future.

2 Thappline is an operator of petroleum transportation through pipeline, currently providing services in 3 routes – namely (1)

225-kilometers Sri Racha – Saraburi Petroleum Pipeline, terminating at the Fuel Depot in Sao Hai District, Saraburi, with a pipeline branching out to Fuel Depot at Don Muang Airport, (2) 67-kilometers Map Ta Phut – Sri Racha Petroleum Pipeline, and (3) 38-kilometers Jet Fuel Pipeline connecting Lam Luk Ka Fuel Depot – Suvarnabhumi Airport. Furthermore, Thappline owns 2 Fuel Depots, comprising 170 million liters Depot in Lam Luk Ka District, Pathumthani, and 170 million liters Depot in Sao Hai District, Saraburi. (Please see additional information on www.thappline.co.th.)



For the public, the Project ensures the sufficiency of fuel because the pipeline system is safe and stable. Residents in the northeastern region are able to use the fuel at a lower price than current

price due to a cheaper cost of fuel transportation by the pipeline system than by the road or rail transport system. This can ensure fairness of fuel price in regional development and reduce rural price

inequality.

As the parent company which is the direct major shareholder of BIGGAS and the indirect major shareholder of TPN, PSTC will benefit from recognition of a growing performance of TPN from the

investment in the Project which will generate long-term benefits for the Company and returns in the form of dividend income through BIGGAS, thus being beneficial to the Company’s shareholders.

The benefits that the Company will obtain from entering into this transaction are as follows: (1) Growth in income and improvement of operating performance of TPN and the Company;

(2) Diversification of investment into a recurring-income business that generates returns to the

Company; and (3) Investment in a sound and potential project that could provide an opportunity for future business

expansion for the Company as follows: (3.1) The Project delivers a reasonable rate of return.

(3.2) The Project corresponds with the Oil Plan 2015-2036 and accordingly is supported by the

government sector. (3.3) The Project receives cooperation from Thappline in the connection of TPN’s petroleum

pipeline with the pipeline at Thappline’s fuel depot, thus enabling the Project to cater for almost all major oil refineries and depots in the eastern region to TPN’s Khon Kaen Depot.

(3.4) The Project has a strong customer base. TPN’s main target groups are oil traders who are Thappline’s existing customers.

(3.5) The Project is granted privileges for investment promotion by BOI and, hence, is exempted

from import duty on machinery under such promotional privileges. (3.6) The Project has a growth potential with an opportunity to expand customer base or further

expand the petroleum pipeline to Lao PDR; and (3.7) The Project provides an opportunity for TPN to extend its aviation fuel pipeline

transportation service to airports in the northeastern region to be in line with the

Department of Airports’ investment plan for the northeastern airport development. (4) The Project’s social, environmental and national contribution, as follows:

(4.1) The Project helps to enhance the country’s fuel transportation efficiency and energy security.

(4.2) The Project provides benefits for the public and the business sector, enabling residents in

the northeastern region to use fuel at a lower price than current price. (4.3) The Project helps to decrease number of large fuel transport trucks, save national budget

for road repair, reduce road accidents and preserve the environment.

However, there are some disadvantages from entering into the transaction as follows: (1) TPN and the Company will bear higher debts, interest expenses and D/E ratio.

(2) Existing shareholders of the Company will encounter dilution effects (in case of successful PP of

new shares with the proceeds thereof to be invested in the Project). (3) TPN will have to provide, and thus incur expenses on, a bank guarantee of Baht 200 million to

Thappline for a period of 30 months. The transaction is also exposed to the following risk factors:

(1) Risk associated with a heavy reliance on Thappline in terms of pipeline connection, pipeline

management, business consultancy, and knowledge and experience from Thappline (2) Risk from TPN, BIGGAS and the Company having no direct experience in management of the

petroleum pipeline business (3) Risk involved with the case where the Company’s shareholders’ meeting does not approve the asset

acquisition transaction and, hence, TPN, BIGGAS and the Company must record the project expenses already paid by them

(4) Risk of the Project failing to perform as expected

(5) Risk concerned with government agencies, as follows: (5.1) Risk involved with application for a fuel depot construction permit from Tambon Ban Phia

Administration Organization, Ban Phai District, Khon Kaen Province (5.2) Risk involved with the regulatory body’s control over pipeline tariff in the future



(5.3) Risk associated with an increase of pipeline land lease fees by the Department of Highways, Department of Rural Roads, Royal Irrigation Department and State Railway of Thailand;

and (5.4) Risk involved with approval from ONEP, Ministry of Natural Resources and Environment,

and application for business license type 3 from the Ministry of Energy

(6) Risk regarding to management of communities that the fuel pipeline passes through and communities in the area of Khon Kaen Depot

(7) Risk of technological changes with respect to a growing use of electric vehicles, hydrogen-powered vehicles, etc., thus likely resulting in a drop in fuel consumption in the northeastern region; and

(8) Financial risk: (8.1) Risk in obtaining loans for TPN’s project investment and for PSTC’s and BIGGAS’s

investment in newly issued shares of TPN

(8.2) Foreign exchange rate risk resulting from TPN’s import of pipe, pump, valve and other equipment

(8.3) Risk of cost overrun; and (8.4) Risk of requirement for additional investment, for instance, if, during the system testing

and fuel transportation, the fuel pressure is inadequate, it may need to construct pressure

booster stations along the route Taking into account the objective and necessity of the transaction together with the

advantages, disadvantages, benefits and risk factors, the IFA is of the opinion that the transaction will enable the Company and TPN to gain more benefits and business opportunities with an acceptable and

controllable level of business risks, and will be substantially beneficial to society, the environment and the country. Therefore, the entering into the asset acquisition transaction is considered

reasonable.

CapAd has considered the appropriateness of TPN’s Northeast Pipeline Project and opined that

it is a project with potential to generate return to PSTC. The Project generates a net present value (NPV) of cash flows between Baht 1,979.52 – 3,387.09 million and an internal rate of return (IRR)

higher than its weighted-average cost of capital (WACC). In addition, the Project has a payback period

of 10.07 – 10.80 years from the commercial operation date (October 1, 2021). Therefore, CapAd is of a view that the Project is feasible and the investment in the Project is appropriate.

Scenario 1 Base Case Scenario 2

Discount Rate: 7.09% - 8.81%

Price of Diesel Fuel (Baht/litre) 20.00 27.65 30.00

Base Tariff (Baht/litre) 0.4150 0.4350 0.4450

Net Present value (NPV) of cash flows from the Project, as of September 30, 2018 (Baht million)

1,979.52 – 2,425.34 2,594.62 – 3,067.90 2,900.10 – 3,387.09

Internal Rate of Return (IRR) (% p.a.) 9.31 9.85 10.11

Payback Period (years) from September 30, 2018

13.80 13.30 13.07

Payback Period (years) from September 30, 20211/

10.80 10.30 10.07

Remark: 1/ From the date the Project starts commercial operation. TPN expects to start generating revenues on October 1, 2021.

When consider the reasonableness of the Asset Acquisition Transaction, and appropriateness of price and conditions of the transaction, CapAd is of an opinion that shareholders should

approve the Asset Acquisition Transaction.

Shareholders should study information in the documents enclosed with the Invitation to the Meeting of shareholders in arriving at their decisions. The approval of such Asset Acquisition Transaction

rests solely on considerations and decisions of shareholders.

CapAd, as the independent financial advisor hereby certifies that it has considered and expressed such opinion with sound professional standards and for the best interest of the shareholders.

Opinion of the Independent Financial Advisor can be detailed as follows.



Part 1: General Information on the Asset Acquisition Transaction

1. Nature and Details of the Transaction 1.1 Objective and Background of the Transaction

The Board of Directors’ Meeting of Power Solution Technologies Public Company Limited (the

“Company” or “PSTC”) No. 7/2018, held on November 22, 2018, passed a resolution to seek an approval from the Extraordinary General Meeting of Shareholders No. 1/2019 to make an investment in the

Petroleum Pipeline Extension to Northeast Region Project (the “Project” or the “Northeast Pipeline Project”), from Saraburi to Khon Kaen, with an approximate investment value of Baht 9,768.82 million.

The Project will be operated by Thai Pipeline Network (“TPN”), whose 100% shares are held by Biggas Technology Company Limited (“BIGGAS”), a subsidiary of the Company.

The Northeast Pipeline Project will be extended from the existing fuel pipeline system of Thai

Petroleum Pipeline Co., Ltd. (“Thappline”) at Thappline’s Depot in Sao Hai District, Saraburi. The pipeline is branched out to the northeastern region through Saraburi, Lopburi, Nakhon Ratchasima, and

Chaiyaphum, and ended at TPN’s 150 million-litre Depot in Ban Phai, Khon Kaen, covering a total distance of 350 Km. The Project will use pipeline with 16-inch diameter and commence construction in

the second quarter of 2019. The construction is estimated to take approximately 30 months and the

Project is expected to commence operation in October 2021. The Project follows a guideline from the resolution of the National Energy Policy Committee

(“NEPC”) No. 3/2015, dated August 13, 2015, allowing private operator to develop the project in order to encourage free competition. Governmental agencies will provide support and lease rights of way at

appropriate rates and validity period. The Cabinet acknowledged such NEPC’s resolution on September 30, 2015. TPN signed a Memorandum of Understanding for the Petroleum Pipeline Extension to

Northeast Region Project with Department of Energy Business, Ministry of Energy, on August 31, 2016.

The transaction is deemed as an acquisition of asset3 pursuant to the Notification of the Capital Market Supervisory Board No. TorChor. 20/2551 Re: Rules on Entering into Material Transactions

Deemed as Acquisition or Disposal of Assets and the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure Of Information and Other Acts of Listed Companies Concerning

the Acquisition or Disposition of Assets B.E. 2547 (“Notification of Acquisition or Disposition”), with the

highest transaction size equal to 152.24% based on total value of consideration criteria, with reference to the reviewed consolidated financial statements of the Company for the period ended September 30,

2018, and a total investment value for the Project of Baht 9,768.82 million. However, the investment value used in the transaction size calculation is Baht 9,581.82 million4 (the Company has not entered

to any asset acquisition transaction for a period of 6 months prior to this transaction). This transaction,

therefore, is categorized as a Class 4 Transaction with a size equal to or higher than 100%, or a backdoor listing transaction. However, this transaction meets all requirements in the Notification of

Acquisition or Disposition for an exemption from reapplying to list on the stock exchange5, as follows: (a) The acquired business is similar to or supports the existing business; and

(b) The Company has no policy to make a significant change to its core business; and (c) The group of companies, as a result of the acquisition of assets, is qualified to list on SET;

and

(d) There is no material change to the board of directors and the controlling power of the Company, or the controlling shareholders.

1.2 Date of the Transaction

TPN will enter into the Asset Acquisition Transaction after obtaining an approval from the

Extraordinary General Meeting of Shareholders of the Company No.1/2019, to be held on January 11, 2019, and comply with applicable laws. Construction of the Project will commence after TPN has fulfilled

conditions precedent specified in Part 1, Section 1.9.

3 TPN’s Asset Acquisition Transaction for the Petroleum Pipeline Extension Project has not been included in the calculation of

transaction size of the Company’s Asset Acquisition Transaction on September 22, 2017 for the investment in BIGGAS because the Project was under a feasibility study and there was no certainty for a decision to invest in the Project. 4 Please see details of the calculation in Part 1, Section 1.7, of this report. 5 Please see Footnote 1.



1.3 The Parties Involved and Their Relationships (as of November 15, 2018) (1) Land

(1.1) Letters of consent for rights of way for pipeline installation, for a distance of approximately 350 Km., with governmental entities.

Lessee : Thai Pipeline Network Co., Ltd. (TPN)

Lessor : Department of Highway and Department of Rural Roads that the fuel pipeline passes through

Relationship between lessor and lessee

: No relationship with the Company as defined under the Notification of Capital Market Supervisory Board No. TorChor. 21/2551 Re: Rules on Connected Transaction

Remark: Include letters of consent for rights of way from the Royal Irrigation Department and State Railway of Thailand.

(1.2) Acquisition of 1.6 Km. of Land for Pipeline Placement. Buyer : Thai Pipeline Network Co., Ltd. (TPN)

Sellers : Under agreement preparation process (Expect to be completed within December 2018)

Relationship between buyer and sellers


Remark: Some plots of land are under transferring process, which shall takes place before the shareholder’s approval on Jan 11, 2019.

(1.3) Acquisition of Land for Construction of 11 Block Valve Stations along the Pipeline Route Buyer : Thai Pipeline Network Co., Ltd. (TPN)

Seller : Under agreement preparation process (Expect to be completed within December 2018)

Relationship between buyer and seller


Remark: Some plots of land are under transferring process, which shall takes place before the shareholder’s approval on Jan 11, 2019.

(1.4) Acquisition of Land for Construction of Fuel Depot in Khon Kaen6 Buyer : Thai Pipeline Network Co., Ltd. (TPN)

Sellers : 25 individuals*.

Relationship between buyer and sellers


Remark: * Plots of land to be acquired comprise 25 title deeds. Some sellers own more than one title deed and some title deeds are owned by more than one seller. The acquisition of land is carried out through 2 agents, who have no relationship with the Company. TPN is in a process of merging all the title deeds into one.

(1.5) Lease of Land in Saraburi Depot for the Construction of Pipeline Extension (Pump Substation and Fuel Tank Service) to be Connected with Thappline’s Pipeline

Lessee : Thai Pipeline Network Co., Ltd. (TPN)

Lessor : Thai Petroleum Pipeline Co., Ltd. (Thappline)

Relationship between lessee and lessor


(2) Advisory Agreement7

(2.1) Engineering Study

6 BIGGAS became shareholder of TPN since October 20, 2017 and the Company became shareholder of BIGGAS since December

21, 2017, making BIGGAS and TPN subsidiaries of the Company. Prior to being a subsidiary of the Company on December 21, 2017, TPN has entered into agreements relating to the Petroleum

Pipeline Extension Project with various counterparties. Total value of the agreements is equal to Baht 187.00 million. Details of the agreements are as follows:

(1) Agreement to purchase and sell land for construction of Fuel Depot in Khon Kaen, dated November 30, 2017, with a total value of Baht 116.00 million

(2) Agreement for Engineering Study, dated April 1, 2016, with a total value of Baht 18.30 million (3) Agreement for Project Consultant and Management, dated January 15, 2017, with a total value of Baht 26.40 million (4) Agreement for Environmental Impact Assessment (EIA) Consultant, dated May 23, 2017, with a total value of Baht

13.50 million; and (5) Agreement for Corporate Social Responsibility (CSR) Consultant, dated November 1, 2017, with a total value of Baht

12.80 million. All agreements have not been included in calculating the transaction size because they had been entered into before TPN became a subsidiary of the Company. Furthermore, in acquiring TPN’s ordinary shares, the Company took into account these agreements in the valuation of BIGGAS ordinary share that the Company had acquired for Baht 1,350 million, funded by the capital increase. 7 Please see Footnote 6.



Employer : Thai Pipeline Network Co., Ltd. (TPN)

Contractor : Penspen Services Co., Ltd.

Relationship between employer and contractor


(2.2) Project Consultant and Management Employer : Thai Pipeline Network Co., Ltd. (TPN)

Contractor : Polytechnology Co., Ltd.



(2.3) Environmental Impact Assessment Study and Report (EIA)


Contractor : En-Tic Co., Ltd.



(2.4) Corporate Social Responsibility Consultant (CSR)


Contractor : Daoreuk Communications Co., Ltd.



(2.5) Project Management Consultant (PMC) Employer : Thai Pipeline Network Co., Ltd. (TPN)

Contractor : Under agreement preparation process (Expect to be completed within December 2018)



(3) Construction and Operation (3.1) Construction of Petroleum Pipeline


Contractor : Under bidding process (Expect to conclude within January 2019).



(3.2) Construction of Khon Kaen Depot Employer : Thai Pipeline Network Co., Ltd. (TPN)

Contractor : Under bidding process (Expect to conclude within January 2019)



(3.3) Petroleum Pipeline Connection Agreement with Thappline Employer : Thai Pipeline Network Co., Ltd. (TPN)

Contractor : Thai Petroleum Pipeline Co., Ltd. (Thappline)



(3.4) Operating Service Agreement with Thai Petroleum Pipeline Co., Ltd.


Contractor : Thai Petroleum Pipeline Co., Ltd. (Thappline)



1.4 General Characteristic of the Transaction

The Board of Director’s Meeting No. 7/2018 of the Company, held on November 22, 2018, passed a resolution to approve TPN, an indirect subsidiary of the Company, to make an investment in

the Petroleum Pipeline Extension to Northeast Region Project from Saraburi to Khon Kaen, following a feasibility study that TPN had been conducting since 2016.

The Extension of the Petroleum Pipeline from Saraburi to Khon Kaen has a total investment

value of Baht 9,768.82 million, requires approximately 30 months for construction, and is expected to commence operation in October 2021. The Project originates from Thappline’s Fuel Depot in Sao Hai

District, Saraburi; branches out to the Northeast Region through Saraburi, Lopburi, Nakhon Ratchasima,



and Chaiyaphum; and ended at TPN’s 150 million liters Fuel Depot in Ban Phai, Khon Kaen. Total distance of the Project is approximately 350 kilometers.

TPN will lease land from the Department of Highway, Department of Rural Roads, Royal Irrigation Department, and State Railway of Thailand, in order to install pipeline mainly in the areas of

Department of Highway, with a lease period of approximately 30 years. Moreover, TPN will acquire

additional land, with a distance of 1.6 kilometers, for approximately Baht 15.0 million. In addition to the land to lease and purchase above, TPN will acquire plots of land to build 11

Block Valve Stations, with a combined area of 10-0-2 rai at total value of Baht 28.10 million, and a new plot of land with an area of 202-1-91.2 rai for construction of fuel depot in Khon Kaen at a total value

of Baht 116.0 million (ownership of the land was transferred to TPN on May 9, 2018). Moreover, TPN will rent a 6,536-sq.m. plot of land in Saraburi to set up Pipeline Connecting Station (Pump Station and

Depot) to connect with Thappline’s pipeline (“Thappline Pipeline Connecting Station”).

The construction of petroleum pipeline system, fuel depots, Block Valve Stations, and Thappline Pipe Connecting Station will commence when the Environmental Impact Assessment (EIA)

report is proposed to and approved by the Office of Natural Resources and Environmental Policy and Planning (“ONEP”), Ministry of Natural Resources and Environmental.

Summary of the Petroleum Pipeline Extension to the Northeast Region Project

Thappline allowed TPN’s pipeline to integrate with its system at the fuel depot in Sao Hai District, Saraburi. Thappline’s Board of Directors’s and shareholders’ meetings approved in principal to let TPN, who was willing to invest in the Fuel Pipeline Project to the North and the Northeast Region from Saraburi, integrate its pipeline system with Thappline’s with conditions proposed by TPN.

August 1, 2016

National Energy Policy Council’s (“NEPC”) meeting No. 3/2015 passed a resolution to allow existing business operator, or fuel trader, or other private company to develop the Extension of the Fuel Pipeline Transportation System Project to the North and Northeast in order to encourage free competition, with supports from governmental agencies.

August 13, 2015

September 30, 2015 The Cabinet acknowledged the aforementioned NEPC’s resolution.

October 13, 2015

Department of Energy Business (“DOEB”), Ministry of Energy, issued a letter PhorNor. 0407/9765 informing that it had no objection to allow TPN to develop the Extension of the Fuel Pipeline Transportation System Project to the Northeast Region, with a condition that the Project was an extension of Thappline’s.

August 31, 2016 DOEB and TPN signed an MOU on cooperation to develop the Extension of the Fuel Pipeline Transportation System Project to the Northeast Region, whereby DOEB would support TPN in coordinating with relevant government agencies for the

development of the Project, granting an operating license to TPN, and providing suggestions, recommendations, and opinions on the development of the Project to align with the government’s policy.

TPN had to prepare EIA report, whereby o The EIA report had to be approved by ONEP, Ministry of Natural Resources and

Environment, within March 2019*. o Design of fuel pipeline system and depot had to be completed within October 2018. o Application for an operating license with DOEB within June 2019*. o Construction of the fuel pipeline system and depot had to be completed within August

2021. o Commissioning and commercial operation of the fuel pipeline system and depot within

October 2021. * Amended under approval from DOEB on August 2, 2018.

Thappline and TPN singed an MOU on connecting and implementing the Extension of the Fuel Pipeline Transportation System Project to the North and Northeast Region. (“MOU with

Thappline”)

May 23, 2017

Plan, Implementation Period, and Progress of the Project



The Company expects that investment budget for the Petroleum Pipeline Project, excluding value of lease of land and operation agreement which is considered an annual operating expense, is

approximately Baht 9,768.82 million. For the Petroleum Pipeline Extension Project, TPN received a support from DOEB in order to

achieve the objective to transport fuel to provinces in the northeastern region more conveniently and

safely. TPN submitted the EIA report on August 24, 2018, and expected ONEP to approve it within March 2019.

Plan, Implementation Period, and Progress of the Project

Please see details of the Project in Part 1, Section 1.5, of this report.

Located/Acquired land for fuel depot in Ban Phai District, Khon Kaen. The Company received an ownership transfer of a plot of land with an area of 202-1-91.2 rai on May 9, 2018.

From May 2017

TPN contracted En-tic Co., Ltd. for Environmental Impact Assessment (EIA) study and report on May 23, 2018.

Prepared an EIA report, which needed an approval from ONEP, Ministry of Natural Resources and Environment.

Progress: (1) TPN submitted the EIA report to ONEP on August 24, 2018. (2) TPN expects the EIA report to be approved by ONEP within March 2019.

From May 2017 – Nov 2018

Applied for investment promotion from the Board of Investment (BOI), which granted the Project a BOI certificate on May 9, 2018, including the amendment on paid-up capital on November 13, 2018.

From May 2017 – Nov 2018

Completion of project design by PMC selected by TPN. Request of construction permits from governmental agencies, and hiring of

contractors for pipeline installation and fuel depot construction. Procurement of pipes and equipment (including manufacturing and transportation

period).

First quarter 2019

Construction of Fuel Depot. Construction of Fuel Pipeline Transportation System.

Second quarter 2019 – Third quarter 2021

Negotiate/prepare draft agreements with Thappline, with respect to MOU with Thappline, including (1) The Pipeline Connection Agreement, (2) Operating Service Agreement, and (3) Rental Agreement. Progress: Both parties agree in detail. All agreements are valid for 20 + 10 years (under existing conditions) and expected to be signed after PSTC obtains an approval

from its shareholders.

Within Dec 2018

TPN selects EPC and equipment suppliers. Within Jan 2019

Request for permit to operate fuel pipeline transportation system and depot. Commissioning of fuel pipeline transportation system and depot.

Third quarter 2021

Expect to commence the operation of the Fuel Pipeline Transportation System and the Fuel Depot

Fourth quarter 2021



1.5 Detail of the Acquired Asset TPN will make an investment in the 350-km Petroleum Pipeline Extension to Northeast Region

Project, from Saraburi to Khon Kaen, after obtaining an approval from the EGM No.1/2019, to be held on January 11, 2019, and meeting all conditions precedent of the Transaction (Details as shown in Part

1, Section 1.9, Conditions Precedent of Entering the Transaction) and related regulations of the

governmental agencies involved. Total value of the investment is approximately Baht 9,768.82 million. TPN was established in 2015, with a registered capital of Baht 100.0 million, to operate the

Petroleum Pipeline Extension to Northeast Region Project, which is the center of fuel distribution to the region and the ASEAN Economic Community (AEC), including Laos, Vietnam and Cambodia. The starting

point of this project is at Thappline’s fuel depot in Sao Hai District, Saraburi. The pipeline branches out in the northeast direction, passing Saraburi, Lopburi, Nakhon Ratchasima, Chaiyaphum, and terminates

at TPN’s fuel depot in Ban Phai District, Khon Kaen. Total distance of the pipeline is approximately 350

kilometers. The Project uses 16-inch diameter pipe, with a maximum capacity of approximately 6,000 million liters per year. The development and construction of the Project shall take around 30 months.

