After the gas pipeline is spun off, why would PTT maintain 100-per-cent ownership, since returning the pipeline to the state would diffuse public criticism?

The government would have no money to buy out the pipelines, which are worth Bt200 billion. The government, if it had the money, should instead channel that money into investing in infrastructure projects. Plus, who would operate the pipelines after the takeover, and who would shoulder the additional investment? Whatever, we are still a state enterprise, with the Finance Ministry owning 52 per cent of the company.

In what way would the spin-off affect PTT shareholders?

None. The pipeline would remain fully owned by PTT, and the spin-off has been shown in the IPO prospectus.

What would happen if the Federation of Consumer Organisations won the upcoming case to nullify PTT's privatisation?

The government would need Bt400 billion to buy out the shares held by other shareholders. That would reduce the Stock Exchange of Thailand's market capitalisation by Bt700 billion, to Bt4.7 trillion. The chain effect would be that the lower market capitalisation would reduce Thailand's weighting in the Morgan Stanley Capital International Index. The Thai stock market would then become less attractive among foreign investors.

If PTT resumed state-enterprise status, what would happen to those state enterprises that have been privatised and listed, such as MCOT, Airports of Thailand, Thai Airways International and several state banks?

Over the past 10 years, the government has raised Bt260 billion from selling state enterprises. If that amount had not been raised from privatisations, the government would have had to borrow to finance its spending, which in turn would have caused the crowding effect [when public borrowing overtakes private borrowing] and pushed up interest rates.

Why are Thai retail oil prices based on Singaporean prices? Does this highlight an unusual relationship between the two countries?

The quotations in Singapore are not specified by Singapore; they are based on global prices and demand and supplies by oil companies doing business in Asia. About 200 companies happen to be based in Singapore. It has nothing to do with the relationship between the two countries, or any other deals that have been struck.

Why, after privatisation, does PTT still monopolise several energy segments?

We have enjoyed no monopoly in any segment. PTT has been in four businesses - exploration and production, gas pipelines, gas separation and distribution. In exploration and production, we must compete with international players. For gas pipeline, PTT happened to be first in the business when no one wanted to invest money in it. Now that we have two pipelines, and the first phase of a third one is operational this year, this ensures an economy of scale, which means lower gas prices than in other countries.

Meanwhile, the gas-separation industry is open wide to all players, but it requires a huge investment, and the government has so far controlled the price of liquefied petroleum gas (LPG, or cooking gas).

All areas are open to private companies. There is no monopoly.

Why are refining margins in Thailand higher than in Singapore? Is it because most refiners are owned by PTT?

The refining margin is based on the level quoted in Singapore, plus the cost of shipment from Singapore to Thailand. The margin here is slightly higher than in Singapore, but you must consider what PTT has to pay out to subsidise LPG and diesel prices. We don't monopolise the refining market.

Does the oil shortage have anything to do with distorted market mechanisms?

There are more than 10,000 petrol stations at present, and most of them are unbranded. These stations rely on jobbers who buy fuel from our refineries for sale to independent operators. Right now, we cannot satisfy their demand, because our stations are really busy, selling 20 million litres of diesel a month, rather than the normal 15 million litres. We must ensure prompt distribution.

Indeed, shortages occur but only for short periods, like when Hurricane Katrina struck the US. The current complication is the situation in Iran, and we don't know when that will be solved. Once prices are stabilised, the situation should return to normal.

Why is PTT considering splitting up its business units?

Now that we are splitting up our pipeline business, we are considering splitting other businesses into separate units. This should give the public a clear picture of how we operate. Being big means huge public pressure, but under the new structure, the public will know how much we gain from each business. When you talk about PTT, it's not only PTT. PTT per se now contributes 38 per cent of our total revenue, while the rest comes from nearly 100 subsidiaries. Business separation should reduce this pressure.

Tomorrow: PTT documents supporting the management team's argument that the privatisation was legitimate.