In a letter to the court the SET noted the "profound and serious" implications on the market if there was a ruling that led to the de-listing of the oil-and-gas giant. SET chairman Vijit Supinit said the exchange decided to act because PTT was a listed company and de-listing would have a serious impact on the exchange.

"De-listing PTT could create volatility on the exchange and because of PTT's size, it could have a profound, serious and long-lasting impact," Vijit said.

"This would affect other listed state enterprises, as well as those which are seeking to list."

Last Friday a group of consumer organisations asked the court to overturn two Royal decrees allowing the 2001 privatisation of the old Petroleum Authority of Thailand.

Consumer advocates have been encouraged by a recent ruling overturning the privatisation of the Electricity Generating Authority of Thailand (Egat).

They believed their arguments could succeed in the case of PTT.

Their petition alleged the PTT privatisation was flawed due to conflicts of interest with lawmakers, lack of public participation and violations of procedures set out under the Corporatisation Act.

They claimed the government failed to spin off national assets such as gas pipelines ahead of the corporatisation.

The court is considering if the groups' case merits a full hearing.

A decision overturning the decrees could lead to the de-listing of PTT. The company would be forced to buy back all floated shares and resume its status as a state-owned enterprise.

PTT president Prasert Bunsumpun yesterday reiterated confidence that the company could successfully defend the legal challenge.

At Bt238 a share for the 840 million shares not in government hands, the estimated cost of a buyback would be about Bt200 billion.

Since its December 2001 listing PTT has become the darling of the Thai market. The main SET index has risen 387 points since January 2002. About 25 per cent of this has been attributed to PTT. In terms of market capitalisation, PTT now accounts for 13 per cent of the market.

"The SET has been hovering in a range of 600 to 800 points since 2004 due to a lack of positive catalysts and new products. It has under-performed regional markets.

"If PTT had not been listed, we believe this would have put more pressure on the investment climate in Thailand," Tisco Securities said in a research note.

Tisco believed a decision leading to the de-listing of PTT would be a worst-case scenario for business in Thailand.

It would heap more pressure on an economy already suffering from high crude-oil prices, rising interest rates and a lack of consumer and investor confidence.

The government would need to find money to finance a share buy-back at a time when it was running a budget deficit.

"If PTT were to be de-listed, we believe the implications for the economy would be severe in terms of both stability and policy. Given the current weakness of the economy, and a high level of political uncertainty, the adverse effects are likely to be magnified," it said.

Tisco foresaw a retroactive impact on other listed state enterprises including the Airports of Thailand, the Mass Communications Organisation of Thailand and Thai Airways International.

It anticipated selling pressure from foreign investors as the country's risk rating would rise. There would be an impact also on the baht given the tight correlation between the SET index and the currency.

Siriporn Chanjindamanee

The Nation