The Project is expected to commence commercial operation within October 20218, unless an extension is granted.

The Petroleum Pipeline Extension Project of TPN is under an MOU, dated August 13, 2016,

between the Department of Energy Business (“DOEB”), Ministry of Finance, and TPN. The implementation of such project is carried out with an approval from the National Energy Policy Council

with an objective to make fuel transportation to provinces in the northeastern region more convenient. The implementation of the Project requires cooperation from several government agencies,

namely Department of Highway and Department of Rural Roads, on rights of way for pipeline

installation (most of which are located in Highway areas), and Muang Phia Sub-District Administration Organization, Ban Phai District, Khon Kaen, for construction permit to build fuel depot. Total distance

of the Project is approximately 350 kilometers9. Diagram of the pipeline route is shown below:

8 In the MOU on a cooperation to implement the Extension of the Fuel Pipeline Transportation System to the Northeast Region

between DOEB and TPN, totaling 3 pages, there are no clauses mentioning any penalty in the event that TPN is unable to honor the cooperation in the specified timeframe. 9 Including rental of areas, covering approximately 5% of the Project, from Royal Irrigation Department and State Railway of

Thailand.

Thappline’s origination:

Refinery in Rayong and Chonburi

Destination:

TPN’s Fuel Depot, Ban Phai District, Khon Kaen

Connection:

Thappline’s Fuel Depot, Sao Hai District, Saraburi



Diagram of the Fuel Pipeline Transportation System to the Northeast Region of TPN

Diagram of Petroleum Pipeline to the Northeast Region and the Pipeline Route

Source: PSTC

Saraburi – Khon Kaen 16-inch pipe/ 350-km distance

Fuel Depot, Sao Hai

District, Saraburi

5 km.

Highway No. 362

(Dept of Highway)

Highway No. 1

(Dept of Highway) 11 km.

Highway No. 3385

(Dept of Highway) 7km.

5 km.

Highway No. 21

(Dept of Highway)

24 km.

Highway No. 3334

(Dept of Highway)

Highway No. 3017


23 km.

Highway No. 2089

(Dept of Highway)

Highway No. 2256


140 km.

Highway No. 201

(Dept of Highway)

Highway No. 229


Fuel Depot, Ban Phai

District, Khon Kaen

350 km.



Aerial Photograph of Fuel Depot, Ban Phai District, Khon Kaen

Source: PSTC and Google Earth

Fuel Depot Layout, Ban Phai District, Khon Kaen

Source: PSTC

N



Details of the Petroleum Pipeline Extension to the Northeast Region Project The Petroleum Pipeline Extension to the Northeast Region Project consists of the following main

structures: a) Petroleum Pipeline, 350 kilometers in distance, originating from Thappline’s Fuel Depot in

Sao Hai District, Saraburi, passing through Lopburi, Nakhon Ratchasima, Chaiyaphum, and terminating

at TPN’s Fuel Depot in Ban Phai, Khon Kaen. The pipeline passes through 5 provinces, 22 districts, and 71 sub-districts. Around 95% of areas for pipeline installation are under the jurisdiction of Department

of Highway and Department of Rural Roads. The Project will use 16-inch diameter steel pipe with extra toughness, according to the

Petroleum Quality Institute of America (API), 3LPE coating on the outer surface, Cathodic Protection system installed. The pipeline will be installed underground at no less than 1.5 meters deep from the

surface with concrete slabs on top for protection. In addition, there will be warning signs installed along

the pipeline route pursuant to the DOEB’s regulation. Types of petroleum to be transported by the pipeline include H-BASE diesel, Gasohol 91 (GB1)

and 95 (GB2), and Premium-grade Benzene (ULG). The Petroleum Pipeline System will be controlled and supervised automatically through an

automatic system called Supervisory and Data Acquisition (SCADA), and monitored by employees

throughout 24 hours. b) Fuel Depot in Ban Phia Sub-district, Ban Phai District, Khon Kaen, is located on a plot of

land covering an area of 202-1-91.2 rai and has a capacity of 150 million liters. The depot takes fuel from Thappline’s pipeline system at Sao Hai District, Saraburi, and stores in a reserve tank. The depot

is equipped with Pumping System and Loading Meter for conveniently dispensing to fuel trucks. The fuel dispensing system can be used for all products and clients.

Land for the Project Land under ownership of TPN, without any obligation, can be divided into 3 groups.

(1) Land for pipeline installation, covering a distance of 1.6 kilometers and an area of 18-1-23 rai, is located in Muang District and Munchakiri District, Khon Kaen.

(2) Land for 11 Block Valve Stations along the pipeline route, covering combined areas of 10-

0-2 rai (please see additional details in Information Memorandum of the Company Account 1, Section 4 (Enclosure No. 2), attached to this Invitation to the EGM).

(3) Land for construction of fuel depot, covering an area of 202-1-91.2 rai, is located in Ban Phai District, Khon Kaen, and is under a process of merging 25 title deeds into one.

Petroleum Pipeline Route Use secondary highways instead of main Highway No. 2 (Mittraphap Highway). The pipeline route starts at Fuel Depot in Saohai District, Saraburi and follows the irrigation

canal. It then passes through Highway No. 362 (Saraburi bypass); Highway No. 1 (Phahonyothin Road);

Highway No. 21 (Saraburi – Lom Sak) at Phu Kae junction, Saraburi; Highway 3375 at Phatthana Nikom District, Lopburi; Rural Highways in Saraburi and Lopburi; Highway No. 2256 in Tha Luang District,

Lopburi; Highway No. 201 through Dan Khun Thot District, Nakhon Ratchasima; Highway No. 229 crossing Chi River; and ends in Ban Phai District, Khon Kaen.

Service Areas and Key Customers To support fuel transportation to the upper northeastern region (covering 12 provinces,

namely Khon Kaen, Udonthani, Loei, Nong Khai, Mahasarakham, Roi Et, Kalasin, Sakon Nakhon, Nakhon

Phanom, Mukdahan, Bueng Karn, and Nong Bua Lamphu) and middle and part of lower northeastern region (covering 4 provinces, namely Chaiyaphum, Yasothorn, Amnat Charoen, and Ubon Ratchathani).

This is a connecting route to Lao PDR through Vientiane, Sawannakhet, and Tha Kheak in the future.

Key customers include main fuel retailers, namely PTT Group (comprising PTTGC, SPRC,

and Thai Oil), ESSO, Chevron, Shell, etc. They currently are customers of Thappline and have demands for fuel transportation through the pipeline to the northeastern region for cost reduction and safety

purposes.

In addition, TPN sees an opportunity for fuel transportation to Lao PDR. Currently, fuel is transported across border into Lao PDR by trucks. This is another important group of customer with

demand for fuel pipeline from refineries to terminal depot in Khon Kaen, then it will be transported by trucks into Lao PDR. Fuel traders in Lao PDR also express interest in this Project.



1.6 Total Value of Consideration and Basis of Determining the Value of Consideration

Total Value of Consideration Total cost of the Petroleum Pipeline Extension to the Northeast Region Project is approximately

Baht 9,768.82 million, comprising of the following items:

(1) Land of approximately Baht 159.10 million, comprising: - Land for pipeline installation, with a total distance of 1.6 kilometers: TPN is acquiring a plot of

land with an area of 18-1-23 rai with total value of Baht 15 million. It expects to complete the acquisition within December 2018.

- Land for Block Valve Stations: TPN is acquiring plots of land with combined areas of 10-0-2 rai with total values of Baht 28.10 million. It expects to complete the acquisition within December

2018.

- Land for fuel depot in Khon Kaen: TPN acquired plots of land with combined areas of 202-1-91.2 rai in Ban Phai District, Khon Kaen with total values of Baht 116.00 million, on May 9, 2018.

Land acquisition prices are determined by negotiations between TPN and sellers through agents and comparison of prices of land in the neighborhood of the fuel depot construction site

in Khon Kaen and Thappline Pipeline Connecting Station.

(2) Consultant fees of approximately Baht 192.00 million, comprising Project Management Consultant (PMC), Engineering Study Consultant, Project Consultant and Management, Environmental Impact

Assessment Consultant, and Corporate Social Responsibility Consultant. Such fee is quoted by each service provider. Payment term is based on installments as specified in the agreement. These

agreements had been entered into before TPN became a subsidiary of the Company. (3) Construction of petroleum pipeline and depot of approximately Baht 8,850.00 million. The

construction is based on a Turnkey basis. Total construction cost was estimated by Penspen

Services Co., Ltd., an expert in Engineering Study who has experience in design and construction of storage tanks for High Speed Diesel (HSD), water storage with equipment for fire extinguisher,

and other related systems for TPN. Payment term is in installments based on the progress of the construction. The Company is in a process of selecting contractors.

(4) Land rental fee paid to the Department of Highways and the Department of Rural Roads for the

installation of pipeline. The rent shall be for a period of 33 years with an approximate value of Baht 567.72 million10.

Method Used for Determination of Total Value of Consideration

The determination of total value of the Petroleum Pipeline Extension Project is based on its

return derived from generally accepted valuation approach by the Company’s financial advisor (Trinity Securities Co., Ltd.). The Company is of the view that Discounted Cash Flow is the most appropriated

valuation approach for this Transaction. IRR for the Project is approximately 12.12% p.a., which is higher than the Company’s Weighted Average Cost of Capital (WACC) of 7.75%, reflecting business

operation risk (Beta) comparable to Bangkok Aviation Fuel Services Public Company Limited (BAFS). Net present value of the Project is equal to Baht 5,048.70 Million and a payback period is approximately

13.63 years.

1.7 Calculation of Transaction Size

Calculation criteria Calculation Transaction size

1. Net Tangible Asset (NTA) Unable to calculate as it is not an acquisition of securities. N/A

2. Net Operating Profit Unable to calculate as it is not an acquisition of securities. N/A

3. Total Value of Consideration Baht 9,581.821/ million / 6,293.912/ million 152.24%

4. Value of issued securities of the listed company in consideration of the acquisition of assets

Unable to calculate as there is no issuance of securities for asset acquisition.

N/A

Highest Transaction Size 152.24%

Source: 1/ Details of the investment is as follows: Value of the investment Land 159.10 million Consultant fees 192.00 million

10 Land rental fee for 350-kilometer pipeline installation to be paid to the Department of Highways and the Department of Rural

Roads during 3 years of construction and 30 years after construction complete. The estimated annual rental fee is equal to 5% of value of land and increase by 15% every 5 years (referred to order of the Department of Highways No. KorKor 0611/157/2544 Re: Criteria for determining rental fee for pipeline installation in highway areas).



Construction cost 8,850.00 million Estimated land rental fee paid to the Department of Highways and the Department of Rural Roads for a period of 33 years

567.72 million

Total 9,201.10 million Deduction*

1) Land acquisition for fuel depot in Khon Kaen 116.00 million 2) Engineering study advisory fee 18.30 million 3) Project consultant and management fee 26.40 million 4) EIA study and report fee 13.50 million 5) CSR consultant fee 12.80 million

Total investment for transaction size calculation 9,014.10 million Remark: * All 5 transactions are not included in the calculation of the transaction size because they had been entered into before TPN became a subsidiary of the Company. Furthermore, in acquiring ordinary shares of TPN, the Company took into account all these 5 transactions in valuation of BIGGAS ordinary shares, of which the Company already paid for in the amount of Baht 1,350 million from the Company’s capital increase. 2/ Total assets of the Company, according to the reviewed financial statements for the period ended September 30,

2018.

Based on the reviewed financial statements for the period ended September 30, 2018, the

investment in the Northeast Pipeline Project is considered an asset acquisition transaction by a listed company pursuant to the Notification of Acquisition or Disposition. The highest transaction size, based

on total value of consideration criteria, is equal to 152.24%. The transaction is deemed as an acquisition

of asset of Class 4, with the size equal to or higher than 100%, or a Backdoor Listing. However, this transaction meets all requirements in the Notification of Acquisition or Disposition for an exemption

from reapplying to list on the stock exchange, as follows. (a) The acquired business is similar to or supports the existing business; and

(b) The Company has no policy to make a significant change to its core business; and (c) The group of companies, resulting from acquisition of assets, is qualified for listing on SET;

and

(d) There is no material change to the board of directors and the controlling power of the company, or the controlling shareholders of the Company.

Therefore, the Company is required to prepare a report and disclose information on the asset acquisition transaction to the SET, and obtain an approval from a shareholders’ meeting with a vote of

not less than three-fourths of total voting rights of shareholders who attend the meeting and are eligible

to vote, excluding the votes of shareholders with a conflict of interest. (There is no shareholder with conflict of interest for this transaction.)

1.8 Sources of Fund for the Transaction

TPN expects cost of the Project to be approximately Baht 9,768.82 million, comprising (1) cost

of 202-1-91.2 rai of land for construction of fuel depot, 1.6-kilometer land for installation of pipeline, and land for Block Valve Stations, (2) consultant fees, and (3) cost of pipeline installation and

construction of fuel depot, and (4) land rental fee to be paid to the Department of Highways and the Department of Rural Roads. The Company will use fund for (1), (2), and (3) from the following sources:

(1) Baht 7,200 million loan from financial institutions and/or issuance of long-term debentures. Currently, TPN has received offers from several financial institutions willing to support the Project

in the amount of Baht 7,000 – 7,500 million.

(2) Issuance of new ordinary shares of TPN and/or sale of existing ordinary shares of TPN to strategic partners through a Private Placement (PP), resulting in a reduction of the Company’s shareholding

in TPN. The Company has a policy to maintain its shareholding in TPN at no less than 51%.

The Board of Directors’ Meeting No. 6/2018 held on November 13, 2018 approved the capital

increase of TPN from Baht 300 million to Baht 1,350 million and approved the disposition of 1,080,000 TPN shares by BIGGAS with par value of Baht 100 per share, equal to 8% of registered

capital of TPN after capital increase, at price of Baht 450 million to GL Energy Solutions (HK) Company Limited who is not connected person of the Company. The condition of the share

disposition stated that GL Energy Solutions (HK) Company Limited is not eligible to subscribe for future new shares of TPN until TPN has registered capital of over Baht 2,350 million (details as

shown in the Information Memorandum of the Company dated December 6, 2018).



Additionally, TPN plans to increase its registered capital from Baht 1,350 million to Baht 2,200 million during the first quarter of 2019, resulting in decreasing shareholding of GL Energy Solutions

(HK) Company Limited in TPN to 4.91% of registered capital of TPN;

and/or

(3) Issuance of 650 million new ordinary shares of PSTC, pursuant to the resolution of the Board of Directors’ Meeting No. 7/2018, held on November 22, 2018. The Company will seek for an approval

from the Extraordinary General Meeting of Shareholders No. 1/2019, to be held on January 11, 2019, for the issuance of new ordinary shares via Private Placement.

The Company’s Board of Directors will consider and select the best and most appropriate option. Sources of fund for approximately Baht 10 - 12 million annual land rental fee to be paid to the

Department of Highways and the Department of Rural Roads, Baht 11.80 million annual rental of 6,536

sq.m. of land at Thappline’s fuel depot in Saraburi, and Baht 12.00 million annual fee for managing fuel depot in Saraburi, will be from cash flows from operation and working capital of TPN.

CapAd has analyzed sources of fund for the Project in Part 2, Section 3, of this report.

1.9 Conditions Precedent of Entering into the Transaction

The Company must obtain an approval from the Extraordinary General Meeting of Shareholders No. 1/2019 and TPN meets all related conditions and regulations for the transaction, of which DOEB

will take part in consideration of detail of the Project. TPN must complete all the following steps. (1) Prepare an Environmental Impact Assessment (EIA) report and get an approval from ONEP, Ministry

of Natural Resources and Environment. The Company expects to get the approval from ONEP within March 2019.

(2) Design detail of the pipeline route and construction plan for the pipeline system and fuel depot.

TPN has completed this step. (3) Obtain letters of consent for annual rights of way from the Department of Highway and Department

of Rural Roads, as well as local administrative organizations, who hold the rights to the land for pipeline installation. The Company expects to complete this step within March 2019.

(4) Receive a letter of approval from Department of Public Works and Town & Country Planning, Khon

Kaen, and a construction permit for the Fuel Depot from Muang Phia Sub-district Administrative Organization, Ban Phai District, Khon Kaen. The Company expects to complete this step within

October 2019. (5) Apply for licenses to operate Fuel Pipeline and Depot with the DOEB, Ministry of Energy, pursuant

to Category 3 of the Ministerial Regulations, Fuel Control Act B.E. 2542. The Company expects to

complete this step within the third quarter of 2021. Remark: Step (3) – (5) shall be implemented when ONEP approves the EIA for the Project. Timeline

for these steps may change due to factors outside the Company’s and TPN’s control.

1.10 Summary of related agreements (1) Memorandum of Understanding for a Cooperation on the Petroleum Pipeline Extension to the

Northeast Region Counterparty : Department of Energy Business, Ministry of Energy

Date of the agreement : August 31, 2016

Scope of the agreement : To set a framework for a cooperation on an effective implementation of the petroleum pipeline extension to the northeastern Region in order to maximize the benefit and support the development of Fuel Pipeline System of Thailand.

(2) Memorandum of Understanding for Connection and Operation of the Petroleum Pipeline

Extension to the North and Northeast Region Counterparty : Thai Petroleum Pipeline Co., Ltd. (Thappline)

Date of the agreement : May 23, 2017

Scope of the agreement : 1. TPN appoints Thapppline as the sole operator of the Petroleum Pipeline under the MOU. 2. Thappline shall not enter into agreements with any other parties to construct and connect

the Petroleum Pipeline along Saraburi – Kamphaeng Phet and Saraburi – Khon Kaen route as long as this MOU is valid.

Remark: Summary of the Memorandum of Understanding (MOU) is in Attachment 3 of this report.

(3) Agreement to Purchase and Sale of Land for Construction of Depot in Khon Kaen Counterparty : 25 individuals

Date of the agreement : November 30, 2017



Payment term : 1. A deposit of Baht 11.60 million on the date of the agreement 2. The balance of Baht 104.40 million on the date of registration of ownership transfer The Company has already paid Baht 116.00 million for the land.

Suspension and cancellation of the agreement

: 1. Unless the parties agree otherwise, in case TPN fails to make a payment for the balance, it is deemed that TPN violates the agreement. The sellers are entitled to confiscate the deposit.

2. If the sellers sell the land to other party or violate the agreement, TPN has the right to file a legal case to have the sellers honor the agreement and/or request the sellers to be responsible for any damages.

(4) Engineering Study Consultant Agreement Counterparty : Penspen Services Co., Ltd.

Date of the agreement : April 1, 2016

Payment term : Based on progress of work

Scope of the agreement : Engineering study and preliminary construction cost estimation

Service period : April 1, 2016 – March 31, 2018

(5) Project Consultant and Management Agreement

Counterparty : Polytechnology Co., Ltd.

Date of the agreement : January 15, 2017

Payment term : One-time payment within 90 days from the invoice date

Scope of the agreement : Project consultant and management

Service period : January 15 – August 15, 2017

(6) Environmental Impact Assessment (EIA) Consultant Agreement Counterparty : En-Tic Co., Ltd.

Date of the agreement : May 23, 2017


Scope of the agreement : Conduct a study and prepare a report on environmental impact assessment (EIA) of the Petroleum Pipeline Extension to the Northeast Region Project (Saraburi – Khon Kaen), as detailed in the agreement

Service period : May 23, 2017 – May 22, 2018

(7) Corporate Social Responsibility (CSR) Consultant Agreement

Counterparty : Daoreuk Communications Co., Ltd.

Date of the agreement : November 1, 2017


Scope of the agreement : Perform community relations function and prepare CSR plan of the Project

Service period : November 1, 2017 – October 21, 2018

2. Information of Power Solution Technologies Public Company Limited (PSTC) As shown in Part 1 of the Information Memorandum on Asset Acquisition Transaction Account 2 of

the Company (Enclosure No. 2), enclosed with this Notification on the Extraordinary General

Meeting of Shareholders.

3. Information of Biggas Technology Co., Ltd. (BIGGAS) As shown in Attachment 1 of this report.

4. Information of Thai Pipeline Network Co., Ltd. (TPN) As shown in Attachment 2 of this report.

5. Other impacts

Dilution Effects

In case that the Company’s Extraordinary General Meeting of Shareholders No. 1/2019 approves the allocation of not more than 650,000,000 newly issued ordinary shares, with par value of

Baht 0.10 per share, via Private Placement process to investors who are not connected persons with the Company (Agenda 5), the offering price will be determined at no less than 90% of the weighted-

average share price of the Company during a period of at least 7 but no longer than 15 consecutive trading days prior to offering price determination date, pursuant to the Notification of Capital Market

Supervisory Board No. ThorChor 72/2558 Re: The Approval for Offering of Newly Issued Shares to the

Private Placement Investors of the Listed Company. The use of fund shall be for the investment in the extension of TPN’s pipeline and the Company’s working capital.



Current shareholders will have dilution effects as follows. (1) Control Dilution is equal to 9.03%.

(2) Price Dilution cannot be calculated because the price for the private placement of such ordinary shares has not been determined.

(3) Earnings Dilution is equal to 9.03%.



Part 2: Opinion of the Independent Financial Advisor on Reasonableness of the Asset

Acquisition Transaction

The IFA has determined reasonableness of the entering into the transaction based on the

following key factors.

1. Objective and Necessity to Enter into the Transaction Taking into account the Company’s income structure and gross profit margin in 2012 - 2017, it

is evident that the Company generates income primarily from its two major lines of business as follows: (a) Power backup solution and environment monitoring solution, which is its core business; and

(b) Renewable power plant business, in which the Company has gradually invested since 2011. The revenue structure and gross profit margin of each business are shown below.

The two businesses’ income in percentage of total revenues became in a close range in 2017.

The income proportion of Business (A) has shrunk significantly over the past two years, with an increasing reliance on income from Business (B). The gross profit margin of Business (A) has fluctuated

through the past 5-6 years and dropped at times due to stiffer competition. Meanwhile, the gross profit

margin of Business (B) stayed at around 70% all along, except in 2016 - 2017 when the Company invested in power plant improvement to enhance production efficiency, thus the power plant fail to

produce and distribute electricity at its full capacity under the power supply agreement and also resulting in higher expenses from such power plant improvement.

However, the renewable power plant business is currently faced with intense competition after the adoption of the competitive bidding method for selection of small power producers (SPP), as already

announced in the Government Gazette and taking effect as from July 7, 201711. Besides, there is an

increasing number of new entrants and keener competition from large players who have an advantage in lower cost and, hence, could place a lower tariff bid, thus reducing the opportunity of the Company

to win such bids and likely resulting in a decrease in its tariff income from future investment in new power plant projects which will relatively hurt its future performance.

