Battling accusations of connections with the Shinawatra family and monopolising the oil industry, PTT Plc’s chief executive Pailin Chuchottaworn has kept calm while insisting that the fuel giant’s major role is to strengthen the country’s energy security.
Pailin: Brushes aside Shinawatra ties
During an interview with Forbes Thailand, Mr Pailin highlighted PTT’s three major missions — security, wealth and sustainability of energy supply.
“Energy security means people have access to energy anytime and anywhere. Thailand, Singapore, Brunei and Malaysia are the four countries in Asean that have energy security, meaning if your car needs gas, it is available anywhere,” said Mr Pailin, as the national energy conglomerate enters its 36th year of operation.
For this mission, PTT’s role is continuously searching for energy security sources both in Thailand and abroad. Natural gas, in particular, is a concern as three-quarters of the gas Thailand consumes comes from domestic sources with the rest from Myanmar and Malaysia.
“Gas supply from the Gulf of Thailand is going to be depleted in the next 10-15 years while as much as 70% of electricity in the country is fuelled by gas and this would remain until 2021,” he said.
“This means Thailand is facing imbalance of energy usage in power generation. Although gas is clean as it emits less carbon dioxide than coal, when some gas fields are shutdown, we face a problem. And if somebody says the country needs coal, we need government policy to support it as PTT is not the one who sets the policy.”
PTT predicts that gas supply from Myanmar and the Thailand-Malaysia Joint Development Area is not enough to serve Thai demand given Myanmar’s accelerating economic development, which would lead to the reduction of gas delivered to Thailand, while negotiations over the the overlapping area with Cambodia are unlikely to conclude soon given the political problems facing both countries.
Consequently, liquefied natural gas is a solution although its price is still high at US$16-17 per million British Thermal Unit (BTU), compared with $11 per million BTU of Myanmar gas and $8-9 of gas from the Gulf of Thailand.
Wealth is also an important mission for PTT of which the Finance Ministry is the largest shareholder with a 51.11% interest.
“PTT sales revenue has jumped over the past 12 years from about 300 billion baht in 2002 to almost 3 trillion baht as of last year,’’ said Mr Pailin.
‘’With a net profit of 100 billion baht per year, a part of it is used to finance new investments and the balance for the Finance Ministry and other shareholders in terms of dividend ranging from 2.64-4.55% between 2010-14,” Mr Pailin said.
As of 2013, PTT was a listed company with the largest market capitalisation at 817 billion baht and the only Thai company on Fortune’s list of the top 100 companies. Its ranking moved up to 81 in 2013 from 95 in 2012.
Last year, its revenue was 2.84 trillion baht, up 1.7% from the 2012, which was larger than Thailand’s 2014 annual budget of 2.53 trillion baht, as net profit dropped 9.5% to 94.65 billion baht from 104.6 billion the year earlier.
“When our profit reached 100 billion baht, we became the target of attacks but they don’t think this is below 5% of the sales. We have shouldered losses from the [subsidised] gas business. If business organisation makes a lot of profit, it pays a lot of tax and dividends. This is irony of doing business in Thailand,” he said
The Energy Ministry is the key policy planner while PTT has to follow the guidelines set by it. At the same time, the Energy Regulatory Commission (ERC) is an independent organisation in charge of electricity and gas businesses.
“The regulators have done their jobs well over the past six to seven years but now people say they want to overhaul the system,” he said, also brushing aside allegations that PTT is the treasure of the Thaksin system.
“PTT is governed by the Security Act which is a strict regulation. Also, PTT is scrutinised by parliament because we are a state enterprise and we, together with our board of directors, need to come clean about our assets,” Mr Pailin said.
“Nowadays, everyone can check who are PTT’s shareholders which are as many as 4,000-5,000. This can guarantee that we are more transparent than being just a state-owned enterprise,” he cited.
Now in the third year of his four-year term, Mr Pailin said he’s committed to transforming PTT from a resource-based company to a knowledge-based organisation by adding value and innovation.
To achieve this third mission, PTT has focused on research and development with a budget of 4 billion baht this year to initiate new products such as electronic control unit, and Amazon coffee.
Besides, more than 200 companies in
the PTT group, have explored business opportunity and sourced energies from abroad including power plants in
neighbouring countries and coal mines in Indonesia, Madagascar, Brunei and Mongolia.
“All of PTT’s coal business is overseas. We are planning for the future that when we need more energy, coal will be the last energy source to use in the world. Once the oil and gas are all gone, only coal will remain over the following centuries,” said Mr Pailin.
