Panel defends changes to contract for Thailand’s high-speed rail project connecting Don Mueang, Suvarnabhumi, and U-tapao airports
The Eastern Economic Corridor Policy Committee has defended its plan to amend the contract for the high-speed rail project connecting Don Mueang, Suvarnabhumi, and U-tapao airports, saying the move is critical to keep the flagship infrastructure project alive amid shifting economic realities.
Chula Sukmanop, the committee’s secretary-general, said the revision is not intended to bail out the private operator, but to address structural challenges that have stalled progress on the 225-billion-baht project, which is now six years behind schedule.
Thw project has faced mounting hurdles since the contract was signed in 2017 with the Asia Era One consortium led by the Charoen Pokphand Group. Costs have surged while expected revenues have fallen, particularly after Covid-19 altered travel behaviour, compared with the original study. As a result, expected shareholder returns have plunged from 5.5% to just 1.1%, making the venture unattractive to investors.
“No bank can approve a loan under the current risk profile,” he said, citing refusals from major lenders including the China Development Bank and Japan Bank for International Cooperation.
Pandemic-related delays in land handovers and construction further complicated financing. If the current investors withdraw, Mr Chula said, there may be no other bidders, as costs show no signs of falling and restarting from zero would cause more delay.
Under the proposed amendment, government payments to the private operator would be accelerated from the sixth year of operations to the second or third year, improving cash flow and enabling access to loans. This change would also reduce the state’s interest burden, cutting total payments in half.
However, the plan carries fiscal implications. Mr Chula said the Attorney General’s Office has flagged six issues for revision, including clarifying a 120-billion-baht performance bond.
Cabinet approval is required before the new payment structure can take effect.
Source: https://www.bangkokpost.com/thailand/general/3148320/panel-defends-changes-to-airport-highspeed-rail-deal
