Thai Oil Plc (TOP), an oil refinery arm of national oil and gas conglomerate PTT, plans to raise the investment budget in its clean fuel project (CFP) by 63.02 billion baht, plus 17.92 billion baht as interest incurred during the construction period.
The company’s chief executive Bandhit Thamprajamchit revealed on Monday that the move would be proposed to the shareholders’ meeting on February 21, 2025.
He explained that the CFP kicked off in 2018 when TOP invested US$4.82 billion (159.22 billion baht) in a clean fuel initiative, promising interest of $151 million (4.98 billion baht) throughout the five years.
The project would help reduce the cost of oil refining and increase Thai Oil’s capacity in refining crude oil from 275,000 to 400,000 barrels per day, he said.
CPF was scheduled to start operation in 2023, but the construction was delayed due to the Covid-19 outbreak. In 2021, project contractor UJV Consortium negotiated to extend the delivery deadline to 2025 and increase the budget by $550 million (18.6 billion baht).
On December 12, some 500 employees from over 20 subcontractors working on CFP rallied outside the South Korean embassy in Bangkok to protest against a default in payments by UJV, which comprises Petrofac International (UAE), Samsung Engineering and Saipem.
Protestors claimed that UJV has defaulted on paying compensations worth over 6 billion baht to 28 subcontractors for eight months to date, resulting in their suspending the project’s construction indefinitely.
Bandhit said TOP’s board of directors resolved on December 19 to increase the project’s budget by 63.02 billion baht, plus 17.92 billion baht as interest and to propose the motion to shareholders’ meeting on February 21.
The CEO said the money would come from the company’s cash flow from 2025-2027 operations, which is estimated to be around 30 billion baht.
The remainder will be borrowed from commercial banks as well as come from issuing new financial products, such as hybrid bonds.
“There will be no increase of Thai Oil’s capital in raising the CFP investment budget,” Bandhit insisted.
He added that the 17.92 billion baht earmarked as interest is calculated based on the scenario that the project’s delivery would be delayed to 2028, and therefore might not be needed if it is finished before the 2025 deadline.
“Increasing the budget for the CFP will not significantly impact the company's dividend payout plan,” said Bandhit. “Thai Oil will continue to pay dividends of at least 25% of net profit outlined in the financial statement, after deducting contributions to reserve funds as specified in the company's regulations and in accordance with the law.”