Embattled PTT 'bleeding' from enforced low prices, says CEO

"PTT can no longer shoulder any cost. Every litre we sell is like we're bleeding. Even then we're criticised by the public. In the future, I hope the government will resort to pricing and tax measures to solve the [energy] problem," CEO and president Prasert Bunsumpun said yesterday.

PTT is expected to post a higher loss than last year after the delays in price increases, he said.

The company's retailing margin has been running at an average minus 38 satang per litre during the first five months, though oil retailers say the margin must be at least Bt1.50 to break even.

It estimates its retailing deficit would soar to Bt5 billion to Bt7 billion this year, from Bt2 billion last year.

PTT also revised its forecast loss for NGV distribution to Bt5 billion from Bt2 billion, since it has to keep pegging the NGV price at Bt8.50 per kilogram until the end of this year against the cost of over Bt10.

It has to expand its NGV stations to 300 this year and boost NGV supply fivefold. The more stations, the more natural gas for vehicles sold and the bigger the drain on its finances.

PTT hopes the situation would get better once it can hike the NGV price by Bt2 next year and Bt3 in 2010.

Prasert noted that PTT has lost the opportunity to generate more revenue from LPG as it has to sell LPG here at US$300 (Bt9,781) per tonne, or Bt11 per kilogram, compared to the global price of $900.

The low LPG price has prompted rising demand from taxis and personal cars while domestic supplies are low,

so PTT has to import costly LPG and resell it at the bargain price at its own expense.

LPG imports are expected to reach 200,000 tonnes this year and jump to 500,000 to one million tonnes next year. Though the government has agreed to compensate PTT, the company still has to eat the cost for the time being.

PTT has already explained the situation of the red ink to shareholders.

Instead of spending money on the oil price subsidy, the government should invest in extending the mass transit system or help address the problems of specific groups such as public transport or fishing trawler operators, he added.