Thai Oil, oil refinery state enterprise of Thailand, has an ongoing mega project, its new plant in Chonburi. The contractor of this project is UJV, the consortium led by Samsung E&A Thailand, apparently an affiliate of a South Korean conglomerate. UJV won the deal bidding lowest at 100 billion THB (roughly 4 trillion won).
Of course, the project of this scale involves multiple sub-contractors and, these sub-contractors have been on strike as they have not been paid for over 6 months.
The problem stems from UJV bidding too low. The estimated cost of this project was somewhere between 140 billion to 160 billion THB. It is assumed that UJV just wanted to get the deal by all means and meant to negotiate for additional fee later. Indeed, UJV did ask for 800 m USD more using COVID as excuse and Thai Oil has granted 550 m.
The delayed opening of the plant is inevitable at this point and estimated damage is multiple billion THB. Meanwhile, the registered capital of Samsung E&A Thailand is meager 12 million THB. Other partners in UJV are Saipem and Petrofex. Saipem apparently has been out of business due to bankruptcy. Petrofex is a special purpose company, opened just to get this project. So, these 2 other partners do not seem to be reliable one bit.
A question is how came UJV was qualified for this mega project. Did not Thai Oil run background check on project bidders? Rumor has it that the deal was finalized through the certain lobbyist who led PTT, another energy state enterprise, to disastrous oil palm investment in Indonesia.
Sub-contractors revealed to the journalist that their contracts with UJV was disadvantageous. They could only sue UJV for contract violation to a tribunal court in a Common Wealth country. They signed anyway only because this was the only big project of a state-own entity during COVID period. Almost every single construction contractors and suppliers in the eastern area of the country have taken parts in this project and, if the overdue payment is not paid, thousands employees will be laid off.
A sub-contractor notified the journalist that 97% progress had been recorded but the reality was far from that, for example, the air-conditioning system was recorded "finished" but only the machine was put in place, the pipe and the power cord had not been connected. Sub-contractor had no mean to know how much Thai Oil had paid UJV, 97% or lower.
Thai Oil informed its shareholders this was a dispute between UJV, the contractor, and sub-contractors, Thai Oil had paid its part, had paid to UJV, it was sole liability of UJV to pay sub-contractors. And, if they would be any damage to Thai Oil, Thai Oil would redeem the 12 billion THB worth bank guarantee and ask for indemnity from South Korean Samsung, who submitted guarantee letter.
Sub-contractors found filing the case in a Common Wealth country too complicated, too time-consuming thus, they decided to circumvent the contract clause. 30 sub-contractors have reported UJV and Samsung E&A Thailand of fraud, seeking indemnity through criminal case. Also, they have requested South Korean embassy to step in.
