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MAP TA PHUT CONTROVERSY

Map Ta Phut projects to eventually boost PTT

By SIRIPORN CHANJINDAMANEE

THE NATION

Stock analysts have been left guessing about the fate of companies whose projects in the Map Ta Phut industrial estate have been suspended.

Though many of the projects are not subjected to the National Environment Board's list of 11 harmful activities, the fate of the projects hinges mainly on the Central Administrative Court's decision.

Chief among the 65 suspended projects is the sixth gas-separation plant of PTT, which is intended to be the major supplier of feedstock to several petrochemical plants in the area.

A Globlex Securities analyst painted two scenarios for the gas-separation plant. First, based on the news that it is not part of the National Environment Board's list of 11 harmful industrial activities, PTT could ask for the Central Administrative Court's permission to resume operations.

"Sixty per cent of analysts have a consensus that it is not part of the [NEB] list," the analyst said.

In this case, with the court's approval, it could commence operations late this year while commercial operations should start early next year.

Second, if it is a part of the harmful list, PTT would still need to complete the health impact assessment (HIA). This should also not lead to a change in the operation time frame.

Facing higher uncertainty is the TOC Glycol project of PTT Chemicals. However, the Globlex analyst noted that though this project, which is expected to be a part of the harmful list, could see a delay, PTT Chemicals' performance would not be affected.

"Its 1-million-tonne cracker is now running at only 10 per cent of the capacity," he said. Once the sixth gas-separation plant is up and running, ethane supply would feed to PTT Chemicals' plant and this will boost the capacity utilisation to over 100 per cent.

"Next year, PTT Chemicals' project will jump and PTT, as the parent company, would benefit from that."

Eventually, solely because of the expected good news on the gas-separation plant, the PTT Group will show good profitability and this will give a long-term boost to share prices.

An analyst of Kiatnakin Securities, however, declined to conclude that the gas-separation plant would be excluded from the list. He said one would have to wait until the NEB list is officially enforced.

"We know for sure that the gas-separation plant is not a part of the list. This should allow business resumption and boost the company's petrochemical production," he said.

The PTT share price has not reflected the possible good news. Due to lower oil prices, the company's share price has so far this week lost 3.38 per cent to close at Bt257 yesterday. Siam Cement's share price also shed 1.12 per cent over the same period to close at Bt265.

According to DBS Vickers Securities (Thailand), all of Siam Cement's downstream expansion projects will be exempted from the final harmful-industry list. Projects in the list will need to conduct EIA, HIA and public hearings.

"Exempted projects should start commercial operation by year end. This is a little earlier than market expectation of the first quarter of 2011. The commercial start-up of the gas-separation plant should boost PTT's earnings by Bt6.5 billion (or nine per cent) next year, and that of PTT Chemicals by Bt2.5 billion (or 18 per cent). Most of Siam Cement's projects will start commercial operations in the second quarter," DBS said.

-- The Nation 2010-08-26