Consolidation of Thailand’s PTT's oil-refining and petrochemical units faces further delays

22-Jul-10

The PTT Group’s plan to merge its refining and petrochemical units to create synergy and improve cost efficiency has been on the planning board for over a year. Plan for consolidation is facing further delays as a number of legal issues need serious discussion. The first phase is expected to focus on PTT Aromatics and Refinery, the country's largest integrated aromatics refinery, which is 49% owned by PTT, and IRPC, 36% owned by PTT. The merger would create Asia's eighth-largest oil refiner, but is faced with concern related to outstanding lawsuits lodged by Prachai Leophairatana, the founder of Thai Petrochemical Industry, which PTT acquired in a debt restructuring. TPI was Thailand's largest corporate debt defaulter after the 1997-98 Asian economic crisis. It was renamed IRPC in 2006 after the government intervened in 2003 and PTT took control of it in late 2005 as part of the restructuring. One of the concerns relates to a recent investigation by the national anti-graft agency into the government's handling of the business rehabilitation plan of TPI before it became IRPC. Last week, the National Anti-Corruption Commission ruled that former prime minister was wrong to endorse the Finance Ministry as an administrator for TPI's rehabilitation plan in 2003.