Thai Oil may replace contractors over unpaid wages in fuel project
Thai Oil Plc is contemplating altering the contractors for its Clean Fuel Project (CFP) due to unresolved disputes over unpaid wages to construction workers, potentially causing further delays. This development marks a significant moment for the country’s largest oil refinery by capacity.
Unincorporated Joint Venture (UJV), which includes Petrofac South East Asia Pte Ltd, Saipem Singapore Pte Ltd, and Samsung E&A (Thailand) Co Ltd, was commissioned for the project. Despite Thai Oil’s compliance in transferring wages to UJV, the contractors have not compensated their subcontractors, resulting in protests at the Chon Buri refinery.
“It must be clear next year whether the construction will be complete,” stated Bandhit Thamprajamchit, Thai Oil’s chief executive and president.
If these wage issues persist, adversely impacting the CFP’s progress, Thai Oil may replace the constructors and pursue legal action to seek compensation for the project’s delays.
“We will make sure everything will be done under conditions stated in the construction agreement,” Bandhit asserted.
Originally slated for completion in 2023, the CFP’s timeline was extended to 2025 due to disruptions caused by the Covid-19 pandemic, which first struck Thailand in 2020. The ongoing conflict between UJV and its subcontractors has further hindered the project as subcontractors halted work during protests, pushing the commercial operation date to 2028.
Thai Oil has previously appealed to the parent companies of the construction firms to resolve the prolonged wage payment delays and has requested governmental intervention to mediate the discussions.
Financially, Thai Oil’s board has sanctioned an additional US$1.7 billion (63 billion baht) to bolster the CFP, which is currently 90% complete. The board has also approved an interest payment of US$505 million accrued during construction.
This financial provision is crucial as the company braces for possible further setbacks in the project timeline, reported Bangkok Post.
Situated in Si Racha district, Chon Buri, the CFP began with an initial investment budget of US$4.8 billion. The project is designed to enhance the refinery’s capacity and produce high-value oil products such as diesel and jet fuel.
