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ENERGY
WICHIT CHANTANUSORNSIRI YUTHANA PRAIWAN
The role and responsibilities of PTT Plc, the largest company on the Stock Exchange of Thailand, have returned to the spotlight following last week's censure debates in Parliament.
The opposition Democrat Party sharply criticised the government and Finance Minister Surapong Suebwonglee for its national energy policies and position toward PTT.
Massive profits generated by PTT's monopoly over the country's gas sector had not been allocated to either the public or PTT shareholders, but instead were being retained by the company.
Instead, profits should be returned to the Finance Ministry to fund development programmes or for poverty relief, charged the Democrats. Alternatively, PTT could be considered as a true private enterprise, with its profits returned to shareholders as a dividend when the overall market was liberalised to help encourage fair competition.
The energy conglomerate, 51.8% owned by the Finance Ministry, was privatised and listed on the Stock Exchange of Thailand in October 2001. The company posted net profits of 97.8 billion baht last year on revenues of 1.55 trillion. But dividends amounted to only 15% of profits.
Korn Chatikavanij, a Democrat deputy secretary-general, said the government's overall policies towards the energy sector and PTT were rife with contradictions.
If PTT was a state enterprise, more of its earnings should be used to help ease the burden of consumers from rising energy prices, he said.
But if PTT was to be considered a profit-oriented company, more of its earnings should be returned to shareholders, including the government.
''I am not opposed to PTT being listed on the stock market or being a state enterprise. But it should have a clear role on whether it will be profit-oriented and focused on shareholder returns or not,'' he said. But one senior Finance Ministry official said PTT's current status offered flexibility for both policymakers and investors.
The company was forced to carry the burden of tens of billions of baht of additional costs in subsidising LPG prices due to government policy. At the same time, its earnings strength and size was a clear benefit to investors and the capital market overall.
Yet even though PTT by far is the most profitable company on the SET, its margins of 6.5% compare unfavourably with other national oil companies, such as the 18% posted by Brazil's Petrobras and 25% for Malaysia's Petronas.
The Finance Ministry official agreed with Mr Korn and said PTT needed to improve its efficiency and that policy should not impose on operations.
''If PTT is forced to continue subsidising energy prices, this isn't really an example of good corporate governance,'' the official said, adding that minority shareholders would also suffer from lost profit opportunities.
But dividend payments were structured to ensure that PTT had sufficient funds to help finance its five-year, 900-billion-baht investment plans, the official added.
''Energy security should be PTT's first priority. If the company lacks funds, then ultimately, the burden will shift to the state,'' he said.
Chitrapongse Kwangsuksathit, PTT's chief operating officer, adopted a neutral position on the debate, saying there were both pros and cons for both sides.
He said if the company was transformed completely back into a state enterprise, it would give authorities greater control over market prices.
On the other hand, subsidising prices would hinder the company's financial performance and reduce its resources for future investment, including that made to secure future energy supplies.
PTT shares prices closed on Friday at 308 baht, up two baht, in trade worth 919.7 million baht.
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