New PTT chairman planning overhaul

New PTT chairman planning overhaul

Oil and gas conglomerate PTT Plc will need a revamp soon, one that entails new business strategies, after showing a disappointing return on investment, says the newly appointed chairman.

A PTT staff member checks the readiness of petrol pipes to ensure they are ready for an oil truck. SOMCHAI POOMLARD

PTT's board and executives are working closely to formulate new business strategies that are slated to be announced next year, Piyasvasti Amranand said yesterday.

He said the plan would lay down a business direction until 2028, when PTT celebrates its 50th anniversary.

The revamp is needed because PTT's return on invested capital (ROIC) has declined for many years due mainly to its losses caused by past governments' liquefied petroleum gas (LPG) and compressed natural gas (CNG) price subsidies.

"We have to bear almost 30 billion baht each year for losses in CNG and LPG businesses, and the losses are expected to widen in the coming years," Mr Pivasvasti said.

Since CNG and LPG became popular in the transport sector in 2007, PTT's ROIC has dipped from double digits to 9% last year, below the 16% average of listed utility and energy companies on the Stock Exchange of Thailand (SET).

Its net profit per total sales ratio was only 2.7% compared with a 10-30% average of other energy operators.

PTT has been attacked by activists claiming it uses its dominant market position to overprice retail oil and gas but allows firms under its group to access cheap energy for its own profit.

"PR campaigns will be launched this year and next to remake the image of PTT into one loved by Thais," Mr Piyasvasti said.

For long-term strategies, PTT needs to secure more energy supplies, as domestic oil and gas resources are expected to be depleted after 2022.

The firm will focus more on innovation, biofuels and bioplastic while securing energy resources abroad by increasing investment.

After 2022, Thailand's imports of liquefied natural gas are expected to top 30 million tonnes a year, up from 1.4 million tonnes this year, so an LNG storage facility is needed, said Mr Piyasvasti.

PTT must maintain its business growth by relying on technology and innovation even though PTT just started these steps a few years ago, Mr Piyasvasti said. France's Total SA is a good example of an oil and gas giant without any oil and gas resources at home.

Since 2012, PTT has allocated 3% of net profit for innovations from upstream to downstream petroleum businesses including biofuel and bioplastics.

"We believe electric vehicles will become a global trend in the automobile industry, so we have to prepare for that," said Mr Piyasvasti.

Executive vice-president Supattanapong Punmeechaowsenior said PTT had started development of a 7-billion-baht polybutylene succinate bioplastic production plant in Rayong province, with operation scheduled to start next year.

PTT has also finished a pilot cellulose ethanol plant at its research centre in Ayutthaya province. That project produces ethanol from rice straw and bagasse waste, which is price-competitive with fossil fuels.

PTT shares closed yesterday on the SET at 329 baht, down five baht, in trade worth 727 million baht.

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