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Thai energy firm PTT sees project pipeline unblocked after coup
May 23, 2014 / 9:27 AM / 3 years ago

Thai energy firm PTT sees project pipeline unblocked after coup

* PTT says military govt could unblock project approvals

* Company looking to expand domestically, overseas

* Has said will slash investment budget due to crisis

By Khettiya Jittapong and Florence Tan

BANGKOK/SINGAPORE, May 23 (Reuters) - A coup may be just what Thailand’s top energy firm PTT Pcl needed. Now the army has seized control, project approvals that had hit a roadblock during a protracted political crisis are likely to speed up, a senior company official said on Friday.

PTT, 51-percent owned by Thailand’s finance ministry, needs permission for state-related projects but the caretaker government that had been in office since December lacked the power to take policy decisions or make budget approvals.

“We have to get some clarity on the formation of a new government. But I believe the new government should help solve problems and unlock all outstanding projects so they can move ahead,” Saran Rungkasiri, chief operating officer for PTT’s downstream business, told Reuters on Friday.

PTT and affiliates like PTTEP, Thai Oil and PTT Global Chemical have been looking to expand locally and as far afield as in the United States. But projects such as PTT Global’s plan to enlarge a petrochemical factory have been on hold, awaiting government clearance.

The army seized power in a coup on Thursday, amid a protracted struggle between supporters of ousted former premier Thaksin Shinawatra and opponents backed by the royalist establishment that has polarised the country and battered its economy.

“(The) coup brings Thailand’s seven-month political stalemate closer to resolution,” ANZ analysts said in a note late on Thursday.

“It could well prove to be the circuit breaker that allows a return to political normalisation and ultimately allows fiscal policy to become operational again.”

DROOPING DEMAND

Southeast Asia’s second largest economy risks slipping into recession this year and its annual oil demand could fall for the first time since the 2008 financial crisis.

PTT, Thailand’s biggest firm, said last month it planned to cut its investment budget, for a second straight year, by as much as 30 percent to 60 billion baht ($1.85 billion) in 2014 due to the political crisis.

The company posted a more than 20 percent drop in first-quarter net profit from a year ago, while its liquefied petroleum gas (LPG) and natural gas for vehicles (NGV) businesses are this year set to book close to 30 billion baht in losses related to government fuel subsidies.

But some observers questioned how effective the military would be at getting government moving again.

“Whenever there have been coups before in Thailand, the post-coup administrations have always ruled very poorly,” said Stephen Morris, a political risk analyst at Control Risks in Singapore.

“Specific to the energy sector, it’s not guaranteed that there’s going to be a return to the smooth processing of investments.” ($1 = 32.3950 Thai Baht) (Additional reporting by Pisit Changplayngam and Wilawan Pongpitak; Editing by Joseph Radford and Amran Abocar)

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