Abhisit airs rail project doubts – Sino-Thai high-speed-rail project

Construction News Laos

THE DEMOCRAT Party yesterday formally asked Prime Minister Prayut Chan-o-cha to have his government review the Sino-Thai high-speed-rail project, claming it could not be justified economically.

While supporting investment in development of the country’s rail system in general, and proper investment in the high-speed-rail project, Democrat Party leader Abhisit Vejjajiva said in the letter to Prayut that, during his government’s term, the project was aimed at regional connectivity under joint investment, construction and management with China.

He said that previously, the high-speed train was routed to Nong Khai province for connection with China’s planned high-speed rail route from Kunming.

Based on the Transport Ministry’s earlier assumptions of 7.5 million passengers per year in the initial period and 20 million per year in the long term, Abhisit said in the letter that these assumptions might not be viable under the government’s new plan to have the high-speed train run only to Nakhon Ratchasima province without any connection with China’s high-speed train. This could sharply erode the economic and financial worthiness of the project, while the possibility of regional cooperation was certainly dismissed, he said.

Abhisit also emphasised that there remained financial risks in this project that were beyond the scope of Thailand as the sole investor.

Assuming China lends Thailand Bt170 billion and charges it 2-per-cent interest, the Thai government will carry a Bt3.4-billion annual interest burden. If the fare is set at Bt500 (more than Bt3 per kilometre), that means it would require 7 million passengers per year to cover the interest costs alone. But that number was based on the ministry’s previous assumption of the train running through Khon Kaen, Udon Thani and Nong Khai, and connecting with Laos and China.

Abhisit urged that investment, management and supervision of the high-speed train’s operation should be run by a joint investment company, which could be newly established, given the State Railway of Thailand’s heavy workloads.

He also suggested that environmental and human impacts from investing in this project and other mega-projects should be assessed prudently.

The project could be made successful if Prayut negotiated directly with China’s leader, he said, citing previous delays from confusion as well as the inability of both countries to make decisions.

As the high-speed train would focus on passenger transport, not cargo, he urged the government to make development of the logistics system an urgent issue to increase the nation’s competitiveness through accelerating other projects for cargo transport. These efforts would include the double-track railway project and the motorway project.

Meanwhile, according to an analysis report issued yesterday by the Economic Intelligence Centre of the Siam Commercial Bank, the government’s decision to invest solely in the project helped overcome a previous delay in negotiations with China and the construction is now likely to start this year.

Positive effects

Because of this, Thailand will be able set the terms and conditions for the construction contracts, which will add positive effects to Thai businesses along the value chain, especially for civil work and electrical-system work in which Thai contractors are competitive with foreign builders.

“The civil-work and train systems and train contracts for the Bangkok-Nakhon Ratchasima project are expected to be worth Bt74 billion and 4 billion respectively. This excludes benefits to local businesses along the railway’s route,” said the EIC.

However, the research centre noted that the investment for the railway project might affect the state’s fiscal position, since it is estimated to add public debts amounting to 1.5 per cent of gross domestic product.

“Combined with other government mega-projects, this may cause public debt to exceed 50 per cent of GDP within three years, which is a worrisome level. This will make the Thailand Future Fund project, which will raise funds for infrastructure investments, even more necessary,” it said.

Source: http://www.nationmultimedia.com/business/Abhisit-airs-rail-project-doubts-30282754.html