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Published on January 25, 2008

The two sides had been at loggerheads for weeks over the appropriate revenue base. Yesterday's deal finally ended market anxiety over the dispute.

Trinity Securities said the delay had ruined investment sentiment, despite the small amount of money involved.

PTT was required to return three gas-transmission pipelines to the state after consumer groups challenged its privatisation in court. The Supreme Administrative Court ruled against undoing PTT's privatisation but said the pipelines should belong to the government.

Anont Sirisaengthaksin, a PTT executive, said the rental rate was an acceptable compromise. "This formula is fair for all sides. The Finance Ministry will get satisfactory income, while leaving no impact on consumers."

PTT roughly calculated that for the back period from 2001-2006, it owed Bt180 million a year, or 5 per cent of annual gas-transmission revenue of Bt3.6 billion, excluding interest at a rate of 7.5 per cent a year.

The annual rent can go up to Bt550 million.

Energy Minister Piyasvasti Amranand said the rental rate would rise by 5 percentage points for every Bt200 million increase of transmission revenue until it hits 35 per cent.

Finance Minister Chalongphob Sussangkarn said the Treasury Department and PTT planned to sign the pipeline lease in a couple of days. However, both sides will have to discuss further to conclude the back rate. He said the base revenue for calculations should be based on the actual rate.

Piyasvasti said the rental rate would be progressive. For annual gas-transmission revenue up to Bt3.9 billion, PTT will have to pay 5 per cent. The highest rate is 35 per cent for revenue above Bt4.9 billion.

"Today, we agreed on the formula. If the Finance Ministry accepts the revenue claimed by PTT, PTT can immediately pay the rent. The Finance Ministry can also ask for more time to check the details before accepting the instalments."

He said before the meeting that the Energy Ministry had come up with the approach to win Finance Ministry approval and end the negotiations.

"Indeed, the Finance Ministry should be the one that wraps this thing up, as legally the ministry cannot lease the pipelines to anyone but PTT. If this conflict remains, PTT could end up using the pipelines for nothing," he said.

The Nation