PTT's listing ruled as legal

General News - Saturday December 15, 2007

PTT's listing ruled as legal

Stock market saved from devastating blow

PENCHAN CHAROENSUTHIPAN

The Supreme Administrative Court yesterday saved Thailand's stock market and economy from a potentially devastating blow by ruling in favour of PTT Plc's listing on the stock market.

The court, however, ordered PTT to transfer its expropriated assets with an estimated value of 100 billion baht, consisting of 32 rai of expropriated land and 3,000 kilometres of gas transmission pipelines, to the state.

Supreme Administrative Court chief judge Jarin Hatthakam read out the two-hour verdict yesterday, ruling out three out of four allegations the plaintiffs made against PTT and cabinet members involved in the 2001 privatisation.

This saves PTT from delisting from the Stock Exchange of Thailand.

The Foundation for Consumers and four consumer rights activists filed a court challenge on Aug 31 last year against PTT's privatisation.

In the four-pronged challenge, first, they claimed the then Thaksin Shinawatra administration breached the 1999 state enterprise capitalisation law in setting up a committee to oversee the privatisation before cabinet approval.

Second, there was a conflict of interest in the privatisation as two of the three members of the committee overseeing the privatisation process held PTT shares.

Third, there was no legitimate public hearing before the privatisation, and fourth, PTT kept the right to expropriated public property after being privatised as authorised by two royal decrees. As a result, the plaintiffs asked the court to revoke the royal decrees.

On the first allegation, the court ruled there was nothing illegal in the privatisation because the two members of the committee overseeing it had no conflict of interest. The court also viewed PTT's public hearing process prior to the privatisation as sufficient as advertisements were adequate in local newspapers which have large national coverage, both in Thai and English.

As for the legality of the royal decree determining the powers, rights and assets of PTT and the other decree transforming PTT from a state enterprise into a public company, the court considered the gas transmission pipeline system and the land attached to it as well as the expropriation rights as the public domain.

PTT as a state enterprise, according to the 1978 law on the Petroleum Authority of Thailand, could possess this public domain and state power necessary for its function. But PTT as a public company is not entitled to this public domain and cannot exercise state power.

Consequently, the cabinet must transfer the public domain comprising the gas transmission pipeline system and land attached to it as well as the expropriation rights to the Finance Ministry and must not entitle PTT to exercise state power, the verdict said.

In neglecting to do so, the two royal decrees are unlawful, the court ruled.

"Nonetheless, the court is of the opinion that annulling the royal decree transforming PTT from a state enterprise into a public company would entail a forced delisting of PTT, which has a market capitalisation of around 800 billion baht, from the Stock Exchange of Thailand and would cause great jeopardy to the financial, social and security state of the country," said the verdict.

Therefore, the court ordered the cabinet, the prime minister, the energy minister and PTT to do what is necessary to transfer the gas transmission pipeline system, the land attached to it as well as the expropriation rights to the Finance Ministry. The court rejected the plaintiffs' request to have the two decrees annulled.

Prime Minister Surayud Chulanont said yesterday his cabinet will meet this coming Tuesday to discuss the verdict.

Asked if the verdict would have any negative impact on PTT in the stock market, Gen Surayud said there would be an impact, but not a significant one.

"I think investors in the stock market understand this is something we need to correct," said the prime minister.

Bangkok Post