Charoen Pokphand Group (CP)-led consortium given Thailand’s 3-airport link ultimatum

Construction News
Charoen Pokphand chief executive Suphachai Chearavanont leads his team to submit a bid for a high-speed train project connecting Suvarnabhumi, Don Mueang and U-Tapao airports in November last year. (Photo by Pornprom Satrabhaya)

Charoen Pokphand Group (CP)-led consortium given Thailand’s 3-airport link ultimatum

Deputy Prime Minister Anutin Charnvirakulsays signing must happen Oct 15

24 September 2019

The Charoen Pokphand Group (CP)-led consortium, winner of the bid to build the 224-billion-baht high-speed railway linking three airports, will be told to sign the contract on Oct 15 or face a fine for failing to honour the terms of the bid.

The ultimatum was decided upon on Monday at a meeting between Deputy Prime Minister Anutin Charnvirakul, who oversees the Transport Ministry, Transport Minister Saksayam Chidchob, senior transport officials and the chief of the Eastern Economic Corridor (EEC) Office.

Mr Anutin said the bid selection committee will hold a meeting on Friday and issue an official letter to inform the CP-led group of the contract-signing date which is set for Oct 15.

“It’s agreed we’ve given the CP-led group sufficient time in the negotiations and we’ve accepted conditions as best as possible under the procurement regulations. There’s no more left to negotiate,” he said.

The railway project linking Don Mueang, Suvarnabhumi and U-Tapao airports in Bangkok, Samut Prakan and Rayong respectively was initially expected to be signed this month. But the consortium is said to have had some concerns, especially about the handover of land for the project construction.

Mr Anutin said the contract-signing date must be fixed because the bidding price is only valid until Nov 2 and noted that if the contract is not signed by then, agencies concerned will be held responsible.

If the CP-led group fails to sign the contract by the specified date, the bid bond worth 2 billion baht will be seized and all the companies making up the consortium will be blacklisted and prohibited from taking part in any further bidding for state projects, he said.

Moreover, the consortium will be required to pay for damages incurred by its failure to sign the contract, he said, stressing that there is no reason for the bid winner not to enter into the deal.

The consortium, which comprises CP, Bangkok Expressway and Metro Plc, China Railway Construction Corporation Ltd, Ch Karnchang Plc, and Italian-Thai Development Plc, offered the lowest bid of 117.2 billion baht with the government setting the state subsidy for the project at 119 billion baht.

Under the railway development scheme, the contractor will develop and operate the high-speed rail system for a period of 50 years and commercially develop 150 rai of land in the Makkasan area and a 100-rai plot in Chon Buri’s Si Racha.

The deputy premier on Monday ruled out the complete handover of the land before the signing of the contract. He said that contractors for any state projects can seek an extension of the project deadline if they encounter unforeseeable problems as the work progresses.

The State Railway of Thailand will have to clear the land for the railway project but it has insisted about 80% of more than 10,000 rai can be handed over straight away to the contractor to begin work while 20% of the land required for construction is still mired in expropriation and eviction problems, as well as leasing contracts with the private sector.

A total of 12 decrees are required for land appropriation. In the contract’s appendices, the land appropriation must be completed within one and a half years plus six months after the enforcement of the decrees.

According to Mr Anutin, the railway system is a key element of the government’s flagship EEC high-tech investment hub scheme. The 220-km railway network is scheduled to open in 2024 and its trains are expected to be able to reach up to 250 kilometres per hour.

“We’ve reached the point of no return. If there is no high-speed rail project, there is no EEC and the hub plan won’t materialise. As a government representative, I’m encouraging the bid winner to sign the contract. The government is ready to assist if they face problems,” Mr Anutin said.

He added that Prime Minister Prayut Chan-o-cha instructed him to accelerate the project at a meeting of economic ministers on Sept 20.