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Published on December 17, 2007

But there is still much work to be done to restore confidence among investors that the country will continue its privatisation programme.

Energy Minister Piyasvasti Amranand said the ruling set a standard for future state enterprise privatisation.

So far, however, stock investors view the PTT case, and the preceding halting by the courts of the Electricity Generating Authority of Thailand (Egat) initial public offering, as "uncertainties" that may force them to undervalue the local stock market.

To be precise, the problems of both PTT and Egat arose because of mistakes by the Thaksin Shinawatra government.

This government has had to clean up that mess and the uncertainties created by the PTT legal challenge.

PTT was listed in 2001 during the first Thaksin administration. Egat was forced to abort its listing plans following a Supreme Administrative Court ruling.

The December 14 PTT order stipulates the company returns expropriated land, and the pipelines sitting on it, to the government. It can then lease these assets back from the Finance Ministry.

Impact on the oil-and-gas giant's balance sheet is expected to be a one-off and the financial effect will be minimal.

The ministry has said it will charge PTT fair rent for the pipelines. It does not want the stock market to get spooked.

PTT has a market capitalisation of about Bt1 trillion, or around 15 per cent of the entire stock market. The ministry owns 52 per cent of the company, too. So, for all practical purposes, things will barely change.

The Foundation for Consumers, which made the legal challenge to the company's status, argued the expropriated assets undermined the rights of citizens who previously owned the land. A private company like PTT should not exploit these assets for commercial benefit, it said.

The company contended that while it had become a private company, it had sought government approval for all actions involving the pipelines.

One major mistake was a decision by the Thaksin government to shelve the Energy Business Act, drafted during the Chuan Leekpai administration.

That legislation - now passed by the Surayud government - transferred the power of PTT in using public rights of way and expropriated assets to an industry regulatory body, which will be appointed by the state.

The PTT prospectus stated the company would spin off the pipeline assets. But the Thaksin government failed to do this because it wanted to rush PTT to market at the highest possible asset value.

Civil group representatives, including Sairoong Thongpond, one of the five who brought the PTT challenge, sat on a Parliamentary committee which scrutinised the Energy Business Act.

It passed the House on November 7 and was endorsed by His Majesty the King on December 9. It took effect last Tuesday.

The next elected government will be left with the task of restoring investor confidence in the country's privatisation policy.

Citing last week's conviction and jailing for two years for abuse of power of Sommai Phasee, the deputy finance minister, some have expressed concern about the ability of future governments to deal effectively with state enterprises, especially the loss-making State Railway of Thailand.

Pichaya Changsorn

The Nation