## High-Speed Rail Linking 3 Airports Faces Countdown: State Railway May Take Over
**Prachachat Business, 13 December 2024 - 06:59 AM**
The high-speed rail project linking 3 airports is facing a countdown, with its fate hanging in the balance. Despite approval from the Eastern Economic Corridor (EEC) Policy Committee over two months ago, the project has yet to be presented to the Cabinet. This delay jeopardizes the original timeline of completing the project by the end of 2024, increasing the likelihood that the State Railway of Thailand (SRT) will have to take over.
**Delays Hinder EEC Opportunities**
Mr. Chula Sukmanop, Secretary-General of the EEC Policy Committee, stated that the high-speed rail project linking Don Mueang, Suvarnabhumi, and U-Tapao airports has not yet been submitted to the Cabinet, despite expectations that it would be presented in mid-November 2024. He could not confirm whether the proposal would reach the Cabinet before the end of the year.
Almost two months have passed since the EEC board, chaired by Deputy Prime Minister and Finance Minister Mr. Pichai Chunhavajira, approved the revised contract on October 13, 2024. This revision aimed to address project obstacles and ensure progress without undue advantage to either the public or private sector.
Further delays will inevitably extend the project timeline. This will lead to missed opportunities for urban development around the stations and along the rail line, including the U-Tapao Airport and the Eastern Aviation City. Construction of the second runway at U-Tapao, which intersects with the planned rail link, is also on hold. The EEC may even seek compensation for these delays. Crucially, delays also discourage investment in the EEC, particularly from industries hoping to join the project's supply chain.
**SRT May Take Over Investment**
The original plan was to submit the proposal to the Cabinet in November 2024. Following Cabinet approval, the SRT and Asia Era One Co., Ltd. (a subsidiary of CP Group), the project's winning bidder, were to negotiate and accept the amended contract. If no objections arose, the revised draft would be sent to the Attorney General's Office for review, followed by a second Cabinet approval. This process was expected to be finalized by the end of 2024.
After the contract revision, Era One was to sign the new agreement, with the SRT issuing a Notice to Proceed (NTP) immediately, likely in January 2025. The service was expected to be operational by 2029.
With only two weeks left in 2024, it remains to be seen whether the proposal will reach the Cabinet. If it does, the project will remain on track. However, if it is delayed to 2025, the process will be extended.
Should the original timeframe be exceeded, the SRT may decide to invest in the project itself, requiring 120 billion baht for rail infrastructure construction. The rolling stock would be open to private sector bidding, requiring an additional investment of approximately 40 billion baht.
Even if the project stays on schedule, it is uncertain whether Era One will sign the new contract. If they do not sign or fail to commence construction after the NTP is issued within the stipulated time, it will be considered an intention not to proceed. The SRT can then terminate the contract, with both parties having the right to pursue legal action.
**Private Sector Requests 5 Contract Amendments**
The revised contract includes five key amendments:
1. **Public Investment Cost (PIC) Payment Method:** The original contract stipulated that the government would pay 149.65 billion baht in equal annual installments over 10 years, starting after the high-speed rail service commenced operation. This has been changed to payments in installments based on construction progress verified by the SRT, not exceeding 120 billion baht. Asia Era One is required to provide additional security, totaling 160 billion baht, to guarantee construction completion and service commencement within five years. Ownership of the constructed assets will be transferred to the SRT in line with payment installments.
2. **Payment of ARL Concession Fee:** Asia Era One will pay the 10.671 billion baht concession fee for the Airport Rail Link (ARL) in seven equal annual installments, with the first installment due upon signing the revised contract with the SRT. The company must also provide a bank guarantee for the ARL concession fee and other related financial costs borne by the SRT.
Additional guarantees include a 4.5 billion baht performance bond for the 50-year contract, a 160 billion baht shareholder guarantee for the 50-year contract, a 120 billion baht construction guarantee, a 16 billion baht system work guarantee, a 750 million baht 10-year service quality guarantee, and a 9.147 billion baht guarantee for the ARL concession fee and remaining first installment payment (456.9 million baht). The latter requires six separate guarantees, each worth 1.524 billion baht.
