Thai Transport Minister seeks to solve 137-billion-baht expressway dispute

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(Photo by Patipat Janthong)

Thai Transport Minister seeks to solve 137-billion-baht expressway dispute

Minister seeks ways to negotiate with BEM to drop lawsuits so EXAT can avoid crippling damages

07 September 2019

Transport Minister Saksayam Chidchob will seek cabinet approval for a mandate to solve the 137-billion-baht dispute involving the expressway authority and one of its concessionaires.

Earlier, a House special committee was set up to find solutions to the dispute. It proposed that the concessions the Expressway Authority of Thailand (EXAT) had with SET-listed Bangkok Expressway and Metro Plc (BEM) be extended. In exchange, BEM must agree to withdraw all 17 lawsuits against EXAT, seeking 137 billion baht in damages, and to improve the expressways.

Under the proposal, all concessions BEM has with EXAT will be extended by 15 years. At the same time, EXAT will continue to enjoy a 60% share in BEM’s revenue and allow BEM to raise toll fees every 10 years.

In addition, BEM must invest in the construction of a 17km four-lane double-decker highway worth 32 billion baht to ease congestions during rush hours.

Mr Saksayam agreed with the extension but had reservations about the cost-effectiveness of the construction deal. He said he would ask EXAT for more information.

“We will propose at the cabinet meeting on Tuesday to amend its earlier resolution authorising two deputy prime ministers — Somkid Jatusripitak and Wissanu Krea-ngam — to handle the issue when they were in the previous cabinet.

“Now that we have a new cabinet, it’s only right that the Transport Ministry has the mandate. In any case, the ministry cannot sign agreements with a company unless it receives a green light from the government and the cabinet first,” he said.

An EXAT source told the Bangkok Post the proposal for the double-decker construction deal was reasonable.

“A double-decker highway with seven ramps will ease congestions during rush hours at no extra cost to motorists,” he said.

The seven ramps are: inbound Mo Chit, Ngam Wong Wa-Prachachuen, Phayathai elevated way, Asoke Montri, Victory Monument, Rama IX and the intersection to Makkasan, he said.

A green light from the Office of Natural Resources and Environmental Policy and Planning on environment impact assessment (EIA) reports is needed before the construction proceeds, he added.

“If the EIA is not approved, only the first contract will be extended by 15 years in exchange for the withdrawal of the lawsuits but we won’t get the double-decker to ease congestions on the expressway,” the source said.

According to BEM, the double-decker highway runs from Ngam Wong Wan Road, then goes south to Phaya Thai elevated section and turns east to end at Rama IX Hospital.

In 1996, the cabinet approved for the Highways Department to build an extension to the Don Mueang Tollway — from the airport to Rangsit.

After the extension was completed, the number of users on the Pak Kret-Bang Pa-in expressway, a project the government gave concession to the Ch.Karnchang Plc, the parent company of BEM, dropped drastically because the new route ran parallel to it.

When BEM took control of the expressway business from Ch.Karnchang, it filed lawsuits against EXAT for violating the contract.

In 2018, the Central Administrative Court ruled the extension of the route by the government competed directly with a private-sector project, a prohibition under the concession contract.

It ordered EXAT to pay 4.3 billion baht, plus 7.05% interest, for the damage incurred during 1999-2000.

Since the compensation must be paid until the Bang Pa-in Pak Kret expressway concession ends in 2026, the damages totalled 79 billion baht.

The other portion of the damages EXAT was told to pay was for its failure to allow BEM to raise toll fees every five years as per the contract, totalling 56 billion baht. When other damages were taken into account, EXAT has to pay BEM a combined 137.5 billion baht.

All parties agree if EXAT continues to fight the court cases, the damages will multiply, prompting the need for a quick solution.