PTT Plc, Thailand’s top energy firm, has announced it will cut this year’s investment budget by as much as 30% to 60 billion baht due to ongoing political unrest delaying new projects.
“We’re adjusting our investment plan in response to the economic situation, especially in this year’s second quarter, with its lower growth in electricity demand and limited domestic investment opportunities,” chief financial officer Surong Bulakul said.
This will be the second consecutive year for state-controlled PTT to scale back its spending plans after expanding aggressively before.
PTT, Asia-Pacific’s fourth-biggest oil and gas firm by market value, had originally set a budget of 86.9 billion baht for this year, mostly for its core gas business including a gas pipeline expansion project.
However, PTT said its five-year investment plan from 2014-18 remains unchanged at 327 billion baht.
“We are putting several new projects on hold, pending approval from the new government,” said Mr Surong.
The company’s 300-kilometre onshore pipeline project linking the Eastern Seaboard province of Rayong with Saraburi’s Kaeng Khoi district in the Northeast is facing delays after its contractor was hit with liquidity problems, and PTT is now forced to seek a new one.
However, PTT will expedite its gas pipeline to Nakhon Sawan province, Mr Surong said.
Demand for oil and gas fell in the first two months of the year due to cooler weather, but demand is now rising with the seasonal heat.
Anti-government protesters have held street rallies for more than five months as well as disrupted the Feb 2 general election, which was nullified by a court last month.
However, the economic situation is expected to turn around in the fourth quarter on the back of improved tourism after a downturn in the second and third quarters.
Mr Surong said PTT’s investment this year would focus mainly on quality and non-commodity products, production innovation and improved productivity mainly by Thaioil’s refinery.
At present, PTT has cash in hand of 50-60 billion baht and in the second half of this year will offer more than 20 billion baht worth of debentures to replace existing ones that will reach maturity.
Mr Surong said PTT will list its power subsidiary Global Power Synergy Co (GPSC) on the Stock Exchange of Thailand (SET) in the second half.
Shares of PTT closed yesterday on the SET at 315 baht, up eight baht, in heavy trade worth 1.73 billion baht. Reuters