3. **Increased Revenue Sharing:** If future loan interest rates decrease significantly, resulting in Asia Era One's internal rate of return (IRR) exceeding 5.52%, the SRT has the right to demand increased revenue sharing as mutually agreed upon.
4. **Waiver of NTP Conditions:** The requirement for obtaining a Board of Investment (BOI) promotion certificate before issuing the NTP will be waived. This allows the SRT to issue the NTP to Asia Era One immediately after both parties sign the revised contract.
5. **Protection Against Future Risks:** Contract clauses related to force majeure and relief events have been updated to align with other public-private partnership contracts, mitigating potential financial impacts on the project.
"This project is under close scrutiny and is widely known as the CP Train. We must address each issue carefully, not through pressure. If we continue discussions under the original contract terms, we won't reach a conclusion even in seven years. Therefore, we need to define new conditions, especially regarding Era One securing bank guarantees. They are currently in discussions with two banks, which must be commercial banks. Foreign banks with branches in Thailand are acceptable. The key question is whether they can secure these guarantees within this short timeframe."
## 7 Years On, Thai-Chinese High-Speed Rail Only 38% Complete, with No Progress on Train Production
**Bangkok--** The Thai-Chinese high-speed railway project connecting Bangkok and Nakhon Ratchasima, spanning 250.77 km with a budget of 179.41 billion baht, has seen frustratingly slow progress. Despite a decade passing since the initial Memorandum of Understanding (MOU) was signed on December 19, 2014, and seven years since the official construction launch on December 21, 2017, the project is only 38.07% complete.
**Construction Lags Behind Schedule**
The project, divided into 14 civil engineering contracts, has only completed two sections:
* Section 1-1: Klong Dong - Pang Asok (3.5 km), constructed by the Department of Highways.
* Section 2-1: Sikhio - Kut Chik (11 km), with a budget of 3.11 billion baht, constructed by Civil Engineering Co., Ltd.
The remaining 12 contracts are facing significant delays, with 10 under construction and two still in the procurement process. As of November 25, 2024, overall progress lags 39.984% behind schedule.
Several contracts are facing significant delays due to land expropriation issues, changes in design, and the need to relocate oil pipelines. For example:
* Contract 4-2: Don Mueang - Nuan Khon (21.80 km) is 98.01% behind schedule.
* Contract 4-6: Phra Kaeo - Saraburi (31.60 km) is 90.27% behind schedule.
* Contract 3-5: Khok Kruat - Nakhon Ratchasima (12.38 km) is 68.708% behind schedule.
**UNESCO Inspection for Ayutthaya Station**
Contract 4-5, covering the Ban Pho - Phra Kaeo section (13.30 km), is stalled due to concerns over the Ayutthaya station's impact on the city's World Heritage status. UNESCO experts are scheduled to visit the site in January 2025 to assess the situation.
**Design, Procurement, and Installation of Rail Systems Remain Stagnant**
Contract 2.3, responsible for the rail system, electrical and mechanical systems, train procurement, and personnel training, was awarded to China Railway International Co., Ltd. in October 2020 with a budget of 50.63 billion baht. However, progress has been minimal, with design work only 0.95% complete and 58.96% behind schedule.
**Shift to Private Sector Participation in Train Operation**
The initial plan to establish a special organization to manage the high-speed rail project has been scrapped. Instead, the government is now exploring a public-private partnership (PPP) model to reduce financial burden and improve efficiency. This change requires further study and could potentially impact the planned 2028 opening of the first phase (Bangkok - Nakhon Ratchasima).
**Conclusion**
The Thai-Chinese high-speed rail project faces numerous challenges, including construction delays, land expropriation issues, UNESCO concerns, and slow progress in rail system procurement. The shift to a PPP model for train operation adds another layer of complexity. These obstacles cast doubt on the feasibility of meeting the 2028 target for the opening of the first phase.
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