Expediting Amendments to the High-Speed Rail Linking 3 Airports Contract
Editorial
Following the Eastern Economic Corridor Policy Committee's (EECPC) approval "in principle" on October 11th to amend the contract for the high-speed railway project linking Don Mueang, Suvarnabhumi, and U-Tapao airports, the government believes these amendments are crucial to push the project forward after a delay of at least 5 years, dating back to the signing of the joint venture agreement between the State Railway of Thailand (SRT) and Asia Era One in October 2019.
It can be argued that the delay wasn't solely caused by Asia Era One. The COVID-19 pandemic, delays in project site handover, and investment promotion conditions set by the Board of Investment (BOI) all contributed, leading to the saying "both are at fault." However, it's important to consider whether previous governments took proactive steps to address and compensate for the delays caused by the pandemic and the inability to deliver the majority of the project site, which is a crucial aspect of the project.
The current negotiations for contract amendments between SRT and Asia Era One offer hope for the project's success. The key points of the requested amendments address the demands made throughout the 5 years since the contract signing. These include:
* Payment method for public investment cost: Changing from installment payments to payments based on work progress, meaning Asia Era One would receive construction payments faster, provided they provide additional guarantees beyond the original contract.
* Payment for the right to co-invest in the Airport Rail Link (ARL) project: Allowing payment in 7 equal annual installments, with the company providing a letter of guarantee equal to the value of the ARL rights.
* Additional profit-sharing arrangements: If loan interest rates for the project decrease in the future, which is a request the company made from the beginning to mitigate the impact of COVID-19.
Crucially, there's also the "waiver" of the Notice to Proceed (NTP) requirement from the BOI, a negotiation point that emerged after the end of the COVID-19 pandemic. This would allow the company to commence construction without having to submit the NTP to the SRT.
On one hand, the government should expedite the process of bringing the amended high-speed rail contract to the Cabinet for consideration. This would lead to signing a revised agreement, binding Asia Era One to finally begin construction. On the other hand, this also tests Asia Era One's financial and investment management capabilities and their readiness to proceed with the project.
The lack of clarity in compensation payments and delays in high-speed rail construction have left more than 50 families living along the railway construction zone without access to water supply. These residents are unable to relocate because they haven't received their compensation payments to start their new lives.
High-speed railway station structure is built over the double-track railway. Progress of the high-speed railway project in Saraburi-Kaeng Khoi section.
Nakhon Ratchasima High-Speed Rail Project Update: Elevated Tracks and Community Input
Nakhon Ratchasima, Thailand The State Railway of Thailand (SRT) has reaffirmed its commitment to the dual-track and high-speed rail project passing through Nakhon Ratchasima City. Following a recent cabinet meeting and discussions with local officials and community leaders, the SRT confirmed the project will proceed with elevated tracks to minimize disruption and maximize land use.
The SRT Governor, Mr. Wirot Amrapal, met with stakeholders to discuss the project's progress and address concerns. Key updates include:
* Elevated Tracks: The dual-track railway will be elevated over the bypass bridge and Sima Thani bridge. Revised plans will be submitted to the Ministry of Transport for approval by the end of the year.
* Community Engagement: The SRT plans to disclose the finalized track model to the public by November or December, encouraging community participation and feedback to mitigate potential issues.
* Traffic Flow: Railway intersections at Sipsiri Road and the entrance to Suranaree Camp will have a minimum pier height of 5.5 meters, ensuring smooth traffic flow for all vehicles.
* Historical Preservation: The SRT will preserve the historic Nakhon Ratchasima Railway Station, integrating it with the new station as a landmark for the city's old town.
* Optimized Design: Dual-track and high-speed railway piers will be built close together to maximize space beneath the elevated tracks for future development and community drainage.
* Traffic Alleviation: The SRT will open construction zones near Sima Thani Hotel and Tawan Daeng Pub to ease traffic congestion.
Mr. Amrapal emphasized the project's value and assured stakeholders that it will be completed before the 2029 World Horticultural Exposition in Nakhon Ratchasima. This project represents a significant investment in Thailand's rail infrastructure, promising efficient and safe transportation between Bangkok and the Northeast region.
The State Railway of Thailand is currently adjusting the construction plans for the high-speed train and double-track railway lines passing through Nakhon Ratchasima city center to mitigate the impact on the community.
The High-Speed Rail Linking Three Airports project in Thailand, valued at 224.5 billion baht, faces a deadline of January 2028 for the private partner, Asia Era One, to sign the construction contract and secure funding after a 5-year delay.
The project, which will connect Don Mueang, Suvarnabhumi, and U-Tapao airports, has been stalled due to unresolved issues between the State Railway of Thailand (SRT) and Asia Era One, including land handover delays and disagreements over investment incentives.
