PTT Plc set to pay commercial rates

PTT Plc set to pay commercial rates

Consumers could see higher energy prices

WICHIT CHANTANUSORNSIRI YUTHANA PRAIWAN

The rental rate that PTT Plc will pay to use the national gas-pipeline network will be set on commercial terms, according to Treasury Department officials. Three models could used to determine the rental fee for the pipeline, said Amnuay Preemonwong, the deputy director-general of the Treasury Department.

The government could stipulate a set return on assets in calculating the rental fee, or demand a revenue-sharing percentage from PTT's operations. The third option would be to use a net revenue-sharing formula, minus the 17 billion baht already invested by PTT in the land-based pipeline segments.

In any case, Mr Amnuay said the rental fee would be subject to a 15% increase every five years. The rental increases would be based on an assumption of 3% inflation per year and would be in line with standard practice used by the Treasury Department in assessing property values.

''The rental fee will be set on a commercial basis, considering that shareholders benefiting from PTT include both private Thai and foreign shareholders,'' he said. The Finance Ministry is the largest single PTT shareholder at 52%.

The Supreme Administrative Court earlier this month ordered PTT Plc to return to state ownership pipeline assets constructed on property gained through land expropriation while PTT was a state enterprise.

PTT, which was privatised and listed on the Stock Exchange of Thailand in 2001, said the ruling would affect about 15 billion baht worth of assets, counting only pipeline segments on land gained from expropriation. The majority of PTT's gas pipeline, running underwater in the Gulf of Thailand, was not stipulated for transfer.

On Dec 18, the cabinet agreed to a preliminary rental rate set at a minimum 5% of revenues minus operating and maintenance expenses of another 3%.

Mr Amnuay said that overall, 400 kilometres of the pipeline would be returned to the Finance Ministry. The ministry is also expected to receive backdated rentals from PTT's privatisation in October 2001, which, if using the minimum rate of 5% minus expenses, would be around 350 million baht per year.

Cabinet ministers agreed to fix the final rates based on a balancing of needs among consumers, shareholders and PTT itself.

A high rental rate, while maximising returns for the government, could potentially result in higher gas and electricity prices. A low rate, in contrast, would raise allegations of favouritism for PTT and private shareholders.

A working group formed to consider the issue met for the first time yesterday. The next meeting is scheduled for Jan 3, with the final rate to be announced later in the month.

Mr Amnuay said committee members used as one test case the 30-year rental agreement of the Mahboonkrong shopping complex with Chulalongkorn University.

Anon Sirisaengtaksin, a PTT senior executive vice-president, said the final rate should consider the various needs of the public and stakeholders.

''If the rate is too high, it will hurt our shareholders and power consumers will need to bear some of the costs. But if the rate is too low, government income will be affected. We'll have to strike a balance,'' he said.

''We can't say [the base rate] will begin at 5%. It might be more, it might be less.''

In another development, PTT executives said yesterday that imports of liquefied natural gas (LNG) would be delayed by one year to 2012 due to delays in negotiations with Iran.

PTT's new 30-billion-baht LNG terminal at Map Ta Phut is expected to become operational in 2011.

The company has opened talks with suppliers in Egypt, Oman and Qatar about possibly supplying LNG to compensate for the delay in Iranian shipments.

Chitrapongse Kwangsuksathit, a PTT executive vice-president, said that PTT planned to import three million tonnes per year of LNG from the Pars site, a joint venture of National Iranian Oil Co, TotalFinaElf and Petronas.

Egypt could supply another one million tonnes of LNG per year and another two million each from Qatar and Oman.

''The amount of supplies from each country has yet to be concluded. These numbers are just preliminary estimates, and much depends on the results of our negotiations,'' Mr Chitrapongse added.

LNG prices in the global market have moved upward in line with crude oil prices and higher demand from East Asia. Thailand is seeking new LNG supplies to help meet growing natural gas demand. Demand is projected to reach 5,000 million standard cubic feet per day (mmcfd) by 2011 from 3,300 mmcfd now, driven in part by the rising popularity of natural gas as a fuel source for automobiles.