Land lease included in PTT transfer package

Land lease included in PTT transfer packagePTT Plc is expected to complete the transfer of three gas pipelines to the Finance Ministry within three months and pay lease fees backdated for five years under the Energy Ministry plan to be submitted to the Cabinet for approval today.
Published on December 18, 2007
Energy Minister Piyasvasti Am-ranand said that once the Cabinet approves the plan, it is clear how PTT would be financially affected by the Supreme Administrative Court's ruling. Then, it would pave way for trading in PTT shares to resume after being suspended last Friday.
He said he would put PTT on the priority list of items to be discussed by the Cabinet today.
Meanwhile, the Administrative Court yesterday rejected a new petition by the Foundation for Consumers seeking a court order for PTT to prepare valuation reports on its assets.
The court argued that a cause for the case was not warranted as the Cabinet had not made any resolution on the matter, according to foundation member Rosana Tositrakul. The court suggested that a further petition could be filed when it became apparent that the Cabinet would not follow the court ruling delivered last week, she said.
Subject to be transferred to the Finance Ministry's Treasury Depart-ment are 32 rai of land on which three gas pipelines are located. The three pipelines are the Thai-Burma, Ratchaburi-Wang Noi, and Wang Noi-Bang Pakong pipelines.
A pipeline in the Gulf of Thailand and the pipeline linking the Joint Development Area (JDA) to Chana in the southern province of Songkhla will be excluded because they fall under the auspices of the Energy Business Act, Piyasvasti said.
The resolution was reached yesterday at the meeting between Piyasvasti, Finance Minister Chalongphob Sussangkarn, PTT president Prasert Bunsumpun, Stock Exchange of Thailand president Patareeya Benjapholchai and related agencies. They discussed the PTT assets and valuation assessments of the natural gas pipelines that are to be transferred to the state under the court's ruling.
Based on the decision to transfer only three pipelines, the value of the assets to be split from PTT is likely to be less than Bt100 billion, a source from PTT estimated.
The value would become clear after the Cabinet endorses the package. Then, investors can calculate the impact on PTT and trading of its shares can be allowed to resume.
In the proposal to the Cabinet, PTT will also pay a lease fee for the pipelines backdated to 2001, when the privatisation took place.
Chalongphob said that the Finance Ministry would evaluate the lease fee based on the interests of the shareholders and consumers as well as the standard rates applied by the Treasury Department for other privatised state enterprises like Airports of Thailand.
Piyasvasti said that to facilitate the transfer, the Energy Ministry has set up a working committee to finalise the procedures in line with the court ruling on Friday. The committee is chaired by Deputy Energy Permanent Secretary Norkhun Sitthipong.
He noted that the ministry would only ask the Cabinet for consent in principle. The transfer would require time for inspection of the land and the direction of the pipelines. The ministry would also need to take into account contracts PTT made with landowners. Representatives of the Office of the Auditor General, as well as other organisations, would participate in this process.
"I told the committee to pay what can be paid, such as the backdated lease fee though the fee was not included in the ruling. As a listed company, PTT needs shareholders' consent for whatever comes above the ruling. If a vote on this issue is necessary, the Finance Ministry and other related parties cannot cast their votes due to conflict of interest," Piyasvasti said.
Still, it should be remembered that though assets are transferred to the Finance Ministry, PTT must still bear liabilities incurred from the pipeline investment, he said.
PTT yesterday issued a statement saying it would strictly follow the court's order by releasing the pipelines and land before the establishment of the committee to supervise the energy business as per the Energy Business Act BE 2550. PTT, however, cannot act beyond the court's decision. The transfer of assets other than those stipulated by the ruling requires the approval of the shareholders.
PTT noted in its statement that the court ruled that it still had the right to utilise its current landholdings by paying returns to the state as required by the Finance Ministry. Nonetheless, the return rate should take into account the debts that PTT accumulated to construct the gas pipelines.
Watcharapong Thongrung
The Nation