In December 2017, the Company invested in BIGGAS (which is the major shareholder of TPN)

in the amount of 51% of BIGGAS’s paid-up capital12 in a bid to diversify into other potential business that could improve performance of PSTC Group. BIGGAS has engaged in the main business of

distribution and transportation of petroleum products and the energy-related engineering business. TPN, a BIGGAS subsidiary, is in the initial development phase of the Petroleum Pipeline Extension to

Northeast Region Project (“Northeast Pipeline Project”) under the policy of the National Energy Policy

Committee (“NEPC”) and with the Cabinet’s approval to extend the petroleum pipeline to the northern and northeastern regions by designating the private sector to undertake such project development.

Therefore, the investment in the Northeast Pipeline Project by TPN is a continuing project from the investment in BIGGAS in order to accomplish the Project as planned and according to the

memorandum of agreement on cooperation with DOEB and the memorandum of understanding with Thappline. TPN signed the memorandum of agreement on cooperation with DOEB in the operation of

11 Source: Strategic Plan for Energy Industry Regulation No. 3 (2018-2021), Energy Regulatory Commission. 12 Approved by the Extraordinary General Meeting of Shareholders of the Company No. 1/2017 held on November 1, 2017.



the Petroleum Pipeline Extension to Northeast Region Project on August 31, 2016 and entered into the memorandum of understanding on the pipeline connection with Thappline to the northern and

northeastern regions on May 23, 2017.

2. Comparison of Advantages and Disadvantages of Entering into the Transaction

2.1 Advantages and Benefits of the Transaction (1) Growth in income and improvement of operating performance of TPN and the Company

Based on the IFA’s study, the Northeast Pipeline Project of TPN will begin to recognize income in October 2021 and is expected to generate a net profit from 2021 onwards (please see more details regarding revenue and profit of TPN in Part 3 of this report). Therefore, after the Project’s commercial operation date from October 2021, TPN will be able to generate higher operational income and net

profit and the Company, as the major shareholder of BIGGAS which is the 100% shareholder of TPN,

will then benefit from a consolidation of BIGGAS’s performance, which has consolidated with TPN’s performance, pro rata with the shareholding percentage. Moreover, the Company will receive return

from such investment through BIGGAS in the form of dividend which will grow solidly and continuously, thus posing a favorable impact on the Company and its shareholders in the long term.

Forecast of recognition of TPN’s performance. Unit: Baht million 2021F 2022F 2023F 2024F 2025F 2026F

TPN1/

Income from services 340.03 1,408.20 1,458.00 1,509.57 1,562.95 1,618.23

Net profit 5.94 208.23 246.4 297.25 351.36 396.93

PSTC: Recognition of TPN’s performance2/ where PSTC holds 51% of shares in BIGGAS and BIGGAS holds 100% of shares in TPN

Income from services (pro rata) 173.42 718.18 743.58 769.88 797.10 825.30

Net profit (pro rata) 3.03 106.20 125.66 151.60 179.19 202.43










Remark: 1/ Source: Financial forecast by the IFA as shown in Part 3 of this report 2/ The figures shown are based on the shareholding percentage merely to give the shareholders a rough idea. In

the actual accounting, TPN’s income, expenses and net profit will be fully recorded in the Company’s consolidated financial statements and the “profit attributable to non-controlling interests of subsidiaries” item will be separately presented after the “net profit” item because TPN is a subsidiary of the Company.

(2) Diversification of investment to a recurring-income business that generates returns to the Company.

Amid the current highly competitive environment faced by the Company, the expansion of

investment to the petroleum pipeline transportation business is deemed appropriate since there are still a small number of players in this business which has a bright growth potential. The fuel pipeline

transportation is a recurring-income business that yields an average gross profit margin of 52.09% throughout the project life. Diversification into this business will help mitigate risk from reliance on

income from the Company’s current core business whose gross profit margin has been volatile, and will also respond to the Company’s policy to invest in other energy-related businesses.

(3) Investment in a sound and potential project that could provide an opportunity of future

business expansion for the Company. From a detailed consideration of the Northeast Pipeline Project of TPN, the Project is deemed

sound and potential and could give the Company a future business opportunity based on the following reasons.

(3.1) The Project delivers a reasonable rate of return.

The Northeast Pipeline Project has a net present value (NPV) of free cash flow of Baht 1,979.52 million – 3,387.09 million with an internal rate of return (IRR) of about 9.31% – 10.11% per year and

a payback period at approximately 10.07 – 10.80 years from the first date of income earning from commercial operation of the Project (October 1, 2021), which the IFA considers reasonable when

compared with the investment value (please see more details in Part 3 of this report).



(3.2) The Project corresponds with the Oil Plan 2015-2036 and accordingly is supported by the government sector.

The Oil Plan 2015-2036 (Oil Plan 2017) of the Department of Energy Business, Ministry of Energy, outlines the principles and measures to support an efficient logistics system through

development of petroleum pipeline transportation systems, as follows:

(a) Enhancing the country’s oil transport efficiency through the development of fuel pipeline systems, which will be handled by Ministry of Energy, Ministry of Transport, Ministry of Finance and Ministry

of Industry. (b) Permitting the private sector to develop the fuel pipeline system to the northern and northeastern

regions in order to promote free competition by abiding by the rules and conditions set forth by the Ministry of Energy.

(c) Seeking cooperation from government agencies to allow the placement of fuel pipelines in their

land areas, including Department of Highways, Department of Rural Roads, State Railway of Thailand, Royal Irrigation Department and Electricity Generating Authority of Thailand, in order to

motivate private investors. (d) The Ministry of Energy collaborating with the prospective private investors in determining the

pipeline routes, oil depot locations, and fuel pipeline transportation volumes.

On August 13, 2015, the NEPC passed a resolution approving the petroleum pipeline extension to the northern and northeastern regions by permitting the existing operators or oil traders or other

private investors to develop the project so as to promote free competition and seeking support from all concerned government agencies. In this respect, the Committee on Energy Policy Administration

(CEPA) has been entrusted with the duties to oversee the pricing of fuel pipeline transportation services, market domination, monopoly prevention, and protection of oil traders and the public to ensure they

could access and receive a fair service until the Energy Regulatory Commission (ERC) has determined,

revised or amended the laws governing the supervision of fuel pipeline transportation system in the future.

According to the above Oil Plan, it is apparent that the government sector has fully supported the selected project operators by collaborating in determining the pipeline routes, oil depot locations,

and fuel pipeline transportation volumes and in encouraging the concerned state agencies to grant

permission for placement of fuel pipelines in their land areas. This is a key factor that will enable TPN, as the selected operator of the Project, to successfully develop the Project as planned.

(3.3) The Project receives cooperation from Thappline. A condition to be fulfilled by TPN before applying for a license to operate the petroleum pipeline

from DOEB is to obtain an approval for connection of the petroleum pipeline of TPN with the pipeline

of Thappline at the oil depot in Sao Hai District, Saraburi Province, for further linkage to the northern and northeastern regions. TPN has successfully negotiated with Thappline regarding the pipeline

connection of the two companies and already signed the Memorandum of Understanding on Connection of the Petroleum Pipeline with Thappline (“MOU with Thappline”)13 on May 23, 2017. Currently, they

have agreed on details of the draft agreements appended thereto, consisting of: (a) Pipeline Connection Agreement;

(b) Operating Service Agreement; and

(c) Rental Agreement Thai Petroleum Pipeline Co., Ltd. (Thappline), a provider of oil pipeline transportation service,

was founded in 1991 pursuant to the Cabinet’s resolution approving the construction of a fuel pipeline from Sriracha to Saraburi and assigning the Petroleum Authority of Thailand (currently PTT PCL.) to

establish a joint venture to undertake such project implementation.

Therefore, entering into the agreement on petroleum pipeline connection with Thappline will enable TPN’s Project to cater for almost all major oil refineries and depots in the eastern region such

as PTTGC refinery, SPRC refinery, TOP refinery, ESSO refinery, PTT depot, Shell depot (receiving oil from PTTGC refinery), Caltex depot (receiving oil from SPRC refinery), Chonburi Terminal Ltd.’s oil

depot, etc. Oil traders who use the pipeline transportation service from the refinery to Saraburi Province are able to transfer their oil further to TPN’s depot in Khon Kaen Province for distribution to the upper

northeastern region and nearby areas, thus helping to save time and cost of transportation when

compared with transport by road or rail.

13 Please see summary of the said MOU in Attachment 3 of this report.



Current Shareholding Structure of Thappline

Source: www.thappline.co.th

Chart of Thappline’s Pipeline Network and Connection with Oil Refineries and Depots

Source: www.thappline.co.th

In this respect, Thappline will receive a fee for such pipeline connection according to the terms

and conditions set forth in the agreement. Moreover, the MOU with Thappline covers the use of Saraburi Depot area (partial) and

management of the Project by the Thappline team. The pipelines will be connected by the same operation system throughout the pipeline route. Thappline will be in charge of fuel management,

including planning for fuel transport from the starting point at a refinery to the destination at TPN’s

Khon Kaen Depot, control of SCADA system, system maintenance and total oil accounting system, thereby allowing for continuous oil management from the starting point under the same operation

system as that applied by Thappline to the fuel pipeline transportation system from Rayong to Chonburi. This, together with the project management team’s fuel pipeline transport experience, will help to

strengthen oil traders’ confidence in the operation standard and induce them to continuously use the service which can be deemed as operated by Thappline. As such, the cooperation between TPN and

Thappline under the MOU is a key success factor for the Project of TPN.

TPN and Thappline have agreed to execute a long-term contract for 20 years (renewable for another 10 years to a total term of 30 years under the original conditions) to commission Thappline to

undertake pipeline and fuel management.

Connected with PTTGC ‘s and SRPC’s Refinery

Connected with ESSO Refinery, TOP Refinery, PTT

Depot, and Chonburi Terminal Ltd.’s Depot

Shell Depot Caltex Depot



Chart of Fuel Distribution from Khon Kaen Depot

(3.4) The Project has a strong customer base.

The main target groups of TPN are oil traders who are the existing customers of Thappline, namely PTT Group (including PTTGC, SPRC and TOP), ESSO, Shell, Caltex, etc. The total amount of

fuel transported through the pipeline of Thappline at its Saraburi Depot in 2016 - 2017 was 2,398.42

million liters and 2,343.12 million liters respectively, while the distribution volume in the main target area, the upper northeastern region, (benzene and diesel only) in 2015 - 2017 and the first nine months

of 2018 (January - September) accounted for 2,167.73 million liters, 2,525.41 million liters, 2,345.71 million liters and 1,755.16 million liters respectively14.

All those major target customers are shareholders of Thappline. Therefore, the employment of

Thappline to undertake pipeline management and fuel management for TPN and the renting of Saraburi Depot area (partial) for pipeline connection, including the condition set forth in the MOU between

Thappline and TPN that Thappline shall not grant permission for pipeline connection to more than one party on each route, can ensure, to a certain extent, that the main target groups will use services from

the Project of TPN and the fuel pipeline transport volume will grow in line with Thappline’s capacity and future fuel demand.

(3.5) The Project is granted investment promotion privileges from BOI.

The Northeast Pipeline Project qualifies for receiving investment incentives under the investment promotion law from the Board of Investment (BOI) in the category of Mass Transit Systems

and Transportation of Bulk Goods, subcategory of Pipeline Transportation (except for water pipeline)15. TPN was granted the BOI promotion in May 2018, subject to the condition, amended later, that it must

have registered capital of at least Baht 1,800 million before issuance of the promotion certificate and

must have the capital fully paid-up before commercial operation date. Under such BOI promotional privileges, the Project will be exempted from import duty on machinery.

(3.6) The Project has a growth potential with an opportunity to expand customer base and further expand petroleum pipeline to Lao PDR.

TPN management expects that the investment in the Northeast Pipeline Project will help expand TPN’s investment in the future. That is, TPN will likely consider investing in pipeline extension from

14 Source: Department of Energy Business, Ministry of Energy (www.doeb.go.th). 15 Based on A Guide to the Board of Investment 2017.

Target areas:

cover 12 provinces, namely

o Khon Kaen

o Udonthani

o Loei

o Nongkhai

o Mahasarakham

o Roi Et

o Kalasin

o Sakonnakorn

o Nakhon Phanom

o Mukdaharn

o Beung Karn

o Nongbaulamphu



Khon Kaen Depot to Lao PDR by passing through such major cities as Vientiane (through Nong Khai

Customs House), Savannakhet (through Mukdaharn Customs House), and Thakhek (through Nakhon

Phanom Customs House). In 2015 - 2017, Laos imported finished oil from Thailand (benzene and diesel only) in the amount of 1,192.68 million liters, 1,200.89 million liters, and 1,154.64 million liters

respectively.

The major Thai exporters of oil to Laos are IRPC, PTT, ESSO and Shell, with their combined export volume reaching about 84.29% and 82.15% in 2016 and 2017 respectively. The remainder

consists of import by PTT (Lao) Co., Ltd. and Petroleum Trading Lao PCL. (PTL)16 and import from other countries via transportation by trucks through Thailand. PTL has shown an interest in using the fuel

pipeline service from TPN when the Project is completed.

Source: Department of Energy Business, Ministry of Energy (www.doeb.go.th)

Apart from a study on Laos’s fuel export/import volumes and discussion about fuel demand of

oil traders in Laos, TPN has not yet conducted a detailed study on an extension of the fuel pipeline to Lao PDR.

(3.7) The Project provides an opportunity for TPN to extend its aviation fuel pipeline

service to airports in the northeastern region. The investment in the Project will provide an opportunity for TPN to extend its fuel pipeline

service to airports in the northeastern region. Given that number of aircraft passengers to this region grows in the future with an increase in air traffic volume, this may prompt TPN to launch a transport

of aviation fuel (Jet A-1) via underground pipeline to fuel depots at northeast airports in replacement of the existing system under which all air carriers need to store reserve fuel upon both their departure

from and arrival in Bangkok.

The Department of Airports plans to invest in the northeastern airport development with total budget of Baht 8,100 million17 to respond to the growing number of passengers, and will push for the

potential airports such as Khon Kaen, Udon Thani and Ubon Ratchathani airports to serve as an aviation hub in the northeastern region. It also plans to promote tourism and focus more on ASEAN airline route

connectivity, particularly among the CLMV bloc (Cambodia, Laos, Myanmar and Vietnam). This,

therefore, is another factor contributing to the expansion of air transport in the northeastern region and providing a business expansion opportunity for TPN.

16 PTL is a listed entity on Lao Securities Exchange (LSX). Its fuel sale volume in 2016 amounted to 161.37 million liters,

representing a market share of around 11% in Lao PDR and ranking fourth among Laos’s oil traders. According to the 2016 oil trader database, the top three traders are Petrolimex Laos Ltd. (I’ ETLIMEX), 24.85%; Lao State Fuel Company (LSFC), 15.47%; and PTT (Lao) Co., Ltd., 12.50%, respectively.

(Source: Annual Report 2016 of Petroleum Trading Lao PCL.) 17 Source: Interview with Director-General of the Department of Airports, posted on Daily News website on September 6, 2017.

http://www.doeb.go.th/



(4) The Project provides social, environmental and national contribution The IFA is of the opinion that the Northeast Pipeline Project is beneficial to society, the

environment and the country as follows: (4.1) The Project helps to enhance the country’s fuel transportation efficiency and energy

security.

The Project is an investment in construction of the country’s infrastructure system which is in line with the Ministry of Energy’s policy to make available a fuel pipeline system with a view to enhance

the country’s fuel transportation efficiency, responding to growth in fuel demand, strengthening the country’s energy security, and providing a reliable energy infrastructure that includes the use of fuel

depots along the pipeline route as the country’s strategic fuel storage. Compared with other transportation methods, the fuel pipeline system is most appropriate as it is the fastest mode of fuel

transportation and takes the shortest time. A single pipeline can transport various types of fuel such as

benzene 95, benzene 91 and diesel. Therefore, the Project will significantly generate economic benefits to the country. It will enable consumers in the northeastern region to utilize fuel at a lower price.

Moreover, the Project will contribute to the policy on finished oil storage in provincial depots to enhance the country’s energy security and competitiveness in its move towards becoming the regional energy

hub as well as gear up for the implementation of AEC.

(4.2) The Project provides benefits for the public and the business sector. The Project will provide benefits for the public by ensuring the sufficiency of fuel because the

pipeline system is safe and stable and allows for fuel transport during a flood event. Residents in the northeastern region are able to utilize fuel at a lower price than current price. For the business sector,

the Project will enable all users of pipeline service to access the service at the same rate and remain competitive with the road and rail fuel transportation system.

(4.3) The Project helps to save national budget for road repair, reduce road accidents and

preserve the environment. The fuel pipeline is safer than fuel delivery by large trucks. Given that oil traders increasingly

use services of the Northeast Pipeline Project in the future, the volume of fuel transportation by large fuel trucks will decline, thus helping to reduce road accidents and road surface wear, save the country’s

budget for road repair, reduce carbon dioxide emissions from fuel trucks, preserve the environment,

and decrease greenhouse gas emissions. Besides, the Project will likely generate more income from sales of carbon credits since it will help reduce greenhouse gas emissions by around 47 million Kg. of

carbon dioxide equivalent per year.

2.2 Disadvantages of the Transaction

(1) TPN and the Company will bear higher debts, interest expenses and D/E ratio. In entering into this transaction, TPN will use sources of funds derived from loans from financial

institutions of approximately Baht 7,500 million and from a capital increase of about Baht 1,900 million (this will partly come from the Company and BIGGAS. TPN increased its registered capital from Baht

300 million to Baht 1,350 million on December 6, 2018 and plan to increase registered capital to Baht 2,200 million in the first quarter of 2019 respectively). Such fund will be used for investing in the

Northeast Pipeline Project and covering operating expenses during the pre-COD period. As a result, the

investment in the Project will lead TPN and the Company (according to the separate and the consolidated financial statements) to incur higher debts and finance costs and, hence, higher D/E ratio.

Comparing D/E Ratio of the Company as a result of entering into this Transaction with one stated under financial covenants of long-term loan agreement of the Company and covenant of the

Company’s debenture based on its consolidated financial statements as of September 30, 2018, the

Company had total liabilities of Baht 2,547.11 million, shareholders’ equity of Baht 3,746.79 million and D/E ratio of 0.68 times. Given that TPN fully draws down the loans of Baht 7,500 million by 2021 and

the Company is, under the assumption, able to (a) fully obtain the capital increase fund from rights offering of 650 million shares to its existing shareholders amounting to approximately Baht 462.15

million, (b) obtain fund from the final exercise of PSTC-W1 on January 28, 2019 in the amount of approximately Baht 151.50 million18, and (c) recognize a profit from sale of TPN’s existing ordinary

shares by BIGGAS to investors who are interested to be a business partner of PSTC Group in the amount

18 This is estimated from 90% of the remaining numbers of warrants (the remaining 336,662,182 units of PSTC-W1 x exercise

ratio of 1:1 x exercise price of Baht 0.50 per share = Baht 151.50 million) since PSTC-W1 is currently in-the-money.



of about 25% of TPN’s paid-up capital after the capital increase19 + net profit of PSTC (from Q4/2018 to 2021 when the loans will be fully drawn down by TPN) based on the Q3/2018 net profit of PSTC,

making up a total amount for (c) of about Baht 1,821.15 million. The D/E ratio of PSTC according to its consolidated financial statements will edge up to around 1.63 times as at the end of 2021 and will

thereafter gradually decline as a result of loan repayment. The D/E ratio will not exceed the financial

covenants specified in the long-term loan agreements of the Company which limit the D/E ratio at not over 2.5 and 3 times (loan agreements with two banks) and the covenants of the Company’s debentures

which limit the D/E ratio at not over 2.5 times. As for TPN, it had total liabilities of Baht 209.41 million, shareholders’ equity of Baht 226.85

million and D/E ratio of 0.92 times as of September 30, 2018. In case (a) TPN draws down total loans of Baht 7,500 million as at the end of 2021, (b) TPN can completely increase its capital by Baht 1,900

million, and (c) the pre-operation loss from Q4/2018 to Q3/2021 is taken into account, based on the

IFA’s projection, its total liabilities will increase to Baht 7,919.95 million and shareholders’ equity to Baht 2,085.00 million and its D/E ratio will rise to around 3.80 times as at the end of 2021 which is still

comply with covenant stated in term sheet from financial institution. Then, D/E ratio will gradually decline as a result of loan repayment20.

(2) Existing shareholders of the Company will encounter dilution effects (in case of successful

PP of new shares with the proceeds thereof to be invested in the Project). The Company will issue and offer its new ordinary shares through private placement (PP) in

the amount of not exceeding 650,000,000 shares with a par value of Baht 0.10 per share. The proceeds shall be used for investment in the Northeast Pipeline Project of TPN and for working capital of the

Company. Therefore, the issuance of new shares through private placement will cause existing

shareholders of the Company a control and earnings dilution of 9.03%. Meanwhile, the price dilution

cannot be calculated because the offering price of those new shares has not yet been determined. (3) TPN will have to provide, and thus incur expenses on, a bank guarantee of Baht 200 million

to Thappline for a period of 30 months. Pursuant to the MOU on pipeline connection between TPN and Thappline, TPN is required to

provide a letter of guarantee from financial institution in the amount of Baht 200 million, covering a

period of about 30 months from the signing date of the EPC Contract Agreement to the completion date of the Northeast Pipeline Project. As such, TPN will incur expenses from the bank guarantee fees

and will have to offer collateral or fixed deposits as security for the said bank guarantee.

2.3 Risks of the Transaction

(1) Risk associated with a heavy reliance on Thappline The development of the Project requires support from Thappline from the beginning and

throughout the project life in terms of pipeline connection, fuel transport management and business

consultancy, all of which are the key success factors of the Project, as described below:

Relevant documents Reliance on Thappline

Signing of the MOU with the

Ministry of Energy

This is subject to a condition that TPN must obtain an approval

from Thappline for the pipeline connection before applying for a license to operate the fuel pipeline with the DOEB.

Signing of the MOU, including the

agreements appended to the MOU, with Thappline

Pipeline connection and use of oil depot areas in Sao Hai

District, Saraburi Province

Reliance on fuel pipeline transportation volume from

Thappline’s customers who are Thappline’s shareholders

Reliance on Thappline’s personnel and experience in fuel management throughout the pipeline route, including other

advice on pipeline route management, oil depot management, etc.

19 The IFA estimated from (1) shareholding of GL Energy Solutions (HK) Company Limited which is equal to 4.91% after TPN

increases its registered capital to Baht 2,200 million and (2) the case that BIGGAS may consider the disposition of TPN shares to business partner at the amount equivalent to 20% of registered and paid-up capital of TPN after increase capital to Baht 2,200 million. 20 The calculation was based on the assumption that the loans raised by TPN will be gradually drawn down according to its

investment plan, TPN will generate a net profit according to the financial projection, and the loans will be gradually repaid.



Therefore, TPN and the Company may lose their bargaining power. Moreover, failure by Thappline to serve as the project manager as per the conditions set forth in the management agreement

or a drop in the fuel pipeline transportation volume from Thappline’s customers could lead to a

materially adverse impact on the Project’s performance. (2) Risk from TPN, BIGGAS and the Company having no direct experience in management of

the fuel pipeline business TPN was founded to operate the fuel pipeline project by the management team of BIGGAS,

which is TPN’s major shareholder who has experience and expertise in energy engineering, especially

NGV pipelining, but without direct experience in the fuel pipeline business. Meanwhile, TPN will have to manage the project by itself in the aspects of pipeline route inspection, pipeline and warehouse

maintenance, and all control systems, thus likely being prone to risk from failure in such management tasks.

