PTT Plc to negotiate with contractors of its 18 suspended projects for settlement of penalties

04-Feb-10

With Siam Cement, Thailand’s PTT Plc is one of the two hardest-hit businesses in the Map Ta Phut suspension case. The two majors each own 18 of the 64 suspended projects that are now facing construction delays caused by the Administrative Court's order to suspend work. PTT's projects are valued at 93.5 bln baht, including its sixth gas-separation plant worth 28 bln baht. In a recent move, the court has rejected PTT's petition to allow 10 of its 18 projects to proceed. PTT is bound by its contracts to pay fines to its contractors if project construction cannot be completed on schedule because of its fault. PTT plans to negotiate with the contractors of its 18 suspended projects for a settlement of penalties worth up to 31 bln baht because the delay is neither a fault of the company nor that of the contractors. Also, PTT estimates the delays (lasting for possibly 6-12 months) could cost 88.6 bln baht to its annual revenue along with revenue loss of nearly 6 bln from the suspended sixth gas-separation plant that was scheduled to commence operations in March. PTT is of the opinion that of its suspended projects, four should not require new environmental impact assessment (EIA) reports – an ethylene cracker unit, an olefins cracker upgrade, a polyethylene production unit and a phenol production unit.