The energy conglomerate PTT Plc has cut its budget for new projects by 46% from almost 101 billion baht to 54.6 billion in line with global economic uncertainty.
Surong: Unconfirmed projects will be cut
Chief finance officer Surong Bulakul said PTT's board recently cautioned the company about global uncertainty that has resulted in the International Monetary Fund cutting its growth projection.
The agency now projects the world economy will grow by 3.1% this year, down from 3.3% forecast in April, citing a slowdown in key developing countries such as China and Brazil and a more protracted recession in Europe. The 2014 projection was cut to 3.8% from 4%.
Mr Surong said PTT had scaled down only the budget for projects still under consideration, while ongoing projects need to be completed as scheduled.
"We have to cut unconfirmed projects to reduce the impact of the slow economy," said Mr Surong.
He said international projects that would be proceeding as scheduled include ones in Myanmar and Indonesia.
Anon Sirisaengtaksin, the chief executive of PTT's petrochemical arm PTT Global Chemical Plc (PTTGC), said even though China's economy is slowing down, Asia in general remains the key driving engine globally, and its demand for commodities remains strong.
"Demand for plastics in China also remains strong. Even though its overall economy will not be as high as in recent years, it is still one of the strongest in the world," said Mr Anon.
He said a basic material for consumer goods, high-density polyethylene, remains relatively expensive at US$1,400 a tonne.
PTTGC plans capital expenditure of $4.5 billion over the next five years to support its mission to earn revenue of 800 billion baht by 2022, up from 600 billion last year.
Mr Anon said major investment plans for 2013-17 include capacity expansion of commodity-grade polymer products, high-value-added speciality plastics and biochemical polymers. PTTGC also continues to invest through mergers and acquisitions.
IRPC Plc, another petrochemical unit under PTT, is also carrying on its Phoenix programme, which is crucial for improving the medium- and long-term competitiveness of its refining and petrochemical business, said Atikom Terbsiri, the president and chief executive.
IRPC has approved capital expenditure of $1.9 billion for 2013-17, mainly for reducing production and energy costs.
Shares of PTT closed yesterday on the SET at 346 baht, down 5 baht, in heavy trade worth 1.26 billion baht.
PTTGC closed at 75 baht, up 1 baht, in heavy trade worth 1.88 billion baht.
IRPC closed at 3.36 baht, up 6 satang, in trade worth 87 million baht.