Thai Government seeks talks with Hopewell over courts Baht 11.88 billion compensation award

Construction News

Thai Government seeks talks with Hopewell over courts Baht 11.88 billion compensation award

23 April 2019

The government said yesterday that it would consider negotiating with Hopewell (Thailand) Co to settle the Bt11.88 billion compensation awarded by the Supreme Administrative Court.

The court upheld an arbitration committee’s ruling in favour of Hopewell whose concession contract for a Bt80-billion elevated road and rail project in Bangkok was scrapped in 1998.

Deputy Prime Minister Wissanu Krau-ngam said negotiations could lead to a lower compensation amount, as the court’s verdict against the Transport Ministry and the State Railway of Thailand (SRT) is regarded as final.

The Transport Ministry is expected to form a committee to study the court’s verdict and submit details to the Cabinet for consideration, according to Wissanu.

The deputy PM declined to comment on whether legal action could be taken against former politicians who had caused damage to the state, resulting in the massive compensation won by the private company. He also dismissed the possibility of using special powers under Article 44 of the charter to resolve this issue.

However, Wissanu said there could be negotiations with Hopewell to settle the issue, adding that it would likely take a lot of time before a final decision is reached.

Meanwhile, Prime Minister Prayut Chan-o-cha said his government was not responsible for the long-standing dispute with Hopewell, but understood that there had been negotiations with the firm in the past to settle the issue.

SRT acting governor Voravuth Mala said public prosecutors will have to study details of the court’s verdict before the agency takes further action, after it was ordered to pay the compensation to Hopewell.

Sawit Kaew-wan, head of SRT’s union, said the agency does not have the financial resources to pay the entire compensation amount so the government will have to share its responsibility.

The Hopewell project, officially known as Bangkok Elevated Road and Train System, was highly controversial when then-transport minister Montri Pongpanich signed the Bt80-billion concession with Gordon Wu, head of Hopewell, back in 1990. Later the project ran into serious financial and technical problems leading to the termination of its concession contract about seven years later when construction work was only 13.7 per cent completed.

According to the 30-year concession contract, Hopewell was supposed to have completed 89 per cent of the overall construction work at that stage, hence the Chuan Leekpai government decided to terminate the contract.

Based on the concession contract, Hopewell was required to pay a total of Bt50 billion in fees to SRT in return for the right to collect revenues from the project’s tollways and community train service as well as develop 2,093 rai of SRT land.

However, the contract had many weaknesses, especially regarding the SRT’s right to end the contract when the private firm could not meet the terms and conditions.

The SRT also faced problems in handing over land plots to Hopewell, as many sites were still occupied by illegal residents. Later, the private firm also had financial and liquidity problems, resulting in work stoppage and isolated pillars along Bangkok’s Vibhavadi Rangsit Road.

The entire project was to consist of 60km of an elevated road and train network. The first section was to have been 18.8km long, running from Yommaraj to Don Muang, while the second section was to have been 18.5km long, from Yommaraj to Makkasan/Chao Phya River.

Construction work on these two sections was supposed to have been completed within 4-5 years, but actual work was far behind when the contract was terminated.