Nonetheless, the executives of BIGGAS and TPN are confident that, from their long-time experience in the energy industry, BIGGAS’s personnel are skillful in energy engineering, notably the

pipelining of NGV, and could thus apply such experience to the operation of TPN’s project. Besides,

they have also gained experience in the placement and maintenance of NGV pipelines. BIGGAS has since 2013 undertaken the NGV pipeline system maintenance for PTT and is currently monitoring more

than 160 NGV stations for PTT. It has also provided the NGV pipeline placement and maintenance services for other NGV station operators. In terms of engineering principles, the placement and

maintenance of NGV pipeline and fuel pipeline are not quite different. Therefore, such expertise could

ensure the Company’s readiness to expand business to the Northeast Pipeline Project. (3) Risk involved with the case where the Company’s shareholders’ meeting does not approve

the asset acquisition transaction and, hence, TPN, BIGGAS and the Company must record the project expenses already paid by them

Prior to the date of the shareholders’ meeting to approve this asset acquisition transaction, (a) TPN has signed various agreements before BIGGAS becomes the Company’s subsidiary, including land

acquisition for oil depot construction and employment of advisors for an engineering study, project

management, engineering feasibility study, EIA study, and CSR. Total cost for (a) is approximately Baht 183.59 million (calculated as of the end of 2018) while there is contingent liabilities of another Baht

3.41 million is payable in the future after the end of 2018 onwards as per the agreements already signed (before BIGGAS becomes the Company’s subsidiary).

Additionally, according to the MOU for the Connection of the Petroleum Pipeline between TPN

and Thappline, TPN shall provide a bank guarantee of Baht 200 million against a successful construction of the Northeast Pipeline Project, whereby TPN has already placed a bank guarantee of Baht 50 million.

(b) After TPN becomes the Company’s subsidiary, TPN has additionally signed the project consultant agreement and paid for the cost of land acquired for fuel pipeline placement and block valve

construction along the pipeline route, amounting to about Baht 98.99 million (calculated as of the end

of 2018), in order to allow for completion of project designing and proceed with the application for all relevant regulatory approvals.

Thus, in the event that the shareholders’ meeting of the Company does not approve the entering into this Transaction, TPN must record such paid expenses and Thappline is entitled to make

a claim under such bank guarantee. Currently, TPN has paid expenses until the end of 2018 at the total amount of Baht 183.59 + 50.00 + 98.99 = 332.58 million (including value of land for depots,

pipeline, and block valve stations) or Baht 173.48 million (excluding land), of which TPN shall utilize

such lands in other aspects or sell it out. In addition, there are financial advisory fee, independent financial advisor fee, and legal advisor

fee, in order to prepare for relevant documents for this Asset Acquisition Transaction. However, TPN, BIGGAS and the Company are confident that such investment is beneficial to

all of them and, hence, the shareholders’ meeting will likely support and approve the transaction.

(4) Risk of the Project failing to perform as expected If the Northeast Pipeline Project does not perform as expected, which may due to factors such

as quantity of fuel transported via the pipeline, number of users, pipeline tariff rate, operating costs and expenses, finance costs, etc., it could then affect the Project’s IRR.



(5) Risk concerned with government agencies (5.1) Risk involved with application for a fuel depot construction permit from Tambon

Ban Phia Administration Organization, Ban Phai District, Khon Kaen Province TPN is in the process of applying for a fuel depot construction permit from Tambon Ban Phia

Administration Organization, Ban Phai District, Khon Kaen Province, thus putting the Project at risk

regarding to the building of a destination depot in Khon Kaen Province. Nonetheless, TPN believes that there should be no problem in the application for a fuel depot construction permit in Khon Kaen Province

since the Project has already passed the consideration of the DOEB and ONEP for the suitability of its fuel depot location. Besides, the construction will promote job creation for the local people and will not

cause any environmental problem to the community. (5.2) Risk involved with the regulatory body’s control over pipeline tariff in the future

At present, there is no government agency responsible for monitoring fuel pipeline service fees.

However, the meeting of the National Energy Policy Committee (“NEPC”), held on December 22, 2015, entrusted the Committee on Energy Policy Administration (“CEPA”) with the duty to oversee the fuel

pipeline service fees in order to prevent market domination and monopoly and to protect oil traders and the public to ensure they could access and receive a fair service, until the Energy Regulatory

Commission (“ERC”) has completed the imposition, revision or amendment of the laws governing the

fuel pipeline transportation systems. If the government sector revises or controls the pipeline tariff rate, it could hinder TPN’s profitability.

However, the market mechanism of fuel prices will enable the pipeline tariff to remain competitive with the fuel truck/rail tariff. An overly high pipeline tariff will not motivate oil traders to

use the pipeline system and they will instead return to the truck or rail transportation modes. It is somewhat unlikely that the government sector will control the pipeline tariff to the extent that could

weaken fuel pipeline operators’ competitiveness because this will not correspond with the Ministry of

Energy’s policy to make available a fuel pipeline system with a view to enhance the country’s fuel transportation efficiency, responding to growth in fuel demand, and strengthening the country’s energy

security. (5.3) Risk associated with an increase of pipeline land lease fees by the Department of

Highways, Department of Rural Roads, Royal Irrigation Department and State

Railway of Thailand More than 95% of the Northeast Pipeline Project will be constructed along the highways, which

are owned by the Department of Highways and Department of Rural Roads, and the rest along the irrigation canals, rivers, waterways, ditches and canals, which belong to the Royal Irrigation

Department, and underneath the railways, which belong to the State Railway of Thailand (depending

on the area that the pipeline passes through). Effective from September 14, 2001, the Department of Highways has determined the annual land lease fee based on the area used for laying the pipeline

along the highways and the land price as appraised by the Department of Lands, with a subsequent increase of 15% every five years of lease. Such land lease fee has been applicable for a long period of

time. As for the areas owned by the Royal Irrigation Department, no lease fee has been imposed. In case the Department of Highways, Royal Irrigation Department and State Railway of Thailand revise

up their lease fees, the Project will bear a higher land lease fee to the extent that may weaken its

competitiveness with the large fuel truck and/or rail transportation systems, which may thereby affect TPN. However, TPN is confident that the Ministry of Energy, by the DOEB, will support and enable

investors to operate their projects and compete in this business due to the capital-intensive nature of the projects and the long payback period.

(5.4) Risk involved with approval from ONEP, Ministry of Natural Resources and

Environment, and application for business license type 3 from the Ministry of Energy

The Northeast Pipeline Project is subject to the EIA study according to the Ministry of Natural Resources and Environment’s notification. TPN has engaged an environmental advisor to conduct the

study and already submitted the EIA report to ONEP in August 2018, which is expected to be approved by March 2019. If TPN fails to obtain the EIA approval, it will be unable to submit the construction

permit application since the application must be accompanied by the EIA report, thereby resulting in

failure to implement the Project as planned. It will also be unable to apply for fuel pipeline transportation and fuel depot licenses from the DOEB, Ministry of Energy, pursuant to the regulations for the controlled

businesses Category 3 prescribed in the Fuel Control Act B.E. 2542.



However, TPN believes that the EIA report will be approved by ONEP because it has determined the method of construction and prevention of environmental impacts and has fulfilled all relevant

procedures, including public hearing. Besides, TPN has coordinated with the Ministry of Energy during the EIA process. Therefore, the Project should be able to start commercial operation as scheduled.

(6) Risk involved with management of communities that the fuel pipeline passes through and

communities in the area of Khon Kaen Depot The Northeast Pipeline Project could be exposed to risk involved with management of

communities that the fuel pipeline passes through or communities in the area of Khon Kaen Depot. Being aware of this risk, TPN has conducted a study on communities around the Project area before

drawing up the construction plan so as to analyze and reduce any possible future impacts on the communities and other areas that the pipeline passes through. The EIA process also includes a study

and assessment of potential impacts on the environment, society and health in the Project’s area and

nearby areas during the construction and operation period, a public hearing, a proposal of environmental impact prevention and correction plans, and measures for monitoring and inspection of

environmental impacts, which were already submitted to ONEP. Currently, a part of Ban Phai District has been designated as a purple zone which allows the

use of land for industrial and warehousing purposes. This could increase the communities’

understanding that the use of land for industrial and oil storage purposes is not harmful to their daily life but could contribute to the improvement of their livelihood.

Nonetheless, TPN has hired a CSR advisor to disseminate essential information that could improve all groups of stakeholders’ knowledge and understanding about the Project, as well as to follow

up on the impacts, receive complaints from the individuals, agencies or organizations affected by the operation of the Project, devise a communication strategy, and draw up a long-term CSR plan for

communities in a radius of 5 kilometers around the fuel depot site, by paying attention to the benefits

of the communities. The CSR activities will be harmonized with the local way of life and tradition. (7) Risk of technological changes

If in the future the technological advancement leads to emergence of other alternative energy that can substitute for fuel, there may be a growing use of non-petrol powered vehicles such as electric

vehicles, hydrogen-powered vehicles, etc., thus likely resulting in a drop in fuel consumption in the

northeastern region. However, such technology is still in the process of development, experiment and efficiency testing, and its widespread commercial use remains unclear. Besides, it is relatively expensive

considering per capita income of Thai residents. Thus, petrol-driven vehicles are still essential in daily life and the general public is still accustomed to the conventional types of vehicles and, hence, it will

take a certain period of time for the advanced technology to replace the existing one.

(8) Financial risk (8.1) Risk in obtaining loans for TPN’s project investment and for PSTC’s and BIGGAS’s

investment in newly issued shares of TPN The Project involves a huge investment cost and accordingly needs financial support from

financial institutions. TPN has already received a preliminary term sheet from financial institutions and is in the process of negotiating about details of the terms and conditions. If TPN fails to reach the final

agreement on such financing, the Project could be exposed to a loan procurement risk which will further

affect the construction plan. TPN plans to increase its capital by around Baht 1,900 million, which will consist of a capital

increase in TPN by BIGGAS with funds available from PSTC and the other group of shareholders of BIGGAS and an offering of existing shares in TPN by BIGGAS to investors who are interested to be a

business partner of PSTC Group. At present, GL Energy Solutions (HK) Company Limited, non-connected

person of the Company, decided to purchase from BIGGAS 1,080,000 existing shares of TPN with par value of Baht 100.00 per share or equivalent to 8% of registered capital of TPN after the capital increase

at the price of Baht 450 million. BIGGAS shall, therefore, has fund to invest in TPN. Moreover, one business ally already decided to invest in TPN and TPN is under the negotiation process with another 2

investors. Therefore, risk concerning the capital increase in TPN is considered slim. PSTC will raise funds by (a) an issuance and offering of 650 million new shares via Private

Placement, in which the Company has experience and succeed in the offering of 2,000 million new

ordinary shares to investors via private placement in late November 2017 at price of Baht 0.72 per share, showing that investors are highly interested in shares of the Company, (b) funds from the final

exercise of PSTC-W1 which will be on January 28, 2019 and it is expected that PSTC-W1 holders shall exercise their warrants since exercise price of Baht 0.50 per share while closing price of the Company’s



shares as at December 14, 2018 was at Baht 0.62 per share, and/or (c) from issuance of debentures, depending on the circumstances and necessity in each period.

(8.2) Foreign exchange rate risk For the construction of the Project, TPN has to import pipe, pump, valve and other equipment

from abroad. Therefore, a weakening of the Baht against other currencies may put TPN at risk from

foreign exchange. However, TPN will consider hedging against foreign exchange risk through a forward contract and has adequately provided a contingency cost in the construction budget.

(8.3) Risk of cost overrun The major cost of development of the Project is cost of construction of the fuel pipeline and

fuel depot of approximately Baht 8,850.00 million as estimated in the engineering study and based on the designing of pipeline route and the pipeline and depot construction plan provided in the terms of

reference (TOR) for selection of EPC contractors and equipment suppliers. Such construction cost is

therefore deemed to be estimated according to the plan and design and covers all systems. TPN has additionally mitigated the cost overrun risk by commissioning the EPC contractors and

equipment suppliers on a turnkey basis. Still, it remains exposed to risk from construction cost overrun. (8.4) Risk of requirement for additional investment

In the Project, TPN does not build any pressure booster stations along the route because,

technically, the 16-inch fuel pipeline and the fuel pump system at the pipeline connection point in Thappline’s Saraburi Depot have an adequate pressure to transport fuel to the destination depot in

Khon Kaen. If, during the system testing and fuel transportation, the fuel pressure is inadequate, it may need to construct pressure booster stations along the route, which will incur additional investment

cost. However, such cost (if any) is considered minimal when compared with the total project value. The estimated cost of pressure booster station is approximately Baht 300 million per station.

3. Other Analysis 3.1 Analysis of Sources of Funds

Investment in the Project Investment in development of the Project, already paid and calculated as of the end of 2018,

amounts to approximately Baht 282.58 million. Therefore, the remaining investment required to

complete the Project development up to the commercial operation date (COD) is estimated at Baht 9,681.10 million, comprising of

(1) Costs of land, fuel pipeline and depot construction, and advisory fees totaling about Baht 9,201.10 million which was partially paid, leaving a balance of about Baht 8,974.41 million;

(2) Pre-COD expenses such as personnel-related expenses, office expenses and field work

expenses of about Baht 146.69 million; and (3) Interest payable during construction of around Baht 560.00 million.

Sources of Funds

The Company will use funds via both debt and equity financing, as follows: Debt Financing (1) Borrowing from financial institutions: TPN has received a preliminary term sheet from

financial institutions which offer to provide credit facilities to finance the Project in the amount of Baht 7,000 million – 7,500 million. From an inquiry with TPN management, they have negotiated details of

such loans in material respect and expect to use the maximum loan amount of Baht 7,500 million. (2) Issuance of long-term debentures of the Company: The debenture issuance will be made

as deemed appropriate and based on the D/E ratio.

Equity Financing (1) Issuance of new ordinary shares of TPN and/or offering of TPN’s existing shares by BIGGAS

to specific investors via private placement (PP). In this respect, TPN has increased its registered capital from Baht 300 million to Baht 2,200 million on December 6, 2018 and plans to increase its registered

and paid-up capital to Baht 2,200 million to ensure it will have adequate funds for investment in the Project and for use as working capital during the pre-COD period. This will also comply with the

condition set out by financial institutions and BOI which specify that TPN must have registered and

paid-up capital of Baht 1,350 million and Baht 1,800 million respectively. The management of BIGGAS and TPN has informed that BIGGAS will decrease its shareholding

percentage in TPN so as to mobilize funds for the project development (whereas the Company has a policy to retain its shareholding in TPN at not less than 51%) and/or raise a loan from shareholder



(which is PSTC). Preliminary, BIGGAS shall sell 1,080,000 ordinary shares of TPN with par value of Baht 100 per share or equivalent to 8% of registered capital of TPN after the capital increase at the price of

Baht 450 million to GL Energy Solutions (HK) Company Limited. Condition of the share disposition is that GL Energy Solutions (HK) Company Limited is not eligible to subscribe for new ordinary shares of

TPN in the future unless TPN has registered capital exceeds Baht 2,350 million.

There are several investors interested in investing in TPN. TPN will select the one that offers the best conditions and the most benefit to it21. The IFA has had an opportunity to meet with some of

those investors and has screened the correspondence with some other investors or their financial advisors. Thus, it is confident that TPN will likely be able to raise funds through this channel.

(2) Issuance of 650 million new shares by PSTC: The offering price will not be less than 90% of the weighted average market price of the Company’s shares traded on the SET during a period of at

least seven consecutive business days but not more than 15 consecutive business days before the date

of offering price determination. Therefore, the IFA has made a preliminary estimation based on the market price of the

Company’s shares over the past one year up to November 22, 2018 (the date on which the Company’s Board of Directors resolved to propose the shareholders’ meeting to consider and approve the

investment in the Northeast Pipeline Project), which is equal to Baht 0.79 per share. Hence, by applying

a discount of not more than 10% of the market price, PSTC will obtain a minimum amount of capital increase of approximately Baht 462.15 million22 for investment in the Project (through BIGGAS). The

Company has experience in successful offering of 2,000 million new ordinary shares with par value of Baht 0.72 per share through private placement in late November 2017, showing that investors are

interested in shares of the Company. Moreover, it is expected that PSTC will likely receive funds from the final exercise of PSTC-W1,

scheduled on January 28, 2019, of approximately Baht 151.50 million23 since PSTC-W1 is currently in-

the-money. 3.2 Appropriateness of the MOU with Thappline

When considering appropriateness of the MOU with Thappline, as well as the draft agreement on connection of the fuel pipelines, the draft agreement on operation and management of the Extension

of the Fuel Pipeline Transportation System Project to the North Eastern Region, and the draft agreement

on lease of land and equipment in Saraburi Fuel Depot (collectively called “the 3 Draft Agreements”), CapAd is of an opinion that they are all appropriate and benefit TPN and the Company. TPN will benefit

from connecting its pipeline system with Thappline’s under Thappline’s operation and management, resulting in access to nearly all refineries and fuel depots in the Eastern Region and seamless integration

from the starting point at Thappline’s depot to TPN’s depot in Ban Phai District, Khon Kaen, with an

appropriate compensation. In addition, according to the draft agreement on connection of the fuel pipelines, TPN has the

exclusive right to connect to Thappline’s pipeline system, mitigating any risk of another competitor competing in the fuel pipeline transportation business in the Norther Eastern Region.

Consdiering validity period of the draft agreement and condition on extension of the agreement, CapAd is of the view that Thappline’s agreement to the 20-year validity period and the right to extend

the agreement for another 10 years benefits TPN in the long term. TPN will generate a consistent and

recurring income, resulting in long-term return on investment to TPN and the Company. With respect to collateral under the MOU with Thappline, TPN has to submit a letter of

guarantee from a financial institution to Thappline, which is considered a normal condition that TPN can manage and in favor of the success of the Project, whereby:

(1) A letter of guarantee in the amount of Baht 50 million for SRB – KK Pipeline (Fuel Pipeline

from Saraburi – Khon Kaen), from the MOU signing date to the date on which TPN sign an agreement with a contractor (EPC Contract Agreement). TPN is in a process to select a contractor, to be concluded

within January 2019. (2) A letter of guarantee in the amount of Baht 200 million, from the date on which TPN sign

the EPC Contract Agreement to the completion of the construction (totaling approximately 30 months), in order to guarantee the success of the construction of SRB-KK Pipeline. The letter of guarantee is

21 The Company shall comply with the Notification of the Capital Market Supervisory Board No. TorJor. 8/2558 Re: Rules,

Conditions and Procedures for Offering for Sale of Shares by Shareholders of Limited Companies. 22 The actual figures depend on price of the Company’s shares during the offering period. 23 Please see Footnote 18.



virtually a commitment from TPN to have the contractor complete the construction as agreed. TPN should request a letter of guarantee from the contractor and hire contractors and purchase equipment

only from Thappline’s EPC Vendor List and Major Equipment List. In case TPN would like to hire contractors and purchase equipment from vendors outside these lists, it has to obtain an approval from

Thappline before entering into any agreements.

However, in case TPN is unable to commence commercial operation as planned, Thappline is entitled to a payment from the letter of guarantee. If the delay is a force majeure and lasts longer than

6 consecutive months, each party has the right to cancel the agreement and Thappline agrees to return the letter of guarantee to TPN.

4. Conclusion of the IFA’s Opinion on Reasonableness of the Transaction

The investment in the Northeast Pipeline Project of TPN is deemed as a continuing project from

the investment in BIGGAS and a pilot project to enter into the fuel pipeline transportation business, which will generate a recurring income and, hence, ensure strong and steady growth in TPN’s

performance. It will also help to diversify risk associated with the Company’s current operating income and respond to the Company’s policy to develop into other promising fuel energy business segments

which have a strong growth potential.

The Northeast Pipeline Project will not only bring about benefits to TPN, BIGGAS and the Company, but also help to enhance the country’s energy security. The Project corresponds with the

Ministry of Energy’s policy to promote the petroleum pipeline extension to the northern and northeastern regions to cater for the growing fuel demand in such regions. The Project will contribute

to a broader coverage of fuel pipeline system, enhancement of the country’s fuel transport efficiency, development of fuel transportation infrastructure in the regional areas, and availability of additional fuel

reserves for the country. The Project will also help to promote the free trade policy under which all fuel

traders can access the service at an equal fee rate, while remaining competitive with road/rail fuel transport. Moreover, it will help to preserve the environment and national resources, reduce road

accidents, and respond to higher oil consumption in ASEAN, thus enhancing the country’s competitiveness in the move towards becoming a regional energy hub and connectivity with

neighboring countries in the future.

For the public, the Project ensures the sufficiency of fuel because the pipeline system is safe and stable. Residents in the northeastern region are able to use the fuel at a lower price than current

price due to a cheaper cost of fuel transportation by the pipeline system than by the road or rail transport. This can ensure fairness of fuel price in regional development and reduce rural price

inequality.

As the parent company which is the direct major shareholder of BIGGAS and the indirect major shareholder of TPN, PSTC will benefit from recognition of a growing performance of TPN from the

investment in the Project which will generate long-term benefits for the Company and returns in the form of dividend income receivable through BIGGAS, thus being beneficial to the Company’s

shareholders. The benefits that the Company will obtain from entering into this transaction are as follows:

(1) Growth in income and improvement of operating performance of TPN and the Company

(2) Diversification of investment to a recurring-income business that generates returns to the Company (3) Investment in a sound and potential project that could provide an opportunity of future business

expansion for the Company as follows: (3.1) The Project delivers a reasonable rate of return.

(3.2) The Project corresponds with the Oil Plan 2015-2036 and accordingly is supported by the

government sector. (3.3) The Project receives cooperation from Thappline in the connection of TPN’s fuel pipeline

transportation system with the pipeline at Thappline’s fuel depot, thus enabling the Project to cater for almost all major oil refineries and depots in the eastern region to TPN’s Khon

Kaen Depot. (3.4) The Project has a strong customer base. TPN’s main target groups are oil traders who are

Thappline’s existing customers.

(3.5) The Project is granted investment promotion privileges from BOI and, hence, is exempted from import duty on machinery under such promotional privileges.

(3.6) The Project has a growth potential with an opportunity to expand customer base and further launch the fuel pipeline transportation system in Lao PDR.



(3.7) The Project provides an opportunity for TPN to extend its aviation fuel pipeline transportation service to airports in the northeastern region in line with the Department of

Airports’ investment plan for the northeastern airport development. (4) The Project provides social, environmental and national contribution, as follows:

(4.1) The Project helps to enhance the country’s fuel transportation efficiency and energy

security. (4.2) The Project provides benefits for the public and the business sector, enabling residents in

the northeastern region to use fuel at a lower price than current price. (4.3) The Project helps to decrease number of large fuel transport trucks, save national budget

for road repair, reduce road accidents and preserve the environment.

However, there are some disadvantages from entering into the transaction as follows:

(1) TPN and the Company will bear higher debts, interest expenses and D/E ratio. (2) Existing shareholders of the Company will encounter dilution effects (in case of successful PP of

new shares with the proceeds thereof to be invested in the Project). (3) TPN will have to provide, and thus incur expenses on, a bank guarantee of Baht 200 million to

Thappline for a period of 30 months.

