Thai Oil considers change in contractors
Dispute over unpaid subcontractors may further delay development of new refinery
Thai Oil Plc, the country’s largest oil refinery by capacity, will consider changing the contractors of its new oil refinery under the Clean Fuel Project (CFP) if the ongoing dispute over unpaid wages for construction workers cannot be settled, causing a further delay of the project.
The company hired Unincorporated Joint Venture (UJV), comprising Petrofac South East Asia Pte Ltd, Saipem Singapore Pte Ltd and Samsung E&A (Thailand) Co Ltd, to work on the project, but it has failed to pay subcontractors even though Thai Oil has been paying the required sums to the main contractor.
The problem led to protests at Thai Oil’s refinery in Chon Buri.
“It must be clear next year whether the construction will be complete,” said Bandhit Thamprajamchit, chief executive and president of Thai Oil.
If the wage issue continues, affecting the clean fuel project development, Thai Oil may need to change contractors and file a lawsuit to demand compensation for the delay of the project, he said.
“We will make sure everything will be done under conditions stated in the construction agreement,” said Mr Bandhit.
The project was initially scheduled for completion in 2023 but was put off to 2025 due to the impact of the Covid-19 pandemic, which hit Thailand in 2020.
The conflict between UJV and the subcontractors caused a setback to the project as subcontractors suspended their work during the protests. This led to a need to postpone the planned commercial operation date to 2028.
Thai Oil earlier asked the parent firms of the construction companies to settle the months-long delay in wage payments and requested the government help with the talks.
In terms of financial issues, the Thai Oil board recently resolved to approve an additional UScopy.7 billion (63 billion baht) to support the development of CFP, which is now 90% complete.
The board also gave the greenlight to the interest payment of $505 million incurred during the construction.
The company needs to prepare the extra budget in case the project faces a further delay.
Located in Si Racha district of Chin Buri, the CFP, with an initial investment budget of $4.8 billion, is aimed at increasing the oil refinery’s capacity and producing high-value oil products, including diesel and jet fuel.
Source: https://www.bangkokpost.com/business/general/2925892/thai-oil-considers-change-in-contractors
