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Published on December 19, 2007

The Cabinet also gave the Finance Ministry's Treasury Department three weeks to work out the rental rate, set at no less than 5 per cent of gas transmission revenues, after deduction of operating and maintenance expenses at 3 per cent.

"The rent should be fair to all - the Finance Ministry, PTT, PTT's shareholders and gas users. It must also be set according to PTT's obligations such as loans and interest and maintenance as well as the realisation that gas is basic infrastructure," Prasert Bunsumpun, president of PTT, told investors at the Stock Exchange of Thailand.

The forum was held after the Cabinet approved the transfer procedures, which paved the way for the exchange to lift its suspension on PTT share trading in the afternoon session. Despite limited impact on finances, PTT's price suffered a drop due to the overall selling of foreign investors in the market.

The government will also receive 32 rai of expropriated land with a book value of Bt7 million as of September 30 as well as rights of way over private land estimated at Bt1.12 billion for the three natural gas pipelines with a book value of Bt14 billion.

The pipeline routes are Bang Pakong-Wang Noi, Thailand-Burma-Ratchaburi, and Ratchaburi-Wang Noi.

The Auditor-General's Office will appraise the assets to be transferred.

Pichai Chunhavajira, chief financial officer of PTT, said the assets transfer should incur taxes of not more than Bt2 billion, but Sanit Rangnoi, director-general of the Revenue Department, said it would not attract any tax.

PTT estimates that at the minimum rent of 5 per cent, it would need to pay Bt8.8 billion throughout the 30-year lease, or about Bt200 million a year. PTT must also pay rent for using the pipelines for six years. Including interest and penalties, the back rent should not exceed Bt1.5 billion.

The Finance and Interior ministries will consider the tax implications of post-corporatisation, such as house and land taxes, as well as the tax implications of depreciation expense or rent payable for past usage and penalty and surcharge.

"It will be plus or minus Bt2 billion," Pichai said.

The assets must be transferred before the Energy Business Supervision Committee is set up within 120 days of the Energy Business Act going into effect, or by mid-April.

Achara Deboonme,

 Siriporn Chanjindamanee

 The Nation