The transaction is also exposed to the following risk factors:

(1) Risk associated with a heavy reliance on Thappline in terms of pipeline connection, fuel transport management, business consultancy, and knowledge and experience from Thappline

(2) Risk from TPN, BIGGAS and the Company having no direct experience in management of the fuel pipeline transportation business

(3) Risk involved with the case where the Company’s shareholders’ meeting does not approve the asset

acquisition transaction and, hence, TPN, BIGGAS and the Company must record the project expenses already paid by them

(4) Risk of the Project failing to perform as expected (5) Risk concerned with government agencies, as follows:

(5.1) Risk involved with application for a fuel depot construction permit from Tambon Ban Phia

Administration Organization, Ban Phai District, Khon Kaen Province (5.2) Risk involved with the regulatory body’s control over pipeline tariff in the future

(5.3) Risk associated with an increase of pipeline land lease fees by the Department of Highways, Department of Rural Roads, Royal Irrigation Department and State Railway of Thailand

(5.4) Risk involved with approval from ONEP, Ministry of Natural Resources and Environment,

and application for business license type 3 from the Ministry of Energy (6) Risk relating to management of communities that the fuel pipeline passes through and communities

in the area of Khon Kaen Depot (7) Risk of technological changes with respect to a growing use of electric vehicles, hydrogen-powered

vehicles, etc., thus likely resulting in a drop in fuel consumption in the northeastern region (8) Financial risk:

(8.1) Risk in obtaining loans for TPN’s project investment and for PSTC’s and BIGGAS’s

investment in newly issued shares of TPN (8.2) Foreign exchange rate risk as TPN has to import pipe, pump, valve and other equipment

from abroad (8.3) Risk of cost overrun

(8.4) Risk regarding to requirement for additional investment, for instance, if, during the system

testing and fuel transportation, the fuel pressure is inadequate, it may need to construct pressure booster stations along the route

Considering the objective and necessity of the transaction together with the advantages,

disadvantages, benefits and risk factors, the IFA is of the opinion that the transaction will enable the Company and TPN to gain more benefits and business opportunities with an acceptable and controllable

level of business risks, and will be substantially beneficial to society, the environment and the country.

Therefore, the entering into the asset acquisition transaction is considered reasonable.



Part 3: Opinion of the Independent Financial Advisor on the Appropriateness of the

Acquisition Price and Conditions of the Acquiring Assets

The Board of Directors No. 7/2018 held on November 22, 2018 approved the Investment in

the Oil Pipeline Transportation System to Northeastern Region Project (Saraburi – Khon Kaen) (“the

Extension of Oil Pipeline Project” or “the Project”) by Thai Pipeline Network Company Limited (“TPN”), a subsidiary of the Company indirectly held by Biggas Technology Company Limited (“BIGGAS”).

The project will connect to the existing fuel pipeline system of Thai Pipeline Network Company Limited (“Thappline”) at Saraburi Terminal and extend to North Eastern Region through Saraburi

province, Lopburi province, Nakhon Ratchasima province and Chaiyaphum province to the ending terminal at Baan Phai, Khon Kaen province in with a total distance around 350 Km. The new terminal

at Khon Kaen province will have capacity of 150 million liters. The diameter of line pipe is around 16

inches. CapAd has considered the appropriateness of the investment value of the Fuel Pipeline

Transportation System to North Eastern Region Project (Saraburi – Khon Kaen) by constructing the financial forecast of the Project by taking into account the future cash flows of the Project (Free Cash

Flow: FCF) and calculated;

(1) Internal rate of return (“IRR”) of the Project, (2) Net present value (“NPV”) of the Project by using the weighted average cost of capital

(“WACC”) of the Company as a discount rate, and (3) Payback period of the Project

The IFA evaluated the appropriateness of the investment value of the Project by using information obtained from the Company and TPN and other publicly-disclosed information, such as

Form 56-1, audited and reviewed financial statements, and industry information obtained from

www.doeb.go.th, financial information from various websites, and information from the SEC’s website (www.sec.or.th), and the SET’s website (www.set.or.th). However, the IFA has rendered its opinion

based mainly on the truth and completeness of those information and documents at present. Therefore, any change of such information may significantly affect business operation of the Company and TPN,

this transaction and the IFA’s opinion on this transaction as well as the shareholders’ decision.

To support the consideration for entering into the transaction, the IFA prepared the financial forecast based on the projection prepared by the management of FPT and adjusted certain assumptions

so as to reflect overall market conditions and current economic situation as well as to be in accordance with conservative basis. With this regard, the IFA has prepared the financial forecast for a period of 34

years from 2018 - 2051, to be in consistent with the construction period of 3 years and the useful life

of the machinery and equipment (around 30 years)24. In addition, the IFA also considered term of the draft land lease agreement for Saraburi Terminal and the draft operating service agreement of the

Project (between Thappline and TPN),which is 20-year period and can be extended for a period of 10 years, and based on conservative basis.

Summary of the Oil Pipeline Transportation System to Northeastern Region Project are as follows:

Detail of the Project The Oil Pipeline Transportation System to Northeastern Region Project

Pipeline route Saraburi – Lopburi - Nakhon Ratchasima - Chaiyaphum - Khon Kaen

Governors 5 Province 22 Amphor 71 Tumbon

Pipeline length 342 kilometers

24 Actual useful life of the fuel pipeline is over 30 years with proper and regular maintenance.

Many fuel pipeline systems in the United States of America, which were constructed in 1940 – 1950, have been operated over 70 years till the present, such as: - Big Inch Pipeline, constructed in 1942 (https://en.wikipedia.org/wiki/Big_Inch) - Plantation Pipeline, constructed in 1942 (http://www.kindermorgan.com/business/products_pipelines/plantation_history

.aspx) - Platte Pipeline, operated since 1952 (http://www.spectraenergy.com/Operations/Crude-Oil-Transportation/Platte-Pipeline/

and http://consumerenergyalliance.org/cea-shares-insight-keystone-xl-pipeline-meeting/) - Trans Mountain Pipeline, operated since 1953 (http://www.transmountain.com/current-pipeline-operations) - Yellowstone Pipeline, operated since 1954 (http://insideclimatenews.org/news/20150122/ruptured-yellowstone-oil-pipeline-

was-built-faulty-welding-1950s) - Jayhawk Pipeline, operated since 1957 (http://www.jayhawkpl.com/ and http://consumerenergyalliance.org/cea-shares-

insight-keystone-xl-pipeline-meeting/) - Colonial Pipeline, constructed in 1961 (https://en.wikipedia.org/wiki/Colonial_Pipeline)



Detail of the Project The Oil Pipeline Transportation System to Northeastern Region Project

Size of the pipeline Carbon steel pipe with a diameter of 16 inches

Type of oil through pipeline Diesel base, gasohol base and benzene base

Delivery capacity of pipeline 6,000 million liters per year

Storage capacity 142 million liters

Terminal areas Around 200 rais

Project value Baht 9,400.001/ million

Commercial operation of the Project The 4th quarter of 2021

Remark: 1/ consisted of direct cost of around Baht 9,200 million and pre-operating expenses of around Baht 200 million (excluding financial cost during construction of the Project)

Sriracha-Saraburi pipeline is 255 kilometers long and designed with maximum delivery capacity

of 26,000 million liters/year. The route starts from the pumping station in Sriracha, Chonburi Province, receiving oil from Esso Sriracha refinery, Thai Oil Refinery, PTT Oil Terminal and Chonburi Terminal

Co., Ltd. to the downstream terminals in Lumlukka District, Pathum Thani Province and in Saohai

District, Saraburi Province; with the dedicated pipeline to Don Muang Airport Oil Terminal. Map Ta Phut - Sriracha pipeline has been expanded from Sriracha to connect with PTT Global

Chemical Refinery and Star Petroleum Refinery in Map Ta Phut Industrial Estate. This pipeline is 67 kilometers long and designed to have the maximum transportation capacity of 10,600 million liters/year.

The Project starts from the existing oil terminal of Thappline, located in Saohai District, Saraburi

Province to the ending terminal at Banpai, Khon Kaen province with a total distance around 350 kilometers. The Project is expected to supporth the transportation of petroleum to the Upper Northeast

Region and the Middle Northeast Region including the export of petroleum to Laos through Vientiane, Suvannakhet and Thakek borders in the future.

Therefore, the Project will be support the transportation of petroleum through Thappline fuel pipeline network from Esso Sriracha refinery, Thai Oil refinery, PTTGC refinery, SPRC refinery, PTT

Terminal and Chonburi Terminal Co., Ltd. To delivery to gas stations and manufactures in the Upper

and Middle Northeast Region including to export to Laos. Key assumptions for the financial forecast of the Oil Pipeline Transportation System to

Northeastern Region Project are as follows: 1) Revenue from services

Revenue from services derive from (1) throughput income, and (2) handling charge from usage

of Khon Kaen Terminal. Throughput income

The Project will start at the tie-in point at Thappline’s Saraburi Terminal to TPN’s Khon Kaen Terminal. The objective of the Project is to facilitate the transportation of petroleum to the upper

northeast region and the middle northeast region and for exporting to Laos in the future. During January – February 2018, TPN received letter of intent and/or letter of

acknowledgement on the Project from 5 domestic shippers and 2 petroleum companies from Laos. In

addition, in October 2016, TPN entered in to MOU to co-invest and usage of the oil pipeline and oil terminal with a petroleum trading company from Laos.

a. Throughput volume Based on MOU with Thappline, in allocation of pipeline system capacity and oil terminal, TPN

shall give priority to Thappline Shipper over Non-Thappline Shipper, especially to Thappline

shareholder25 shippers. Throughput volume of the Project could be considered in 3 groups as follows:

o Base volume: Domestic throughput volume to be distributed to Upper Northeast Region comprising of Khon Kaen, Udon Thani, Loei, Nong Khai, Roi Et, Karasin, Sakon Nakhon, Nakorn Phanom,

Mukdahan, Bueng Kan and Nong Bua Lam Phun.

o Additional volume: domestic throughput volume to be distributed to other provinces in Middle Northeast Region and some provinces in Lower Northeast Region, namely, Chaiyaphum, Yasothon,

Amnat Charoen and Ubon Ratchathani. o Export of petroleum to Laos via Vientiane, Suvannakhet and Thakek border.

25 Thappline Shareholders comprise of PTT, ESSO, Chevron, Shell, ThaiOil, Kuwait Petroleum and Susco Dealers (Source:

www.thappline.co.th).



Map of Target Provinces

In this financial forecast, the IFA made an assumption on the throughput volume based on

historical petroleum consumption of benzene and diesel in each province in northeast region and

petroleum export to Laos. Petroleum consumption in upper northeast region was around 2,300 – 2,400

million liters per annum with the average growth of 5% per annum in the past 5 years, while the export volume to Laos was around 1,200 million liters per annum.

Petroleum Consumtion in Upper Northeast Region and Chaiyaphum Province, Yasothon

Province, Amnat Charoen Province and Ubon Ratchathani Province

Source: Department of Energy Business, Ministry of Energy Remark: 1/ Only base benzene and base diesel 2/ Petroleum consumption in 2018 was estimated from actual consumption in January – September 2018.

Base

Volume

Additional

Volume



Petroleum Exported to the Lao People’s Democratic Republic

Source: Department of Energy Business, Ministry of Energy Remark: 1/ Excluding Jet A1 2/ Petroleum exported to Laos in 2018 was estimated from actual consumption in January – August 2018 (source:

Presentation by Energy Policy and Planning Office, Ministry of Energy).

In this financial forecast, the IFA assumed petroleum consumption in the upper and middle northeast to increase 2.50% p.a. based on estimated economic growth of Thailand (GDP growth),

where our growth estimation was lower than the average 5-year growth of petroleum consumption in

the upper and middle northeast at 5% p.a. (2014 – 2018F). The export volume to Laos was estimated to increase 2.50% p.a., which was lower than the average growth of export volume to Laos in the past

5 years (2013 – 2017) at 7.36% p.a. due to the export volume to Laos have not significantly increased in the past 3 years.

Furthermore, the IFA has considered market share and throughput volume to Khon Kaen

Terminal by applying following assumptions. o Base Volume: Throughput volume of petroleum to Khon Kaen Terminal comprise of (1) all diesel

and benzene distributed to the upper northeast region by Thappline Shareholders, and (2) diesel and benzene distributed to the upper northeast region by Non-Thappline Shareholders at around

200 million liters per annum or around 30% of petroleum distributed to the upper northeast region

by Non-Thappline Shareholders [consisted of petroleum distributed the upper northeast region by PTG, where PTG has sourced the petroleum from ThaiOil who is a shareholder of Thappline, and

petroleum distributed the upper northeast region by other shippers such as Bang Chak, whom TPN received LOI.]

TPN has approached a number of shippers including Thappline’s shareholders and many of them have shown interest on the Project by issuing of LOI or/ LOA to TPN as the service price is fair and

comparable to transportation cost by other transportation models. In addition, the oil pipeline

transportation will be safer and help reducing of road accident. o Additional volume: Additional volume was estimated for 60% of petroleum distributed by Thappline

Shareholder to other provinces in Middle Northeast Region and some provinces in Lower Northeast Region, namely, Chaiyaphum, Yasothon, Amnat Charoen and Ubon Ratchathani. (Excluding

petroleum distributed to Ubon Ratchathani and Amnat Charoen by PTT, due to PTT has a policy to

transport petroleum to such provinces by train to PTT’s terminal in Ubon Ratchathani), or around 170 million liters in the first year of services (comprised of petroleum distributed to Chaiyaphum

(next to Khon Kaen in the west) for 140 million liters, and petroleum distributed to Yasothon, Amnat Charoen and Ubon Ratchathani for 30 million liters). TPN’s management informed that a number of shippers who is Thappline’ shareholders have interested on the Project as the throughput tariff for additional volume will be lower than the

throughput tariff for base volume by 60%.



o However, in this financial forecast, the IFA has not considered petroleum distributed to Chaiyaphum, Yasothon, Amnat Charoen and Ubon Ratchatha by Non-Thappline Shareholder.

o Export volume to Laos via TPN’s oil pipeline system to Khon Kaen Terminal and then send to Laos was estimated at 50% of export volume to Laos or around 650 million liters per year in the first

service year. Transportation of petroleum through oil pipeline to Khon Kaen Terminal can shorten

distance for transportation by truck to Laos. The distance from Khon Kaen Terminal to Laos is around 250 – 400 Km. (Please see below map). At the present, TPN received LOI from 2 petroleum

companies in Laos, and TPN has entered MOU for co-investment and usage of oil pipeline and oil terminal with a petroleum trading company in Laos.

Source: TPN

b. Throughput Tariff

Throughput Tariff, is applied to the Alternative Transportation Cost (“ATC”), a model which is

calculated based on other and/or current model of oil transportation, and will be cheaper thanother transportation mode by 5%. This price mechanism is based on the MOU between Thappline and TPN

for competitiveness with other transportation approach. TPN has estimated the initial transportation cost for delivery of oil from Saraburi Terminal of

Thappline to other terminals in Kon Kaen province and then transport to gas station by various transportation approaches. The initial transportation cost is around Baht 0.530 per liter and will be

discounted by 5% resulting to the transportation cost of Baht 0.500 per liter. Please see Tariff

Mechanism below.

Fuel Pipeline

Transportation by truck



Summary of Tariff Mechanism for transportation of oil from Saraburi Terminal of Thappline to gas station in the distance of 35 km from other oil terminal in Kon Kaen province.

Transportation Approach Estimated of Throughput Tariff1/ From Khon Kaen Terminal (Baht / liter)

Truck + Oil terminal 0.541

Truck 0.574

Train + Oil terminal + Truck 0.509

10 wheel truck 0.452

Average transportation cost 0.5301/

Throughput tariff through TPN’ s oil pipeline + Truck 0.5002/

Transportation cost from Kon Kaen terminal to gas station 0.0653/

Throughput tariff for Base Volume (Tariff Base Volume) 0.435

Throughput tariff for Additional Volume (Tariff Additional Volume) 0.1744/

Remark: 1/ Weight average transportation cost by market share of each shipper based on the diesel price of Baht 27.65 per liter, which

is the average diesel price in 2007 – 2018F. 2/ Throughput tariff rate plus transportation cost to gas station giving 5% discount. 3/ Estimated transportation cost to gas station with in 35 Km. by truck is around Baht 0.065 per liter based on tariff calculation

model of TPN. 4/ Additional volume tariff is 40% of base volume tariff.

Average diesel price in 2007 – 2018F

Source: The Bank of Thailand

Baht 0.435

per liter

Baht 0.530

per liter

-5%

Baht 0.500

per liter

Baht 0.065 per

liter

S

K

Other KK

Other KK



However, actual throughput tariff rate will be adjusted based on ATC model – 5% (Alternative Transportation Cost – 5%.

Besides, the IFA assumed throughput tariff to increase 1.00% p.a. throughout the projection period, which was equivalent to CAGR of the diesel price in 2007 – 2018F.

Gantry / Handling Charge Handling income will be charged to customers using Khon Kaen Depot. TPN has estimated the

handling rate at Baht 0.0529 per liter in the first service year (Year 2021), which was based on the handling rate charged by Thappline around end of 2015 and increased 1.10% p.a. reference to the

proposal of TPN to Thappline. In addition, the handling rate was assumed to increase 1.10% p.am. (Note: The IFA applied growth rate at 1.10% p.a. which was lower than the average CPI in the past

10 years (2009 – 2018F) around 1.43% p.a. to be inconsistent with TPN’s estimation and based on

conservative basis.) Summary of revenue from services

Revenue from services 2018F5/ 2021F 2022F 2023F 2024F 2025F 2026F 2027F

No. service months (months) - 3 12 12 12 12 12 12

Capacity (million liters) - 1,500 6,000 6,000 6,000 6,000 6,000 6,000

Utilization rate (%) - 47.97% 49.17% 50.40% 51.66% 52.95% 54.27% 55.63%

Throughput volume - TPN’s pipeline (Baht million)

Base volume1/ - 518 2,123 2,176 2,231 2,286 2,343 2,402

- Thappline shareholders 3/ - 470 1,926 1,974 2,023 2,074 2,126 2,179 - Non-Thappline shareholder4/ - 48 197 202 207 212 218 223 Additional volume2/ - 42 173 177 182 186 191 196

- Thappline shareholders 3/ - 42 173 177 182 186 191 196 - Non-Thappline shareholder4/ - - - - - - - - Total domestic throughput volume 560 2,296 2,354 2,412 2,473 2,535 2,598

Export to Laos5/ 159 654 670 687 704 722 740

Total throughput volume 720 2,950 3,024 3,099 3,177 3,256 3,338

Tariff rate

Throughput tariff

- Base rate (Bath/liter) - 0.435 0.439 0.444 0.448 0.453 0.457 0.462

- Additional volume rate (Baht/liter) - 0.174 0.176 0.177 0.179 0.181 0.183 0.185

- Export rate (Baht/liter) - 0.435 0.439 0.444 0.448 0.453 0.457 0.462

Handling tariff - 0.0529 0.0535 0.0541 0.0547 0.0553 0.0559 0.0565

Growth of tariff rate (%) - - 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%

Throughput income - Base volume (Baht million) - 225.25 932.76 965.64 999.67 1,034.91 1,071.39 1,109.16

- Additional volume (Baht million) - 7.35 30.42 31.50 32.61 33.76 34.94 36.18

- Export to Laos (Baht million) 69.37 287.25 297.38 307.86 318.71 329.95 341.58

Total throughput income (Baht million)

- 301.96 1,250.43 1,294.51 1,340.14 1,387.38 1,436.29 1,486.92

Handling income (Baht million) - 38.06 157.77 163.49 169.42 175.57 181.94 188.54

Total revenue from services (Baht million)

- 340.03 1,408.20 1,458.00 1,509.57 1,562.95 1,618.23 1,675.45

Growth of revenue from services (%) - - 314.15% 3.54% 3.54% 3.54% 3.54% 3.54%

Revenue from services 2028F 2029F 2030F 2031F 2032F 2033F 2034F 2035F

No. service months (months) 12 12 12 12 12 12 12 12

Capacity (million liters) 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000

การใชก้ าลงัการผลติ (รอ้ยละ) 57.02% 58.44% 59.90% 61.40% 62.94% 64.51% 66.12% 67.78%


Base volume1/ 2,462 2,524 2,587 2,651 2,718 2,786 2,855 2,927

- Thappline shareholders 3/ 2,233 2,289 2,346 2,405 2,465 2,527 2,590 2,655 - Non-Thappline shareholder4/ 229 234 240 246 252 259 265 272 Additional volume2/ 201 206 211 216 222 227 233 239

- Thappline shareholders 3/ 201 206 211 216 222 227 233 239 - Non-Thappline shareholder4/ 0 0 0 0 0 0 0 0 Total domestic throughput volume 2,663 2,729 2,798 2,868 2,939 3,013 3,088 3,165

Export to Laos5/ 758 777 797 817 837 858 879 901

Total throughput volume 3,421 3,507 3,594 3,684 3,776 3,871 3,967 4,067

Tariff rate

Throughput tariff

- Base rate (Bath/liter) 0.466 0.471 0.476 0.481 0.485 0.490 0.495 0.500

- Additional volume rate (Baht/liter) 0.187 0.188 0.190 0.192 0.194 0.196 0.198 0.200

- Export rate (Baht/liter) 0.466 0.471 0.476 0.481 0.485 0.490 0.495 0.500

Handling tariff 0.0571 0.0577 0.0584 0.0590 0.0597 0.0603 0.0610 0.0617




Growth of tariff rate (%) 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%

Throughput income - Base volume (Baht million) 1,148.26 1,188.73 1,230.64 1,274.02 1,318.93 1,365.42 1,413.55 1,463.38

- Additional volume (Baht million) 37.45 38.77 40.14 41.55 43.02 44.54 46.10 47.73

- Export to Laos (Baht million) 353.62 366.09 378.99 392.35 406.18 420.50 435.32 450.67


1,539.33 1,593.59 1,649.77 1,707.92 1,768.12 1,830.45 1,894.97 1,961.77

Handling income (Baht million) 195.38 202.46 209.81 217.42 225.31 233.48 241.95 250.73


1,734.71 1,796.06 1,859.57 1,925.34 1,993.43 2,063.93 2,136.92 2,212.50

Growth of revenue from services (%) 3.54% 3.54% 3.54% 3.54% 3.54% 3.54% 3.54% 3.54%




Utilization rate (%) 69.47% 71.21% 72.99% 74.81% 76.68% 78.60% 80.56% 82.58%


Base volume1/ 3,000 3,075 3,152 3,230 3,311 3,394 3,479 3,566



Export to Laos5/ 924 947 971 995 1,020 1,045 1,071 1,098


Tariff rate

Throughput tariff




Handling tariff 0.0623 0.0630 0.0637 0.0644 0.0651 0.0658 0.0666 0.0673






2,030.92 2,102.51 2,176.63 2,253.35 2,332.79 2,415.02 2,500.15 2,588.28



2,290.75 2,371.76 2,455.64 2,542.49 2,632.41 2,725.51 2,821.90 2,921.70

Growth of revenue from services (%) 3.54% 3.54% 3.54% 3.54% 3.54% 3.54% 3.54% 3.54%




Utilization rate (%) 84.64% 86.76% 88.93% 91.15% 93.43% 95.00% 95.00% 71.25%


Base volume1/ 3,655 3,746 3,840 3,936 4,034 4,135 4,135 3,101



Export to Laos5/ 1,126 1,154 1,183 1,212 1,242 1,228 1,228 921


Tariff rate

Throughput tariff




Handling tariff 0.0680 0.0688 0.0695 0.0703 0.0711 0.0719 0.0727 0.0734









2,679.51 2,773.96 2,871.75 2,972.98 3,077.77 3,159.86 3,191.46 2,417.53



3,025.03 3,132.02 3,242.79 3,357.48 3,476.22 3,569.46 3,605.56 2,731.53

Growth of revenue from services (%) 3.54% 3.54% 3.54% 3.54% 3.54% 2.68% 1.01% -24.24%

Remark: 1/ Base volume means domestic throughput volume to be distributed to Khon Kaen, Udon Thani, Loei, Nong Khai, Roi Et,

Karasin, Sakon Nakhon, Nakorn Phanom, Mukdahan, Bueng Kan and Nong Bua Lam Phun. 2/ Additional volume means domestic throughput volume to be distributed to other provinces in Middle Northeast Region and

some provinces in Lower Northeast Region, namely, Chaiyaphum, Yasothon, Amnat Charoen and Ubon Ratchathani. However, it is excluding petroleum distributed to Ubon Ratchathani and Amnat Charoen by PTT, due to PTT has a policy to transport petroleum to such provinces by train to PTT’s terminal in Ubon Ratchathani.