To move forward, the contract will be amended to allow for phased payments from the government based on construction progress, with Asia Era One required to provide additional guarantees. Other revisions include payment adjustments for the Airport Rail Link, potential revenue sharing adjustments, and a waiver of certain conditions to expedite the process.
If Asia Era One fails to sign the amended contract by January 2028, the SRT is prepared to take over the project using the allocated budget of 120 billion baht and seek a separate operator for the train service.
The delay has impacted the Eastern Economic Corridor (EEC) development, hindering progress on related projects such as the U-Tapao airport expansion and surrounding areas. The government aims to finalize the contract amendments by the end of 2027, with construction expected to begin in January 2028 and be completed within 5 years.
Special Report: 5 Years of the High-Speed Rail Linking 3 Airports - January 2025 Deadline: Move Forward or Stop Here?
Source - Matichon Weekly
Friday, November 15, 2024
Sanlaya Prachachart
On October 11, 2024, the Eastern Economic Corridor (EEC) Policy Committee approved the principle of contract amendments for the High-Speed Rail Project Linking 3 Airports (Don Mueang, Suvarnabhumi, U-Tapao). This move signaled that the high-speed train connecting Bangkok to the eastern region, taking less than an hour, is close to becoming a reality.
Originally, the project was expected to be operational by 2024, but delays pushed it back over five years. With the recent approval from the EEC Board to amend the joint venture contract, hopes have been renewed for developing areas along the railway line to accommodate the economic growth that this project is expected to bring.
However, progress remains slow. Although one month has passed since the EEC Board approved the contract amendments, it has yet to reach the Cabinet for principal approval, a necessary step before drafting a new contract and securing Cabinet approval to sign an agreement between the State Railway of Thailand (SRT) and Asia Era One Co., Ltd.
In 2016, the Eastern Seaboard Project was revived under the new name Eastern Economic Corridor (EEC) by then-Deputy Prime Minister Somkid Jatusripitak. The aim was to stimulate investment in three eastern provinces: Chachoengsao, Rayong, and Chonburi. The government introduced the EEC Act to oversee investments and announced a five-year plan featuring four mega-projects, including the 224.5-billion-baht High-Speed Rail Project Linking 3 Airports.
The Cabinet approved the projects 220 km route, connecting Don Mueang Airport, Bang Sue, and Phaya Thai with the Airport Rail Link line, then continuing to Suvarnabhumi Airport and on to Chachoengsao, Chonburi, Si Racha, and U-Tapao Airport. SRT partnered with the private sector under a PPP-Net Cost concession model, where assets will be transferred to the government after 50 years.
In February 2018, the EEC Board invited bidders. The joint venture between Charoen Pokphand Holdings Co., Ltd., and its partners won with a bid of 117.2 billion baht. On October 24, 2019, SRT and the EEC signed a joint investment contract with Asia Era One Co., Ltd., established to manage the project.
However, during preparation, including land expropriation, pipeline removal, and land handover, the COVID-19 pandemic halted everything, reducing Airport Rail Link ridership and revenue. Asia Era One was unable to pay the 10.7 billion baht investment fee, citing increased construction costs, decreased passenger numbers, and rising interest rates, leading them to request contract amendments and an extension under a force majeure clause.
Delays in developing stations, areas along the rail route, and the Eastern Aviation City near U-Tapao Airport resulted. Negotiations have continued, with each party standing firm on its terms, leading to six proposals from Asia Era One.
In response, Deputy Prime Minister and Finance Minister Phichai Chunhavit chaired an EEC Board meeting that approved five key principles for a revised contract:
1) Public Investment Cost (PIC) Payment Method: The state will pay installments based on construction progress, not exceeding 120 billion baht, but Asia Era One must provide additional guarantees totaling 160 billion baht.
2) Airport Rail Link (ARL) Concession Payment: Asia Era One will pay the 10.7 billion baht ARL fee over seven annual installments, starting upon contract amendment signing.
3) Revenue Sharing: If project loan interest rates decrease significantly, SRT may request additional revenue sharing if Asia Era Ones internal rate of return (IRR) exceeds 5.52%.
4) Notice to Proceed (NTP) Exemption: An agreement will be made to waive NTP issuance conditions, allowing SRT to issue NTP to Asia Era One after contract signing.
5) Future Financial Stability Clause: Adjustments to force majeure and relief clauses to align with other state-private investment contracts.
The new contract must be finalized by the end of 2024, with signing expected in January 2025. If unsuccessful, the state has the right to cancel the contract and proceed with a government-led project investment of 120 billion baht.
If all conditions are met, Thailand could see its new high-speed train by 2029.
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