THAILAND: NGOs Seek to Rescue Firm from Foreign Hands

By IPS Correspondents Reprint | | Print |

Prangtip Daorueng

BANGKOK, May 6 1998 (IPS) - A major bail-out operation — led not by foreign money but by non-government organisations — is underway in Thailand to ‘save’ an oil company with a popular record in social development programmes.

The Thai government recently decided it would sell a 31 percent stake in the company, Bangchak Petroleum Plc, as part of a privatisation drive to raise money badly needed in the country’s recession.

But saying the oil refining and marketing firm was no ordinary enterprise, Thai intellectuals, some business executives and activists said the firm ought to stay in Thai hands because it is a rare company that gives money for small businesses and has projects that offer cheap products to poorer citizens.

This week, a well-respected social critic, Dr Prawase Wasi, launched a campaign to persuade NGOs around the country to pool their resources to buy up Bangchak shares and ensure its control does not fall into non-Thai hands.

Prawase says his campaign is not profit-oriented but a “patriotic” mission to maintain Bangchak’s Thai identity.

His goal is to raise enough funds from among 100,000 savings cooperatives, welfare organisations and NGOs in order to buy 31 percent of Bangchak, worth some 42,100 U.S. dollars.

Fund-raising will cover more than 600 rural cooperatives that run half of Bangchak’s 1,000 oil filing stations in Thailand. Even farmers can help because they have “relatively good incomes” despite the economic slump, Prawase added.

Local NGOs also suggest there is potential to raise up to 131.6 million dollars, which would be enough to purchase even the remaining 41 percent share that the finance ministry would be left with in Bangchak after selling off the 31 percent stake.

“There are a lot of cooperatives, each having between 50 million baht (1.3 million dollars) and 371 million baht (9.8 million dollars) in revolving funds,” Prawase said.

Prawasi’s bid comes at a time when foreign investors have been picking through many of Thailand’s crippled companies, buying up major stakes at bargains because the firms badly need the money.

The government’s 31 percent stake in Bangchak consists of the entire 24 percent held and to be sold by the Petroleum Authority of Thailand (PTT), and 7 percent owned by the finance ministry. The finance ministry has a total 48 percent share in Bangchak, but wants to reduce this to 41 percent.

Of the remaining 28 percent of Bangchak, 8 percent of shares belong to the local Krung Thai bank and a 20 percent stake was sold to the public.

Money raised in the sell-off would go to help pay the debts of the government’s Financial Institution Development Fund (FIDF), which spent hundred of billions of baht propping up ailing finance companies.

Bangchak president Sophon Suphapong says the bank must maintain its status as a Thai company so it can continue to serve the national interest.

Bangchak Petroleum channels funds to sponsor various NGOs and social schemes, including a project that helps interested Thais establish and manage oil stations of their own.

Last year, Bangchak started a joint-venture company with Crown’s Property bureau, the government agency responsible for managing King Bhumibol Adulyadej’s property and assets. These work together on farm shops projects that provide low-cost products for middle and lower income Thais.

In a previous interview with the press, Sophon called the project an alternative to the bigger-scale investments which are dying out due to the current crisis.

“This project was initiated by His Majesty the King’s idea on economic development, which emphasises self-reliance activities. We believe the structure of Thai economy is going to rely on small- scale community businesses in the future,” he said.

The farm shops will sell discounted basic items and fresh vegetable and fruits from farms out of Bangkok. The project envisioned expansion to 10 franchises in the city this year.

The project would go behind profit-making, Sophon said. “We will emphasis economical products and products that are made in Thailand. A part of our goal is to change people’s attitude of spending that has attached to brand-named products for a long time,” he said.

The campaign to raise funds among NGOs and other groups to buy into Bangchak, however, is complicated by the economic slowdown.

In fact, Bangchak shares have been trading between 21 to 29 U.S. cents each in recent weeks, compared with 81 cents in its first public offering.

The company’s current registered capital is 137.4 million dollars. Aside from its retail network, Bangchak’s main asset is a 120,000 barrel-per-day oil refinery in Bangkok.

But Bangchak has been misleading the public, says Piyasavasti Amaranand, secretary general of the National Energy Policy Office, which is the main backer of the privatisation of energy enterprises. He says the sale of Bangchak shares is open to everybody — not just to foreign investors.

“The choice of buyers very much rests on the owners of the Bangchak shares (the finance ministry and PTT), something which Bangchak management tends to forget,” Piyasavasti added. Whoever offers the highest prices should get the shares, he said.

Besides, Piyasavasti says, he believes that Bangchak’s new controlling investors would continue its projects if they are as good as Sophon says they are.

Bangchak will soon distribute 180,000 questionnaires to the public, seeking opinions on the sale of the shares and the possibility of subscribing to them. The survey is to be completed by May 27.

Bangchak says the survey results would help the finance ministry decide which parties should be offered the shares — community organisations, the public or a single foreign buyer.

With Bangchak management, NGOs are preparing a report on the possible ill effects of Bangchak shares falling into foreign investors’ hands.