3/ Thappline Shareholders comprise of PTT, ESSO, Chevron, Shell, ThaiOil, Kuwait Petroleum and Susco Dealers (Source: www.thappline.co.th).

4/ Non-Thappline shareholder mean any shipper other than Thappline shareholders, such as Bangchak, PTG and IRPC. 5/ Domestic petroleum consumption in 2018 is annualized of actual consumption in January – September 2018, and petroleum

exported to Laos in 2018 annualized of actual consumption in January – August 2018. (Source: Department of Energy Business, Ministry of Energy). In addition, throughput volume to TPN’s pipeline system is estimated at 50% of export volume to Laos.

6/ Additional volume tariff is 40% of base volume tariff.

2) Operating expenses

Operating expenses are right of way rental, utility expenses, employee expenses, repair and maintenance, insurance and other expenses. Key assumptions are as follows:

- Right of way rental is the rental fee for placement of pipeline along the public road. TPN will enter into land lease agreement with the Department of Highways and the Department of Rural Roads.

The rental fee is assumed at 5% of the appraisal price of land and will be increased 15% every 5

years (Reference to the Department of Highways’ Order No. KorKor 0611/157/2544, subject: guideline to determine land lease fee for running of pipe along/under the highway areas.). Total

land rental area for the pipeline with a diameter of 16 inches and distance of 350 Km. (from the Saraburi Terminal of Thappline through Lopburi, Nakhon Ratchasima and Chaiyaphum to be ended

at the Khon Kaen Terminal) is estimated at 175,000 sq.m. In addition, the rental fee is estimated

at Baht 60 per sq.m. (This annual lease fee is calculated by the average appraisal price of land around Baht 1,200 per sq.m. or Baht 4,800 per sq.wah, which is based on the Treasury

Department's land appraisal prices for 2016 – 2019.) - Electricity expenses for main pump and for gantry are estimated at Baht 0.035 per liter and Baht

0.019 per liter, respectively. The electricity expenses are assumed to increase by 2.50% p.a. throughout the projection period. The estimated utility expense per liter was based on technical

study for 16 inches diameter pipeline. However, the IFA compared the estimated utility expenses

of the Project with another fuel pipeline project and viewed that it was appropriated. - Employee expenses consisted of salary, bonus, overtime and employee warfare. TPN has estimated

93 employees (based on the estimation from the management and engineering team of TPN with suggestion from Thappline). The employee expenses are estimated to increase by 5.00% p.a. The

average employee expenses per personnel is Baht 0.50 million p.a. The IFA compared the

estimated average employee expenses per personnel of the Project with another fuel pipeline project and viewed that it was relatively close.

- Insurance expenses consisted of all risk insurance, business interruption and third party insurance. The insurance expenses for assets are estimated at 0.18% of asset value (excluding land), and

insurance expenses for liability are estimated at 0.70% of sum insured.

- Operating expenses to pay Thappline are as follows: (1) Land rental for Saraburi Terminal for to 6,536 sq.m. at the rental fee of Baht 0.98 million p.a.,

and to increase 1% p.a. from the 6th year of the land lease agreement, based on the draft land lease agreement between TPN and Thappline dated October 8, 2018.

(2) Administrative service fee is for providing operating services including but not limited to pipeline scheduling, pipeline oil accounting, and SCADA control. The administrative service fees are

comprised of (a) employee expenses related Thappline manpower at Baht 0.80 million per

month and to increase 5.00% p.a. (based on salary increase rate of Thappline), and (b) management fee at 15% of the employee expenses, based on the draft operating service

agreement with Thappline dated October 8, 2018.

http://www.thappline.co.th/



(3) Transshipment fee comprised of (3.1) Compensation for moving of oil terminal was estimated at Baht 0.0529 per liter (1st

year). The compensation is for Thappline revenue for Saraburi terminal service fee. The compensation rate is calculated based on domestic throughput volume * agreed

rate based on the draft operating service agreement with Thappline. In addition, the

compensation rate was expected to increase 1.10% p.a. based on the proposal to Thappline.

(3.2) Connecting fee is Baht 0.01 per liter (constant) for the domestic throughput volume. This is based on the draft operating service agreement with Thappline dated October

8, 2018. - Repair and maintenance was assumed at Baht 1.50 million per month or around Baht 18 million

p.a. and to increase 2.50% p.a. throughout the projection period. (Excluding the capital expenditure

for the repair, maintenance and replacement of the machinery and equipment for every 5 years). TPN has estimated the regular repair and maintenance expenses based on the annual repair and

maintenance budget of Thapplin. - Other operating expenses were estimated at Baht 1.13 million per month and to increase 2.50%

p.a. throughout the projection period, or around 1.00% of revenue from services. (Unit: Baht million)

Operating expenses 2021F 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F 2031F

Right of way rental 12.08 12.08 12.08 12.08 12.08 13.89 13.89 13.89 13.89 13.89 15.97

Utility expenses 38.85 163.28 171.55 180.23 189.36 198.94 209.01 219.59 230.71 242.39 254.66

Employee expenses 46.68 49.01 51.46 54.03 56.74 59.57 62.55 65.68 68.96 72.41 76.03

Insurance 20.48 81.90 81.90 81.90 82.01 82.01 82.01 82.01 82.01 82.61 82.61

Land rental at Saraburi Terminal

11.76 11.76 11.76 11.88 12.00 12.12 12.24 12.36 12.49 12.61 12.74

O&M expenses 2.76 11.59 12.17 12.78 13.42 14.09 14.79 15.53 16.31 17.13 17.98

Transshipment fee 14.08 58.10 59.95 61.86 63.83 65.87 67.97 70.14 72.39 74.71 77.10

Depreciation expenses 82.64 327.98 327.70 327.69 327.69 338.81 338.81 338.81 338.81 338.81 367.99

Repair and maintenance 4.50 18.45 18.91 19.38 19.87 20.37 20.87 21.40 21.93 22.48 23.04

Other expenses 3.42 13.90 14.25 14.60 14.97 15.34 15.73 16.12 16.52 16.93 17.36

Total operating expenses 237.24 748.05 761.72 776.44 791.95 821.00 837.88 855.54 874.02 893.97 945.49

% operating expense to revenue from services

1.00% 0.99% 0.98% 0.97% 0.96% 0.95% 0.94% 0.93% 0.92% 0.91% 0.90%

Operating expenses 2032F 2033F 2034F 2035F 2036F 2037F 2038F 2039F 2040F 2041F

Right of way rental 15.97 15.97 15.97 15.97 18.36 18.36 18.36 18.36 18.36 21.12

Utility expenses 267.55 281.10 295.33 310.28 325.99 342.49 359.83 378.05 397.19 417.29

Employee expenses 79.83 83.82 88.02 92.42 97.04 101.89 106.98 112.33 117.95 123.85

Insurance 82.61 82.61 82.61 82.92 82.92 82.92 82.92 82.92 84.12 84.12


12.87 13.00 13.13 13.26 13.39 13.52 13.66 13.80 13.93 14.07

O&M expenses 18.88 19.83 20.82 21.86 22.95 24.10 25.30 26.57 27.90 29.29

Transshipment fee 79.57 82.13 84.77 87.50 90.31 93.22 96.23 99.34 102.55 105.86

Depreciation expenses 367.99 367.99 367.99 367.99 378.14 378.14 378.14 378.14 378.14 408.29

Repair and maintenance 23.62 24.21 24.81 25.43 26.07 26.72 27.39 28.07 28.78 29.50

Other expenses 17.79 18.24 18.69 19.16 19.64 20.13 20.63 21.15 21.68 22.22

Total operating expenses 966.69 988.89 1,012.13 1,036.78 1,074.81 1,101.50 1,129.45 1,158.72 1,190.59 1,255.61


0.89% 0.88% 0.87% 0.87% 0.86% 0.85% 0.84% 0.83% 0.82% 0.82%

Operating expenses 2042F 2043F 2044F 2045F 2046F 2047F 2048F 2049F 2050F 2051F

Right of way rental 21.12 21.12 21.12 21.12 24.29 24.29 24.29 24.29 24.29 18.22

Utility expenses 438.42 460.61 483.93 508.43 534.17 561.21 589.62 614.52 629.88 472.41


Insurance 84.12 84.12 84.12 84.63 84.63 84.63 84.63 84.63 84.73 63.55


14.21 14.36 14.50 14.64 14.79 14.94 15.09 15.24 15.39 8.74

O&M expenses 30.76 32.29 33.91 35.61 37.39 39.25 41.22 43.28 45.44 26.84

Transshipment fee 109.29 112.83 116.49 120.27 124.17 128.21 132.38 134.45 135.43 107.61

Depreciation expenses 408.29 408.29 408.29 408.29 418.44 418.44 418.44 418.44 418.44 255.77

Repair and maintenance 30.23 30.99 31.76 32.56 33.37 34.21 35.06 35.94 36.84 27.63

Other expenses 22.78 23.34 23.93 24.53 25.14 25.77 26.41 27.07 27.75 20.81

Total operating expenses 1,289.26 1,324.50 1,361.42 1,400.61 1,454.45 1,496.91 1,541.40 1,580.83 1,610.32 1,143.54


0.81% 0.80% 0.79% 0.78% 0.78% 0.77% 0.76% 0.76% 0.77% 0.76%



3) Administrative expenses Administrative expenses consisted of employee expenses, utility expenses for office,

transportation expenses, entertainment, office stationary and other expenses. Key assumptions are as follows:

- Employee expenses comprised of salary, bonus, over time and employee welfare. TPN has

estimated 24 employees and managements with an average salary for an employee at Baht 0.94 million p.a. and to be increased by 5.00% p.a. The IFA viewed that the employee expense per

employee was appropriated and in relatively high range. - Other administrative expenses consisted of utility expenses for office, transportation expenses,

entertainment, office stationary and other expenses at totaling of Baht 3.84 million p.a. and expected to increase 2.50% p.a.

(Unit: Baht million)

Administrative expenses 2021F 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F 2031F

Employee expenses 5.95 24.99 26.24 27.55 28.93 30.37 31.89 33.49 35.16 36.92 38.77

Other administrative expenses 0.96 3.94 4.04 4.14 4.24 4.35 4.46 4.57 4.68 4.80 4.92

Total administrative expenses

6.91 28.93 30.28 31.69 33.17 34.72 36.35 38.06 39.84 41.72 43.69

% administrative expense to revenue from services

331.75% 318.61% 4.66% 4.67% 4.67% 4.68% 4.69% 4.69% 4.70% 4.71% 4.71%

Administrative expenses 2032F 2033F 2034F 2035F 2036F 2037F 2038F 2039F 2040F 2041F


Other administrative expenses 5.04 5.17 5.30 5.43 5.57 5.70 5.85 5.99 6.14 6.30


45.75 47.91 50.17 52.55 55.04 57.65 60.40 63.27 66.28 69.44


4.72% 4.72% 4.73% 4.74% 4.74% 4.75% 4.75% 4.76% 4.76% 4.77%

Administrative expenses 2042F 2043F 2044F 2045F 2046F 2047F 2048F 2049F 2050F 2051F


Other administrative expenses 6.45 6.62 6.78 6.95 7.12 7.30 7.49 7.67 7.86 5.90


72.76 76.23 79.88 83.70 87.72 91.92 96.34 100.97 105.82 60.50


4.77% 4.78% 4.78% 4.79% 4.79% 4.80% 4.80% 4.81% 4.81% -42.83%

4) Project cost

Total investment in the Oil Pipeline Transportation System to North Eastern Region Project is Baht 9,201.10 million. The details of investment are as follows:

Land cost and land improvement approximately Baht 159.1 million

Land for pipeline placement, 1.6 km: TPN acquired land with total area of 18-1-23 rai in at total

value of Baht 15 million. Land for block valve station: TPN acquired land with total area of 10-0-2 rai at total value of Baht

28.1 million. Land at Kon Kaen Terminal: TPN acquired land with total area of 202-1-92.5 rai in Kon Kaen

province at total value of Baht 116 million.

Advisory fee is around Baht 192 million composed of advisory fee for the Project. Such fee was

purposed by each advisor and the payment has been made in installment as specified in the agreement. The advisory fees are including (1) Engineering Study, (2) Project Management

Consultant, (3) Environmental Impact Assessment Study agreement (EIA), and (4) Corporate Social Responsibility agreement (CSR), to which TPN signed these contracts before being

acquired.

The construction cost of pipeline system and fuel depot is about Baht 8,850 million. This project is a Turn Key project. The construction cost is estimated by Front End Engineering Design advisor

who had an experience to design and construct. The payment condition for construction cost in

general will be made in installment against work progress of the project. However, at present the contractor for this project has not been chosen yet.



In addition to the direct project cost, pre-operating expense before commercial of the Project such as employee expenses, office expenses, transportation expenses and other expenses in relation

to the Project including contingency has been estimated at Baht 202.58 million. Summary of project cost and spending timeline are as follows:


Cash outflow – Project cost ประมาณการตน้ทนุ

Spending Timeline

2017A 2018F 2019F 2021F 2022F

Land 159.101/ 11.60 147.50 - - -

EPC for pipeline and terminal 8,850.00 - - 3,097.50 3,097.50 2,655.00

Advisory fee and project management fee 192.002/ 48.04 34.16 42.60 33.60 33.60

Total direct cost of the Project 9,201.10 59.64 181.66 3,140.10 3,131.10 2,688.60

Employee expense and other expenses 202.58 10.13 33.29 42.54 56.72 59.90

Total project cost 9,403.68 69.77 214.95 3,182.64 3,187.82 2,748.50

Remark: 1/ Land of oil terminal comprised of 25 land title deeds with total areas of 202-1-91.2 rai at Amphoe Bang Phai, Khon Kaen

Province. Total value of land was Baht 116 million where TPN made deposit in 2017 and payment in May 9, 2018. Total area of land of pipeline placement is 18-1-23 rai with the value of Baht 15 million, and total area of land for block valve

station is 10-0-2 rai with the value of Baht 28.10 million. These land has been under acquisition process and expect to be transferred within 2018.

2/ The advisory fees are including Engineering Study, Project Management Consultant, Environmental Impact Assessment Study agreement (EIA), and Corporate Social Responsibility agreement (CSR).

The IFA considered the investment cost in the Extension of Fuel Pipeline Transportation System

to Northern Region by Fuel Pipeline Transportation Limited (“FPT”) with total pipeline length of 585

Km. and having the project cost (excluding cost of land) of Baht 9,59126 million or average project cost of Baht 16.40 million per Km. To compare with the average project cost of this Project with the direct

project cost (excluding cost of land) at Baht 25.38 million per km, the average project cost of the Project is higher than those of the North Pipeline Project. However, details of bother projects are

different that may affect the cost of the project such as specification of machinery, size of pipe,

geography, no. of pump station, capacity of tank farm, and etc.

5) Capital expenditure The Project is a capital intensive investment project, whereas the investment after the

commercial operation of the Project is limited. In addition to annual maintenance and replacement of spare parts (included in operating

expenses), majority of capital expenditure after the initial investments will be every 5 years and 10

years as follows: o Repair and maintenance of pump and valve

o Repair and maintenance of pipeline o Pipeline inspection by using intelligent pigs

o Inspection and cleaning of tank farm

o Major maintenance of the pipeline system and other components o Replacement of major pump and other component of the oil terminal, and etc.

The engineering team of TPN has estimated the budget for the major maintenance of the Project by basing on the suggestion from Thappline.


Year 5 Year 10 Year 15 Year 20 Year 25 Total

Repair and maintenance 55.60 101.50 152.25 203.00 253.75 766.10

Replacement - 200.00 - 400.00 - 600.00

Total capital expenditure 55.60 301.50 152.25 603.00 253.75 1,366.10

In addition, TPN has estimated an investment in booster pump station to increase capacity of the fuel pipeline. The investment is totaling Baht 535.00 million in 2027 – 2029.

6) Financial costs

TPN received indicative term sheet from 2 commercial banks. Therefore, in this financial

forecast, project funding was assumed to be a long-term loan from financial institution around Baht 7,500 million or around 75% of the project cost (excluding financial cost during the construction of

26 Source: Information Memorandum for the Asset Acquisition of Bangkok Aviation Fuel Services PCL. dated December 18, 2015,

and Notification letter Re: Report on the progress and increase of investment budget in the Northern Route Fuel Pipeline Expansion Project of Bangkok Aviation Fuel Services PCL. dated August 7, 2017.



the Project), and the remaining fund from shareholders’ equity. Term of the long-term loan was assumed 15 years with 3 years grace period and the interest rate of 5.00% p.a.

In addition, the IFA assumed that TPN may need to have shareholders loan in 2021 to finance the operation and interest expenses. Interest rate was assumed similar to those of long-term loan

from financial institution.

7) Corporate income tax

TPN has planned to apply for the BOI to obtain investment promotion on this Project. Group B activity-based incentive is expected to be granted for the exemption of import duty on machinery,

raw material and non-tax incentives. Corporate income tax rate of 20% was applied for this financial forecast.

8) Asset and liability turnovers Key working capital turnovers of the Project based on the policy of TPN are as follows:

Trade and other account receivables 30 days on average Spare parts and material 90 days on average

Trade and other payables 30 days on average

9) Terminal value

CapAd assumes the Project to be terminated after 30 years from the commercial operation based on the estimated useful life of the fuel pipeline for 30 years27 and under conservative basis. The

IFA assumed that TPN would sell all plots of land (the oil terminal, block valve and pipeline placement) at the end of 30 years from the commercial operation of the Project. The selling price of land in year

2051 was expected at the current price of the land and to increase 3% p.a. , based on the land prince

change during the past 10 years (2006 – 2015) which was in the range of 2.9% - 5.5% per annum (Source: Research of Agency for Real Estate Affair Company Limited 2016).

10) Discount rate

The IFA has applied the Weighted Average Cost of Capital (“WACC”), which derived from the

weighted average of Cost of Debt (Kd) and Cost of Equity (Ke) of TPN as a discount rate to calculate the present value of free cash flows from the Project based on the following formula;

WACC = Ke*E/(D+E) + Kd*(1-T)*D/(D+E)

Ke = Cost of equity or shareholders’ required rate of return (Re) Kd = Cost of debt or loan interest rate of TPN

T = Corporate income tax rate E = Total shareholders’ equity

D = Interest-bearing debt

Cost of equity (Ke) or the required rate of return for shareholders (Re) is derived from the

Capital Asset Pricing Model (CAPM) as follows;

Ke (or Re ) = Rf + β (Rm - Rf)

Whereby

Risk Free Rate (Rf) = 3.42% p.a. based on 30-year government bond yield (information as of November 16, 2018), which is currently the longest government bond that is

regularly issued or offered for sale by the Government and aligned with the operating period of the Project.

Beta (β) = 0.43 – 2.07 times based on average unlevered beta (1-year historical data until November 16, 2018) of a comparable SET-listed company28 in Energy &

27 Please Footnote 21. 28 The IFA considered 9 SET-listed company in in Energy & Utilities Sector and Resources Industry with refinery business and/or

distribution of petroleum products, namely, BangChak, Esso, IRPC, PTG, PTT, RPC, SPRC and ThaiOil, and found that these



Utilities Sector and Resources Industry with the business of oil pipeline transportation services similar to the Project (TPN), which is Bangkok Aviation

Fuel Services PCL. (BAFS), and then adjusted with the estimated debt to equity ratio of TPN in the future.

Market Risk (Rm) = 12.63% p.a., which is the 25-year average rate of annual return from

investment in the Stock Exchange of Thailand from 1993 – 2017 as it is the suitable period to reflect average return from the SET.

Kd = Estimated interest rate of the Project at 5.00% p.a. based on the term sheet proposed for this Project from a commercial bank.

D/E Ratio = Estimated D/E ratio at 0.0 – 3.03 times, equivalent to estimate D/E ratio of TPN in the future.

T = Estimated corporate income tax rate = 20% p.a.

Therefore, WACC is equal to 7.23% – 8.64% p.a.

By using above information and assumptions, the calculation of the Project’s Statement of

Income in 2021 – 2051 are as follows; (Unit: Baht million)

Income statement 2021F 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F 2031F Revenue from

services

340.03 1,408.20 1,458.00 1,509.57 1,562.95 1,618.23 1,675.45 1,734.71 1,796.06 1,859.57 1,925.34

Gross profit 102.79 660.15 696.28 733.13 771.00 797.22 837.58 879.17 922.04 965.61 979.85

EBITDA 178.54 959.20 993.70 1,029.13 1,065.52 1,101.31 1,140.04 1,186.20 1,236.58 1,287.58 1,329.04

EBIT 95.88 631.22 666.01 701.44 737.83 762.50 801.23 841.12 882.19 923.89 936.17

Net profit 5.94 208.23 246.40 297.25 351.36 396.93 454.58 513.16 574.36 637.71 683.53

Income statement 2032F 2033F 2034F 2035F 2036F 2037F 2038F 2039F 2040F 2041F Revenue from services

1,993.43 2,063.93 2,136.92 2,212.50 2,290.75 2,371.76 2,455.64 2,542.49 2,632.41 2,725.51

Gross profit 1,026.74 1,075.04 1,124.79 1,175.72 1,215.94 1,270.26 1,326.19 1,383.76 1,441.82 1,469.89

EBITDA 980.99 1,027.13 1,074.62 1,123.17 1,160.89 1,212.61 1,265.80 1,320.50 1,375.53 1,400.45

EBIT 1,373.86 1,420.00 1,467.49 1,516.04 1,563.92 1,615.63 1,668.82 1,723.52 1,778.55 1,833.62

Net profit 756.35 815.46 859.69 898.54 928.72 970.09 1,012.64 1,056.40 1,100.43 1,120.36

Income statement 2042F 2043F 2044F 2045F 2046F 2047F 2048F 2049F 2050F 2051F Revenue from services

2,821.90 2,921.70 3,025.03 3,132.02 3,242.79 3,357.48 3,476.22 3,569.46 3,605.56 2,731.53

Gross profit 1,532.64 1,597.20 1,663.61 1,731.41 1,788.34 1,860.57 1,934.82 1,988.63 1,995.25 1,587.99

EBITDA 1,893.06 1,954.14 2,016.91 2,080.88 2,143.95 2,211.96 2,281.80 2,330.99 2,323.32 1,783.25

EBIT 1,459.89 1,520.97 1,583.73 1,647.71 1,700.62 1,768.64 1,838.48 1,887.67 1,889.42 1,527.48

Net profit 1,167.91 1,216.78 1,266.99 1,318.17 1,360.50 1,414.92 1,470.79 1,510.13 1,511.54 1,221.99

Summary Free Cash Flow of the Project: FCF are as follows:

(Unit: Baht million) FCFF Q4.2561F 2562F 2563F 2021F 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F

Free Cash Flow to the Firm

(60.64) (3,214.57) (3,211.69) (2,589.47) 851.68 928.91 951.53 918.69 998.72 887.78 854.19 889.15

Present Value of Free Cash Flow to Firm

(59.47) (2,913.13) (2,682.01) (1,990.43) 609.04 619.48 591.72 532.68 539.89 447.39 401.21 389.19

FCFF 2032F 2033F 2034F 2035F 2036F 2037F 2038F 2039F 2040F 2041F 2032F


822.73 1,154.23 1,180.56 1,211.78 1,248.07 1,134.55 1,327.15 1,368.18 1,410.58 1,454.18 895.15


335.52 438.48 417.66 399.21 382.87 324.09 353.02 338.89 325.35 312.33 179.03

FCFF 2042F 2043F 2044F 2045F 2046F 2047F 2048F 2049F 2050F 2051F 2042F


1,548.19 1,595.34 1,644.03 1,694.06 1,491.35 1,797.61 1,851.57 1,907.24 1,948.23 1,894.06 1,529.62


288.33 276.66 265.49 254.74 208.83 234.39 224.81 215.64 205.11 185.69 142.16

companies were also involving to other business risk factors such as marketing risk, volatility of oil price, and etc. Therefore, the IFA has not included those company in calculation of the beta.




