Thai Petrochemical Industry Plc (TPI) will stop distributing oil to its wholly owned subsidiary TPI Oil Co from today because the subsidiary has yet to pay a bill that is nearing Bt2 billion.

Piti Yimprasert, the newly appointed CEO of TPI, said the board yesterday approved the move to terminate oil supplies to its subsidiary because it was a month overdue on the Bt1.94-billion bill.

He said TPI's cash flow would be affected if its subsidiary continued to delay the payment. Normally, TPI Oil is three to seven days late paying its parent firm.

About half of TPI Oil's sales are derived from its 60 petrol stations and the rest from sales to fishing boats.

The parent firm will shift supply that would have gone to TPI Oil's petrol stations to petrol traders and it will supply fishing boats through shareholder PTT Plc.

The decision to terminate the oil supply is apparently a double blow to the Leophairatana family. Although TPI Oil is a wholly owned subsidiary of TPI, the retail oil company is managed by the family.

Piti said the company would today deliver a letter to TPI Oil executives calling a shareholders' meeting to change management.

"TPI will allow 30 days to arrange the shareholders' meeting," Piti said, adding that legal action would be pursued if the meeting was not scheduled.

TPI's new management earlier battled the Leophairatana family over charges that TPI founder Prachai and some members of his family signed an office rental contract worth more then Bt900 million to benefit them.

PTT Plc, which led the investors who took over TPI, earlier announced a series of plans to turn the company round.

Meanwhile, the Stock Exchange of Thailand yesterday said it would transfer TPI stocks, from the Rehabco sector, to the petrochemical sector next month.

However, after the transfer, a "C" sign will be posted on the stock to inform investors that the company is still in the rehabilitation process.

TPI shares yesterday closed down 1.97 per cent at Bt7.45.

Watcharapong Thongrung

 The Nation