The Project Base Case

PV of FCFF as of September 30, 2018 2,793.83 PV of Terminal Value 33.40

Total present value of the Project as of September 30, 2018 2,827.23 Add: Cash and cash equivalent 171.891/ Less: Interest bearing debt (200.98)1/

Net Present Value (NPV) of the Project as of September 30, 2018 2,798.14

Internal Rate of Return (IRR) (% p.a.) 9.85% p.a.

Payback Period (years) from September 30, 2018 13.30 years

Payback Period (years) from October 1, 20212/ 10.30 years

Remark: 1/ Cash and cash equivalent was Baht 171.89 million, short-term loans from related company was Baht 200.00 million, and

liabilities under financial lease was Baht 0.98 million, based on the internal financial statement of TPN for the period ended September 30, 2018, which was reviewed by the auditor for preparation of consolidated financial statement of the parent company but did not issue the full audit report.

2/ The Project is expected to start commercial operation in October 1, 2021.

Based on the feasibility study of the Project applying a discount rate at 7.23% – 8.64% p.a.,

the net present value of free cash flow (NPV) is Baht 2,798.14 million. The internal rate of return (IRR)

of the Project is 9.85% p.a., and the payback period is 10.30 years form the commercial operation of the Project (October 1, 2021).

In addition, the IFA has conducted a sensitivity analysis by adjusting the diesel price to Baht 30 per liter and Baht 20 per liter causing the throughput tariff – base rate to be equivalent to Baht

0.4450 per liter and Baht 0.4150 per liter, respectively. In addition, the IFA also adjusted the discount

rate or WACC increased (decreased) by 2.00% of the calculated discount rate mentioned above. Summary of the return of the Project from sensitivity analysis are as follows:

Scenario 1 Base Case Scenario 2

Discount Rate: 7.09% - 8.81%

Diesel price (Baht/liter)1/ 20.00 27.65 30.00

Base Tariff (Baht/liter)1/ 0.4150 0.4350 0.4450

Net Present Value (NPV) of the Project as of September 30, 2018

1,979.52 – 2,425.34 2,594.62 – 3,067.90 2,900.10 – 3,387.09

Internal Rate of Return (IRR) (% p.a.) 9.31 9.85 10.11

Payback Period (years) from September 30, 2018

13.80 13.30 13.07

Payback Period (years) from October 1, 20212/ 10.80 10.30 10.07

Remark: 1/ Throughput Tariff is applied to the Alternative Transportation Cost (ATC). Change in transportation cost of other

transportation approaches (A main factor to impact transportation cost is change in diesel cost.) will affect throughput tariff. The IFA, therefore, conducted sensitivity analysis by analyzing of the effect of change in diesel price to base tariff, which was calculated from oil transportation cost model, and found that 1% change in diesel price will effect base tariff to change around 0.13% on average.

2/ The Project is expected to start commercial operation in October 1, 2021.

From above table, the net present value of free cash flow (NPV) of the Project is Baht 1,979.52 – 3,387.09 million. The Internal rate of return (IRR) of the Project is 9.31% – 10.11% p.a., and the

payback period is 10.07 – 10.80 years form the commercial operation of the Project (October 1, 2021).

Summary of the IFA opinion on the appropriateness of the investment of the Pipeline

Transportation System to Northeastern Region Project From above information, the IFA views that the Project is able to generate a reasonable return

to the Company due to the net present value of the Project is Baht 1,979.52 – 3,387.09 million, and IRR of the Project is higher than WACC of the Project, while the payback period is 10.07 – 10.80 years

form the commercial operation of the Project (October 1, 2021). Therefore, the investment in the

Project is feasible and appropriate.



Part 4: Summary of the Independent Financial Advisor’s Opinion on the Asset Acquisition

Transaction

Please see the opinion of the Independent Financial Advisor in “Executive Summary” section

on page 5 of this report.

However, shareholders should carefully study all documents and information attached to the

notice to this shareholders’ meeting, for the sake of their own decision making. Decision whether to approve the Asset Acquisition Transaction or not rests primarily and is the sole discretion of the

shareholders.

CapAd, as the Independent Financial Advisor, hereby certifies that it has provided the above

opinion cautiously in accordance with professional standard for the benefit of the shareholders.

Sincerely Yours,

The Independent Financial Advisor Capital Advantage Co., Ltd.

-Patchara Netsuwan-

(Mr. Patchara Netsuwan) Managing Director

-Patchara Netsuwan-

(Mr. Patchara Netsuwan)

Supervisor

Attachment: Opinion of the IFA -TRANSLATION- Power Solution Technologies PCL.

Attachment 1 Page 1

Attachment 1 Business Overview and Operating Results of

Biggas Technology Company Limited

1. General Information

Company Name : Biggas Technology Company Limited (“BIGGAS”) Main Business : General construction; maintenance of PTT’s NGV stations; sale of LPG,

Natural Gas for Vehicle (NGV) and LNG products; maintenance and test of NGV trailers; equipment procurement and installation for LPG Depot at

LPG Terminal

Head Office : 9/199 Moo 3 Banmai Sub-district, Pakkret District, Nonthaburi 11120 Telephone : 0 2961 6655

Fax : 0 2931 6435 Registered Capital : Baht 408,160,000 divided into 81,632,000 common shares at par value of

Baht 5.00 per share Paid-up Capital : Baht 408,160,000 divided into 81,632,000 common shares at par value of

Baht 5.00 per share

2. Nature of Business

Big Gas Technology Co., Ltd. (“BIGGAS”) was incorporated on September 21, 2011 by experienced team in alternative energy engineering. BIGGAS obtained a license for being a Liquefied

Petroleum Gas (LPG) distributor under Section 7 to gas stations, retail stores and industrial plants.

BIGGAS is in the process to apply for a license to be a fuel oil dealer with the Department of Energy Business to support business expansion in the future.

Main business of BIGGAS is to provide energy engineering service especially to the integrated business related to natural gas including design, construction, procurement, installation and

maintenance of PTT’s NGV service stations in the central, northern and northeastern regions.

Currently, BIGGAS provides service to more than 160 PTT’s NGV service stations. It also provides natural gas pipeline installation and maintenance services to other NGV service providers. Moreover,

BIGGAS also provides maintenance and test of NGV trailer and equipment installation for LPG Depot at Bangpakong gas depot.

Another major business of BIGGAS is sale of LPG products under trademark “BIGGAS”. The product distribution can be divided into 2 channels.

1) Wholesale of LPG to LPG service stations, industrial plants and LPG filling plants. At

present, revenue from LPG business is derived from transportation sector. 2) Sales of LPG cylinder to residential consumers

In 2018, BIGGAS has a plan to sell LNG or Liquefied Natural Gas (LNG) to various industrial customers for example, automotive industry, glass industry, and food and beverage industry. The use

of LNG in various industries provides an opportunity to increase in sale portion to industrial sector.

The advantage of LNG is cheap and safe. The acquisition of JN Energy Corporation Co., Ltd. in January 2018 enabled BIGGAG to

operate NGV service station business, having 20-year NGV supply agreement with PTT. There are 2 NGV service stations; one is located in Saraburi (commenced commercial operation in Q2/2016) and

another is located in Khon Kaen (commenced commercial operation in Q1/2018). Such two stations have total of 16 nozzles, by which NGV is transported via gas pipeline. Sale of NGV is approximately

45 - 55 tons per station per day.

3. Board of Directors

List of BIGGAS’s Board of directors as of November 6, 2018 was as follows:

Name Position

1. Mr. Panu Seetisarn Director

2. Mr. Kampol Tatiyakavee Director

3. Ms. Anong Panicharoennan Director


Attachment 1 Page 2

Name Position

4. Mr. Sethavut Boonsanit Director

5. Mr. Thanat Pawarawipulyakorn Director

6. Mr. Suradech Malaithong Director

7. Ms. Piyapat Suwannasang Director

Source: BIGGAS’s affidavit. Remark: The authorized directors are Mr. Thanat Pawarawipulyakorn or Ms. Piyapat Suwannasang or Mr. Suradech Malaithong co-sign with Mr. Panu Seetisarn or Mr. Kampol Tatiyakavee or Ms. Anong Panicharoennan total 2 persons and affix the company’s seal.

4. Shareholder Structure

As of November 6, 2018, BIGGAS had issued and paid-up capital of Baht 408,160,000 dividend into 81,632,000 common shares with par value of Baht 5 per share. The details are as

follows:

Name Number of shares % Shareholding

1. Power Solution Technology PCL. 41,632,000 51.00

2. Mr. Thanat Pawarawipulyakorn 20,800,000 25.48

3. Mrs. Pavida Kunchorn Na Ayutthaya 4,160,000 5.10

4. Mr. Suradech Malaithong 2,860,000 3.50

5. Ms. Piyapat Suwannasang 2,800,000 3.43

6. Mrs. Viratchada Tatiyakawee 2,400,000 2.94

7. Mr. Apichart Jutrakul 1,600,000 1.96

8. Ms. Onjira Damrongsak 1,000,000 1.23

9. Mr. Jirapong Jailak 1,000,000 1.23

10. Mr. Pornsak Hirunchoopong 1,000,000 1.23

Total top 10 major shareholders 79,252,000 97.08

Other shareholders 2,380,000 2.92

Total 81,632,000 100.00

Source: BorAorJor 5 as of November 6, 2018.

5. Summary of Financial Positions and Operating Performance The summary of financial information for the year 2015 - 2017 ended December 31, 2015,

2016 and 2017 are as follows:

Consolidated Financial statement (Unit: Baht)

Dec 31, 2015 Audited

(Restate)

Dec. 31, 2016 Audited


Balance Sheet

Current assets 133,146,636 196,066,223 830,142,602

Non-current assets 86,801,217 86,243,367 996,447,135

Total assets 219,947,853 282,309,590 1,826,589,737

Current liabilities 118,858,843 166,582,752 240,342,431

Non-current liabilities 13,793,099 11,209,893 20,339,225

Total liabilities 132,651,942 177,792,645 260,681,656

Issued and paid-up capital 100,000,000 100,000,000 408,160,000

Share premium - - 1,141,840,000

Retained earnings (loss) (13,208,279) 4,272,992 15,908,081

Non-controlling interest 504,190 243,953 -

Shareholders’ equity 87,295,911 104,516,945 1,565,908,081

Total liabilities and shareholders’ equity 219,947,853 282,309,590 1,826,589,737

Income statement

Revenue from sale and service 162,733,397 861,448,806 1,281,470,041

Cost of goods sold and services (131,678,340) (779,018,261) (1,202,399,709)

Gross profit 31,055,057 82,430,545 79,070,332

Other income 2,539,073 4,118,247 2,447,524

Earnings before selling and administrative expenses 33,594,130 86,548,792 81,517,856

Selling and administrative expenses (32,905,910) (59,762,653) (62,279,502)

Earnings before interest and tax 688,220 26,786,139 19,238,354

Financial costs (2,302,585) (5,601,265) (3,576,726)

Corporate tax (4,101,097) (3,963,840) (4,214,302)

Net profit (loss) (5,715,462) 17,221,034 11,447,326


Attachment 1 Page 3

Remark: - Financial statements of BIGGAS for the year 2015 ended December 31, 2015 was audited by Certified Co., Ltd. which is a

certified auditor and it was restated by M.A. Audit Co., Ltd. Both audit companies were not in the approved list of the SEC. - Financial statements of BIGGAS for the year 2016 ended December 31, 2016 was audited by M.A. Audit Co., Ltd., the

certified auditor which is not in the approved list of the SEC, expressed qualified opinion because such auditor was appointed as an auditor of the company on November 7, 2016 so there was no opportunity to observe the examination of inventory at the beginning of the year.

- Financial statements of BIGGAS for the year 2017 ended December 31, 2017 was audited by EY Office Co., Ltd., a certified auditor in an approved list of the SEC expressed qualified opinion because EY Office Co., Ltd. was appointed as an auditor of BIGGAS in November 2016. They did not observe the company’s taking physical inventories at the beginning of the year and was unable to apply procedure to satisfactory determine the volume and value of inventories as at December 31, 2016 shown in Balance Sheet amounting to Baht 19 million which was carried forward to be the beginning balance and be a part of cost of goods sold in 2017.

Analysis of performance and financial status of BIGGAS

Operating performance Revenues

In 2015, BIGGAS’s major revenue from construction, procurement, installation, and

maintenance of LPG service station and revenue from sale was Baht 162.73 million, increased by 53% from 2014 due to higher sale and service income. For the year 2016, major revenue from sale

and service of BIGGAS was Baht 861.45 million, increased by 429% from 2015 because of new business to sell LPG and related products. As a result, BIGGAS generated revenue from sale of LPG of

Baht 563.65 million which in 2014 there was no such revenue. In addition, there was revenue from

sale of other related products amounting to Baht 105.62 million. For the year 2017, BIGGAS had sale and service income totaling Baht 1,281.47 million, increased by 49% from 2016 due to the increase

in sale of LPG from Baht 720.44 million to Baht 1,168.77 million or increased substantially by 62%. Gross profit margin

In 2015, BIGGAS reported gross profit of Baht 31.06 million or 19% gross profit margin which was relatively high as a result of high margin of Kang Koi Construction Project that generated

high profit. In 2016, BIGGAS had gross profit of Baht 82.43 million, equivalent to gross profit margin

of 9.6% of main income which was lower than that of 2015. In 2017, gross profit of BIGGAS was Baht 79.07 million, equivalent to 6.2% gross profit margin. The decelerated gross profit margin was

due to lower gross profit margin of all business especially construction and maintenance service business from intense competition resulting in the squeeze of gross margin of Nam Pong Construction

Project.

Selling and administrative expenses In 2015, there was selling and administrative expense of Baht 32.91 million, decreased by

3% from previous year as a result of the reduction in number of employee in maintenance and service business due to lower business volume and lower income from this business. In 2016,

BIGGAS had selling and administrative expenses of Baht 56.92 million, increased by 73% from the

previous year due to higher employee related expenses, commission, and transportation expenses. In 2017, selling and administrative expense of BIGGAS was Baht 62.78 million, increased by 10%

from 2016 because of the increase in transportation expenses. Financial costs

In 2015, BIGGAS’s financial costs were Baht 2.30 million, increased by Baht 1.25 million from 2014 as a result of the investment in contractor business, construction of NGV service station,

Kangkoi branch. In 2016, BIGGAS had financial costs of Baht 5.60 million, increased by Baht 3.30

million in 2015 due to the investment in LPG business and construction of Nam Phong NGV Station. In 2017, BIGGAS had financial cost of Baht 3.57 million, declined from 2016 because BIGGAS

obtained loan from PSTC as a source of fund for project development and also obtained credit facilities with special interest rate from KBANK.

Net profit (loss)

In 2015, BIGGAS reported net loss of Baht 5.72 million due to high selling and administrative expense representing 20% of sale and service income together with interest expense and income

tax. In 2016, there was net profit of Baht 17.22 million. In 2017, BIGGAS posted net profit of Baht 11.45 million, decreased by 33% from 2016.


Attachment 1 Page 4

Financial Status Assets

At the end of 2015, total assets were Baht 219.95 million, increased by Baht 130 million or

145% from end of 2014. This was mainly due to the increase in current assets including accounts receivable and other receivable, accrued income, and inventory. Non-current assets items that

increased significantly were net property, plant and equipment which increased by Baht 43.94 million. At the end of 2016, BIGGAS had total assets of Baht 282.31 million, increased by Baht 62.36

million, or 28% growth from end of 2015. Such increase was mainly due to the increase in current

assets including accounts receivable and other receivable, accrued income and inventory by Baht 49.57 million and Baht 18.69 million respectively because BIGGAS started sale of LPG products

business under Department of Energy Business’s regulation which specified that the company has to reserve LPG product at 1% of LPG domestic sale volume in each period resulting in an increase in

finished goods in the form of LPG products. In addition, there was construction of NGV service station at Kangkoi. Moreover, the accounts receivable of the company also increased.

At the end of 2017, BIGGAS reported total assets of Baht 1,826.59 million, increased

substantially from the end of 2016 as a result of the acquisition of 100% share of Thai Pipeline Network Co., Ltd. (TPN) in Q4/2017. As a result, TPN became BIGGAS’s subsidiary so the assets and

liabilities of TPN had to be consolidated to BIGGAS’s financial statement. This caused an increase in all current assets items. The significant increased items were cash, accounts receivable, loan from

related party, and restricted bank deposit. Non-current assets that increased substantially were

property, plant and equipment, deposit for investment in subsidiary, and the difference between cash payment for the purchase of investment and the assets of the subsidiary amounting to Baht 773.61

million. Liabilities

At the end of 2015, total liabilities of BIGGAS were Baht 132.65 million, increased by Baht 50.95 million or 62% increased from 2014. Major increased items included account payable and

short-term loan from financial institution.

At the end of 2016, BIGGAS had total liabilities of Baht 177.79 million, increased by Baht 45.14 million or increased by 34% from 2015. Major increased items were account payable and other

payable, and short-term loan from related party. At the end of 2017, BIGGAS had total liabilities of Baht 260.68 million, increased by Baht

82.89 million, increased by 46% from 2016. Major increased items were account payable and loan

from related company to be used as working capital. Equity

At the end of 2015, BIGGAS had total equity of Baht 87.30 million, increased by Baht 79.04 million or increased by 957% from previous year mainly due to the increase in registered capital from

Baht 20.00 million to Baht 100.00 million.

At the end of 2016, BIGGAS’s total shareholders’ equity was Baht 104.52 million, increased by 17.22 million or 20% from previous year as a result of the increase in retained earnings.

At the end of 2017, total shareholders’ equity of BIGGAS was 1,565.91 million, increased by 1,461.4 million which resulting from the increase of registered capital from Baht 100 million to Baht

308.16 million and there was share premium of Baht 1,148.84 million.

6. Industry Outlook

LPG industry in Thailand LPG Demand

(Unit: million ton) 2015 2016 2017 2018 (Jan - Sep)

Volume % Volume % Volume % Volume %

Household 2,094 39.14 2,110 35.18 2,151 34.76 1,619 33.38

Industry 577 11.1x 610 10.17 650 10.50 513 10.58

Petrochemical 931 17.4x 1,810 30.18 2,070 33.45 1,833 37.79

Automotive 1,731 32.37 1,466 24.45 1,319 21.31 885 18.25

Total 5,349 100.00 5,997 100.00 6,189 100.00 4,850 100.00

Change (%) -14.9 12.11 3.20 N/A


Attachment 1 Page 5

Source: The Energy Policy and Planning Office, Ministry of Energy.

LPG demand was accelerated over the past 3 years. However, the demand in household sector, industrial sector, and automotive sector was declining due to lower fuel price while the

demand for petrochemical sector increased continuously as a result of the industry growth. During January – September 2018, the demand for LPG was 4.85 million tons, of which 1.83 million tons

representing 37.79% of total demand was the demand from petrochemical sector followed by

household sector of 1.62 million tons representing 33.38% and then automotive sector and industrial sectors, respectively.

LPG industry outlook

In 2018, the competition in LPG business was still intense especially in transportation

industry where the demand for LPG is diminishing but the LPG operators still want to maintain their sale volume resulting in higher price competition. The estimated LPG demand in Thailand excluding

petrochemical sector is 4.1 million tons/year. The demand for household sector is around 2.1 million tons/year. The Energy Policy and Planning Office (EPPO) forecasted 2018 energy demand with the

economic growth assumption at 3.60% - 4.60% and the growth in demand of primary energy (fuel oil, natural gas, renewable energy, imported electricity) is at 2.1% or 2.81 million barrels of crude oil

equivalent per day in line with the economic growth. The demand of almost all types of primary

energy increases except the demand for natural gas that is expected to decrease from lower consumption in electricity generation and NGV production.

The overview of LPG demand in 2018 is anticipated to increase by 5%. Household sector is expected to grow by 2.5%, industrial sector will increase by 5.7%, automotive sector decreases

continuously from 2015 and expected to decrease by 10.9% due to the switch of consumers to use

gasoline which is cheaper instead. For the petrochemical sector, the demand is expected to increase by 17.8% in accordance with the industry growth from the expansion of global economy.

Natural gas in Gulf of Thailand is going to deplete in the future including the gas sale and purchase agreement with Myanmar that will be gradually expired from 2022. Therefore, Thailand will

need to import more LNG which implies higher gas price. Based on the gas management plan of the Energy Policy and Planning Office, Ministry of Energy, it is forecasted that in the next 20 years the

source of gas will be in the following proportion: 29% purchased from domestic producers, 71%

imported LNG from abroad. Such forecast is based on the assumption that future LPG demand shall be at the same level as 10-year historical growth of LPG demand which equal to 4.61% per year.

Source: www.ryt9.com, Energy Policy and Planning Office, and PTT


Attachment 2 Page 1

Attachment 2 Business Overview and Operating Results of

Thai Pipeline Network Company Limited

1. General Information

Company Name : Thai Pipeline Network Company Limited (“TPN”) Main Business : Petroleum transportation pipeline service provider, obtain the rights from

the Ministry of Energy to develop the fuel pipeline from Saraburi Province to the northeastern and northern regions

Head Office : 349 S.J. Infinite One Business Complex, Room 1903-1906, 19th floor

Viphavadi Rangsit Road, Jompol Sub-district, Jatuchak District, Bangkok Branch : 9/199 Moo 3 Banmai Sub-district, Pakkret District, Nonthaburi Province.

Registered Capital : Baht 1,350,000,000 divided into 13,500,000 common shares at par value of Baht 100 per share

Paid-up Capital : Baht 624,975,000 divided into 3,000,000 common shares paid-up Baht 100 per share, and 10,500,000 common shares paid-up Baht 30.95 per share

2. Nature of Business Thai Pipeline Network Co., Ltd. (“TPN”) was established in 2015 to operate fuel pipeline

transportation project to the northeastern and northern regions with the objective to be a full-service logistic provider to support the increasing demand of fuel in the future. Currently, the project is under

development.

The route for petroleum transportation pipeline to northeastern region will starts by connecting the pipeline to Thappline’s pipeline at Saohai District, Saraburi Province, laying the

pipeline parallel to the highway and rural roads pass Saraburi, Lopburi, Nakorn Ratchasima, Chaiyaphum and end at Khon Kaen Depot, Banpai District (Depot has capacity of 150 million liters)

with total distance of 350 kilometers. Primarily, group of TPN’s customers are Thappline’s

shareholders including PTT, ESSO, Chevron, Shell, TOP, Kuwait Petroleum, Susco Dealers and other additional customers such as PTG, Bangchak, and Oil companies in Laos. TPN expects to start the

construction of petroleum pipeline and oil depot in Q2/2019 and commercially operate in Q4/2021. The fuel transportation via pipeline is cheaper than other transportation method e.g., truck or

train. It would help lower logistics cost for Thailand in the long run. TPN may construct petroleum pipeline from northeastern region to Lao People’s Democratic Republic in the future to expand market

outside Thailand. TPN evaluates that in the next 10 years the fuel demand growth in Laos will be 5%

per year.

3. Board of Directors List of TPN’s Board of directors as of December 6, 2018 was as follows:

Name Position

1. Mr. Jakkrit Jarujinda Director

2. Mr. Panu Seetisarn Director

3. Ms. Anong Panicharoennan Director

4. Mr. Kampol Tatiyakavee Director

5. Mr. Thanat Pawarawipulyakorn Director

6. Ms. Piyapat Suwannasang Director

Source: TPN’s affidavit. Remark: The authorized directors are Mr. Panu Seetisaarn or Mr. Kampol Tatiyakavee or Ms. Anong Panicharoennan co-sign with Mr. Thanat Pawarawipulyakorn or Ms. Piyapat Suwannasang, total 2 persons and affix the company’s seal.

4. Shareholder Structure

As of December 6, 2018, TPN had registered capital of Baht 1,350,000,000 at par value of

Baht 100 per share. The issued and paid-up capital of Baht 624,975,000 divided into 3,000,000 common shares paid-up Baht 100 per share and 10,500,000 common shares paid-up Baht 30.95 per

share. The details are as follows:


Attachment 2 Page 2

Name Number of Registered Capital Paid-up capital % Shareholding shares (Baht) (Baht) %

1. Biggas Technology Co., Ltd. 13,499,998 1,394,999,800 624,974,800 46.29 99.9998

2. Mr. Panu Seetisarn 1 100 100 100.00 0.0001

3. Mr. Thanat Pawarawipulyakorn 1 100 100 100.00 0.0001

Total 13,500,000 1,350,000,000 624,975,000 46.29 100.0000

Source: BorAorJor 5 as of December 6, 2018.

5. Summary of Financial Positions and Operating Performance - Statement of Financial Positions for the year 2015 - 2017 ended December 31, 2015, 2016,

and 2017 are as follows:

Statement of Financial Positions (Unit: Baht)




Current assets

Cash and cash equivalents 502,810 690,270 2,189,482

Trade account receivables and other receivables - 1,933,395 2,461,447

Short-term loan to related party 24,578,534 24,200,000 -

Restricted deposit (within 1 year) - - 50,000,000

Other current assets 7 461,736 1,365,408

Total current assets 25,081,351 27,285,401 56,016,337

Non-current assets

Deposit for land - - 11,357,877

Equipment and vehicle - net - 16,594,891 70,801,381

Intangible assets - - 56,084

Total non-current assets - 16,594,891 82,215,342

Total assets 25,081,351 43,880,292 138,231,679

Current liabilities

Other payables 10,000 7,432,298 43,493,333

Short-term loan 290,000 10,620,000 67,100,100

Financial lease – current due - 394,015 414,140

Other current liabilities 22,804

Total current liabilities 300,000 18,446,312 111,030,377

Non-current liabilities

Financial lease – net of current due - 1,287,723 873,583

Total non-current liabilities - 1,287,723 873,583

Total liabilities 300,000 19,734,036 111,903,960

Shareholders’ equity

Share capital (par value of Baht 100 per share)

Authorized share capital

1,000,000 common shares at par value of Baht 100 per share 100,000,000 100,000,000 100,000,000

Issued and paid-up capital

2015-2016: 1,000,000 common shares at Baht 25 per share 2017: 1,000,000 common shares at Baht 100 per share

25,000,000 25,000,000 100,000,000

Retained loss (218,649) (853,744) (73,672,281)

Total shareholders’equity 24,781,351 24,146,256 26,327,719

Total liabilities and shareholders’equity 25,081,351 43,880,292 138,231,679

- Comprehensive Income Statement for the year ended December 31, 2015, 2016, and 2017

Comprehensive Income Statement (Unit : Baht)

2015* Audited

2016 Audited

2017 Audited

Revenue

Interest income 79,255 1,470,362 648,429

Other income - 21,315 74,612

Total revenue 79,255 1,491,677 723,041

Expenses

Selling and administrative expense 297,904 2,077,588 72,386,188

Total expenses 297,904 2,077,588 72,386,188

Net loss before financial costs (218,649) (585,911) (71,663,147)

Financial costs - (49,184) (1,155,390)

Net loss (218,649) (635,095) (72,818,537)


Attachment 2 Page 3

Remark: * Financial statements for the year 2015 from October 1 – December 31, 2015 because the company was incorporated on

October 1, 2015. - Financial statements for the year 2015 - 2016 ended December 31, 2015 and 2016 was audited by CPA Associates

(Thailand) Co., Ltd., which is not an auditor approved by the SEC. - Financial statements for the year 2017 ended December 31, 2017 was audited by EY Office Co., Ltd. which is a certified

auditor approved by the SEC.

Analysis of performance and financial status of TPN

Operating performance Total revenues In 2015, TPN had total revenue of Baht 0.08 million which was derived from interest income

from short-term loan to related party as TPN was just established on October 1, 2015. In 2016, TPN had total revenue of Baht 1.49 million or increased by Baht 1.41 million, equivalent to 1,755%

increased from 2015. Most of income was derived from interest income of Baht 1.47 million from

short-term loan to related party. TPN did not have revenue from main business yet because the project is under development and it has not started commercial operation. For the year 2017, TPN

generated interest income of Baht 0.65 million decreased by Baht 0.82 million or 56% decreased from previous year due to no loan to related party.

Gross profit In 2015-2017, TPN did not have any gross profit because the project was still under

development and has not started the commercial operation.

Selling and administrative expenses In 2015, TPN reported administrative expense of Baht 0.29 million mainly was pre-operating

expense for the incorporation of the company of Baht 0.27 million and the expenses for the documentation of fuel pipeline transportation project to the northern region. In 2016, TPN had

administrative expenses of Baht 2.08 million, increased by Baht 1.78 million or 597% from the

previous year because of the employment of staffs to run the project resulting in the increase in employee related expenses. In 2017, TPN recorded administrative expenses of Baht 72.39 million,

increased substantially from previous year as there was deposit for land of Baht 50.5 million and additional expense to operate the project.

Financial costs

In 2015, TPN had no financial costs because there was no loan or financial lease. In 2016, TPN reported financial costs of Baht 0.05 million increased by 0.05 million as a result of the incurring

of loan and financial lease. In 2017, TPN’s financial costs were Baht 1.15 million, increased by 1.10 million from previous year due to Baht 56.48 million loan from related party in the form of less than 1

year promissory note with interest rate of 1%-6% per annum. Corporate tax

TPN did not have corporate tax in 2015 - 2017 because there was loss from operation.

Net profits TPN had net loss of Baht 0.22 million in 2015, Baht 0.63 million in 2016, and Baht 72.82

million in 2017, respectively as the project was under development and it has not started the commercial operation, therefore, no service income was generated. There was only interest income

which was less than administrative expenses, resulting in loss from operation in the past 3 years.

Financial status Assets At the end of 2015, TPN had total assets of Baht 25.08 million. Major asset items were short-

term loan to related party while at the end of 2016, total assets of TPN were Baht 43.88 million, increased by Baht 18.80 million or 75% from 2015. The increase was mainly due to the increase in

non-current assets including equipment and vehicle (net) which increased by Baht 16.59 million from

previous year. This was because TPN had invested in a new project so the purchase of assets for business operation was required. For the year 2017, TPN’s total assets were Baht 138.23 million,

increased by Baht 94.35 million. Major current asset items that increased including restricted cash deposit of Baht 50 million which was used as collateral to issue performance guarantee. Non-current


Attachment 2 Page 4

asset items that increased were deposit for land of Baht 11.35 million and property, plant and equipment of Baht 54.21 million for use in business operation.

Liabilities At the end of 2015, TPN had total liabilities of Baht 300,000 which were other payables and

short-term loan. At the end of 2016, TPN recorded total liabilities of Baht 19.73 million, increased by

Baht 19.43 million or 6,478% from 2015. Major increased liability items included other payables and short-term loan for investment in the future project. At the end of 2017, TPN’s total liabilities were

Baht 111.90 million, increased by Baht 92.17 million from 2016 as a result of the increase of other payables and short-term loan from related party as a source of fund for future project.

Shareholders’ Equity At the end of 2015, TPN had total shareholders’ equity of Baht 24.78 million with the issued

and paid-up capital of Baht 25.00 million and net loss for the period of Baht 0.22 million. At the end

of 2016, TPN had total shareholders’ equity of Baht 24.14 million, decreased by Baht 0.64 million or 3% decreased from previous year due to the increase in net loss for the period. In 2017, TPN called

for unpaid shares amounting to Baht 75 million resulting in an increase in paid-up capital to Baht 100 million. However, TPN’s retained loss increased to Baht 73.67 million from the cumulative loss from

operation. As a result, TPN had total shareholders’ equity of Baht 26.33 million at the end of 2017.

6. Industry outlook

There are 2 major fuel pipeline transportation service providers as follows: (1) Fuel Pipeline Transportation Ltd. (FPT) was established in May 1991 according to the

resolution of the cabinet as proposed by the National Energy Policy Office Committee to operate, store and transport fuel via underground pipeline which laid parallel to the railway tracks. Total

distance was 69 kilometers from Oil Refinery of Bangchak Petroleum pass through Shell oil depot and

Chevron oil depot at Chongnonsi area to FPT’s fuel depots at Don Muang Airport and end at FPT’s fuel depot at Bang Pa-In district, Ayutthaya Province which is the fuel distribution center to various

regions of Thailand. FPT had 3 main fuel depots which are (a) Don Muang Depot shall receive aviation fuel for

aircrafts via the fuel pipeline transportation system to store in the reserved tanks in order to inspect

its quality according to international standard prior to distribution and handover to Bangkok Aviation Fuel Service PCL. (BAFS), the fuel aircraft service provider at Don Muang Airport, (b) Suvarnabhumi

Depot is located adjacent to Suvarnabhumi Airport, the depot shall receive aviation fuel from Makkasan Control Station via the fuel pipeline to store in the reserved tanks with the capacity of 24

million liters, and (c) Bang Pa-In Depot located adjacent to the depot of Bangchak Petroleum PCL.

The depot shall receive on-ground products via the fuel pipeline from Bangchak Oil Refinery at Bangchak, Shell Depot and Chevron Depot at Chongnonsi area to store in the terminal tanks with the

total capacity of 75 million liters. (2) Thai Petroleum Pipeline Co., Ltd. (Thappline) was incorporated in January 1991 to

provide petroleum pipeline transportation service. Currently, Thappline provides petroleum pipeline transportation service in 3 main routes. Total distance was 360 kilometers divided into (a) Sriracha-

Saraburi pipeline is 255 kilometers long and designed with maximum delivery capacity of 26,000

million liters/year. The route starts from the pumping station in Sriracha, Chonburi Province, receiving oil from Esso Sriracha refinery, Thai Oil Refinery, PTT Oil Terminal and Chonburi Terminal Co., Ltd. to

the downstream terminals in Lumlukka District, Pathum Thani Province and in Saohai District, Saraburi Province; with the branch pipeline to Don Muang Airport Oil Terminal, (b) Map Ta Phut -

Sriracha pipeline has been expanded from Sriracha to connect with PTT Global Chemical Refinery and

Star Petroleum Refinery in Map Ta Phut Industrial Estate, of which is 67 kilometers long, and (c) Lumlukka - Suvarnabhumi pipeline has been expanded from Lumlukka Oil Terminal to Suvarnabhumi

Airport Terminal, at 38 kilometers in length with the capacity to transport aviation fuel to Suvarnabhumi Airport to support the total demand of 100 million passengers/year.

Thappline had 2 oil terminals at Lumlukka in Pathum Thani Province and Saohai District, Saraburi Province. Both store various grades of petroleum products and are the reserve source of fuel


Attachment 2 Page 5

and distribution center responsible for distributing petroleum to Bangkok and metropolitan areas. Both terminals can store up to 170 million liters.

Industry Outlook At present, the growth of fuel demand in Thailand was around 2% - 3% per year. Such

demand growth depends on various factors e.g. economic growth, growth of automotive industry

especially in the northeastern region where there is continuous growth. This stimulates the growth of fuel demand in this region. In addition, the fuel demand from neighboring country (Lao People’s

Democratic Republic) has increased over the past 5 years. The average export growth of fuel from Thailand to Laos is higher than 7% per year from the growth in the country as well as the need of

fuel in dam project development and power plant project development resulting in the substantial growth in fuel demand. FPT forecasts that the average domestic growth of fuel demand would be at

2% per year.

Picture displays Depot location and Fuel Pipeline Transportation System in Thailand

Source: Fuel Transportation Pipeline Ltd., Thai Petroleum Pipeline Co., Ltd., Thansettakij newspaper 37th year, issue no. 3,296 dated September 14 - 16, 2018, www.thailandindustry.com, and www.teacher.ssru.ac.th.

FPT invests in fuel pipeline transportation project to the northern region which starts from Bang Pa-In Depot, Bang Pa-In district, Ayutthaya Province with total distance of 569 kilometers. It

would be divided into 2 phases which are Phase 1 petroleum pipeline extension project that starts from Bang Pa-In Depot to Pichit Depot with the distance of 367 kilometers and Phase 2 petroleum

pipeline extension project that starts from pumping station and branch out Kampangpetch route to

Lampang Depot with the distance of 202 kilometers and expected to start commercial operation within 2019.

For the extension of petroleum pipeline to the northeastern Region, TPN expressed the interest to invest in the Petroleum Pipeline Extension to the Northeast Region Project and having

terminal depot at Banpai District, Khon Kaen Province. This would extend from the existing petroleum pipeline of Thappline at depot in Saohai District, Saraburi Province by using the 16 inches diameters

pipeline with total project distance of 350 kilometers. Thappline evaluates that if the two new routes

of pipeline were connected to Thappline’s pipeline, it will enhance the flexibility in petroleum pipeline management because Thappline’s pipeline connects to 4 large oil refinery companies (ESSO Refinery,

Thai Oil, PTTGC and Star Petroleum) and increase the fuel distribution volume to the northern and northeastern regions.


Attachment 3 Page 1

Attachment 3 Memorandum of Understanding (MOU) for the Connection and Operation of Petroleum

Pipeline Extension to North1/ and Northeast Regions of Thailand Counter parties : Thai Petroleum Pipeline Co., Ltd. (“Thappline”)

Thai Pipeline Network Co., Ltd. (“TPN”)

Date of agreement : May 23, 2017

Terms and conditions : - TPN is undertaking to construct and complete a pipeline system from the Tie-in Point at Thappline’s Saraburi terminal to TPN’s terminal in the northern1/ region of Thailand at Kampangpet (hereinafter referred as “SRB-KPP Pipeline”).

- TPN is undertaking to construct and complete a pipeline system from the Tie-in Point at Thappline’s Saraburi terminal to TPN’s terminal in the northeastern region of Thailand at Banpai, Khon Kaen (hereinafter referred as “SRB-KK Pipeline”).

- It is Thappline’s intention to allow TPN to connect the Pipeline System to Thappline’s System, subject to the Parties’ agreement on the terms and conditions relating to the connection and operation of the Pipeline System and the fulfillment of any conditions precedent under this MOU and the Pipeline Connection Agreement.

- There is a condition stating that TPN has to appoint Thappline as the sole pipeline operator and Thappline shall not enter into other similar MOU.

Effective date and Termination

: This MOU shall come into force from the effective date and shall terminate 2 years from the effective date. The termination or the extension or renewal of agreement shall depend upon mutual agreement.

Operating service and rental agreement

: - Operating service agreement: Thappline shall be pipeline operator to schedule and control product transportation from Thappline’s system to the pipeline system.

- Rental agreement: TPN shall rent Thappline's available land at or around Thappline’s Tie-in Points in Saraburi to accommodate the connection of the pipeline system.

The utilization of fuel pipeline

: - Thappline has the right to use Pipeline Systems and End Terminals based on the terms and conditions agreed by TPN. In the event that there is capacity constraint in the Pipeline System, TPN shall give priority to Thappline Shippers to use the services of the Pipeline System and End Terminals and among Thappline Shippers on the same basis as Thappline uses for allocation of capacity constraint in Thappline’s system among its shareholder shippers.

- TPN shall be responsible for the maintenance expense of the extension of fuel pipeline from Saraburi Depot to the northern and northeastern region and shall co-operate with Thappline that has expertise and operation standard to maintain pipeline system.

- TPN shall procure insurance coverage

Transshipment Fee : - Transhipment fee shall be calculated from the transshipment volume multiplied by the transshipment fee per unit, while the administrative service fee shall be calculated from the actual cost plus mark up as agreed in the Operating Service Agreement.

Manpower plan : Thappline shall provide the following manpower; At Saraburi Terminal, Thappline shall employ Pipeline Scheduler (full-time), Pipeline Controller (Full-timer), Oil Accountant (Allocated) and Lab Technician (Allocated). Meanwhile, at the End Terminal in Khon Kaen and Kampangpet, Pipeline Controller (full-time) will be employed.

Financial : TPN has to provide a bank guarantee in the amount of Baht 50 million to guarantee Engineering, Procurement and Construction (EPC) to complete the project within the project timeline of 2 years for the SRB-KK Pipeline and within 4 years for the SRB-KPP Pipeline1/. If TPN fails to perform in accordance with the agreement, Thappline can call upon such bank guarantee. If TPN reasonably believes that the project is not feasible within the specified timeframe, TPN shall inform Thappline in writing and the case must be mutually agreed.

Remark: 1/ At present, Fuel Pipeline Transportation Ltd. (FPT) is under the process of developing petroleum pipeline to the northern region project for the route from Ayutthaya – Pichit and Kampangpet - Lampang. It is expected to complete within 2019 so TPN plans to connect the petroleum pipeline to the north from Thappline’s depot in Saraburi Province with FPT’s petroleum pipeline at one of the province but TPN has not studied or negotiated with FPT yet. - SRB stands for Saraburi - KK stands for Khon Kaen - KPP stands for Kampangpet

Attachments of MOU

1. Draft Pipeline Connection Agreement

Counter parties : Thai Pipeline Network Co., Ltd. (“TPN”) Thai Petroleum Pipeline Co., Ltd. (“Thappline”)

Date of agreement : [●]


Attachment 3 Page 2

Connection Period : 20 years which might be extended for another 10 years. TPN has to give Thappline a written notice prior to the expiry date of the agreement.

Exclusivity : 1. TPN has exclusive right to connect Thappline’s Pipeline System. 2. Thappline shall not enter into any fuel pipeline construction and pipeline connection

agreement with other party as long as this agreement is in full force and effect

Event of Default : 1. When any party materially breaches any provision of the agreement and such breach is not cured within 15 days after notice or the party become insolvent, enters bankruptcy, or make an assignment for the benefits of creditors, or fails to pay any sum due.

2. When there is event of default, the non-default party may terminate this agreement upon notice to the defaulting party, or withhold any payment due to the defaulting party, and/or pursue any other remedy.

2. Draft Operating Service Agreement of Petroleum Pipeline Extension to Northeast Region of

Thailand Counter parties : Employer : Thai Pipeline Network Co., Ltd. (“TPN”)

Contractor : Thai Petroleum Pipeline Co., Ltd. (“Thappline”)


Term of service : 20 years which might be extended for another 10 years. TPN has to give Thappline a written notice before the expiry date agreement.

Scope of services, duty and responsibility of Service Provider (Thappline)

: 1. Thappline will be the sole pipeline operator who provide operating service for petroleum products transshipment through SRB-KK Pipeline as well as planning, scheduling and controlling the transshipment from SRB Terminal to KK Terminal as required by TPN’s customers.

2. Thappline will transship quantities specified in the Definitive Transshipment Program from SRB Terminal to the Custody Delivery Point at KK Terminal.

3. Thappline will responsible to assign, allocate, manage and control the manpower to comply with the applicable laws, regulations with cares and in accordance with the international standard.

4. Thappline acknowledges and agrees that manpower shall not be deemed as TPN’s employee under labor laws and Thappline shall be responsible for the wages payment in accordance with the labor law.

5. Thappline will responsible for paying expenditures incurred in connection with manpower assigned to work at SRB Terminal and KK Terminal which comprise of monthly remuneration and all welfares under labor laws in the capacity of the employer of those manpower.

Duties and responsibility of TPN

: 1. TPN shall advise Thappline of its customers’ Three-Year Forecast, One Year Forecast and Monthly Forecast of the estimated total quantity of the products to be transshipped from the Custody Transshipment Point at SRB Terminal to the Custody Delivery Point at KK Terminal.

2. TPN shall prepare and maintain SRB-KK Pipeline, KK Terminal and related facilities in a reliable condition to be able to perform transshipping of products according to the Definitive Transshipment Program.

3. TPN shall provide working area with tools and equipment which is required to perform service of manpower.

Event of Default : 1. TPN fail to pay any payment when due and fails to remedy such failure within 90 days from the date of due payment.

2. An event of default by Thappline shall be the occurrence of any the following events 2.1 Thappline enter to a similar agreement with any other person with regard to the

construction and operation of the Pipeline extension project in the same route as the SRB-KK Pipeline.

2.2 Thappline could not efficiently perform or breaches one of terms.

3. Draft Rental Agreement

Counter parties : Lessee : Thai Pipeline Network Co., Ltd. (“TPN”) Lessor : Thai Petroleum Pipeline Co., Ltd. (“Thappline”)


Land details : Part of the land at Saraburi Terminal in Saohai Sub-district, Saohai District, Saraburi Province with total land area of 6,536 square meters.

Renal objective : To use in petroleum pipeline business

Rental period : 20 years from [●] until [●]

Renewal conditions : When the rental period ends, the lessor agrees to renew the rental agreement for at least 10


Attachment 3 Page 3

years. The lessee shall give written notice to the lessor at least 6 months prior to the last day of leased period. In case of renewal of rental agreement, the rental period and rental rate shall be mutually agreed in written by the parties.

Rental rate and payment

: Rental fee is Baht 980,400 per month, payable on monthly basis. The parties agree to increase rental rate by 1% per year starting from the 6th year of this agreement.

Sub-lease and assignment

: The lessee shall not sublease of land or assign leasehold right as well as not sublease of building or equipment of pipeline system on land without written consent from the lessor.

Termination clause : 1. When any party materially breaches any provision of the agreement, the non-default party shall give written notice to the defaulting party to cure within 60 days. If the defaulting party does not cure within the specific timeframe, the other party has right to terminate the agreement and claim for any damage immediately.

2. The lessee become insolvent as adjudged by the Court 3. If the lessee breaches any provision of the agreement, the lessor has the right to

terminate the rental agreement and the lessee allow the lessor to confiscate all or part of the collateral as the lessor deems appropriate and the lessor still has the right to claim any damage from the lessee.

Effect of termination : In case the agreement is terminated by any reasons except that the lessor breaches the provision of the agreement, the lessee has to transfer the ownership of all assets to the lessor within 60 days from the termination date of this agreement.

enclosure no. 3

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