## 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.
## State Enterprise Policy Office Sends High-Speed Rail Contract Amendment to Council of State, Prepares for Cabinet Approval
**Source:** Krungthep Turakij Online, Thursday, December 26, 2024, 09:34
The State Railway of Thailand (SRT) is confident that the amended contract for the high-speed rail linking three airports will be presented to the Cabinet for approval in January 2025, allowing CP to proceed with construction. The SRT clarified that the option of canceling the current contract to reclaim the project and re-tender it under a PPP model with a new private operator for train operations is a contingency plan if the contract amendment fails.
The high-speed rail project linking Don Mueang, Suvarnabhumi, and U-Tapao airports is a key infrastructure project of the Eastern Economic Corridor (EEC). The original joint investment contract was signed between the SRT and Asia Era One Company Limited, majority-owned by Charoen Pokphand (CP) Group, on October 24, 2022, after CP won the bid with the lowest requested government co-investment of 117.226 billion baht.
In 2023, the COVID-19 pandemic led Asia Era One to request government relief measures to mitigate the impact of reduced Airport Rail Link ridership, which affected high-speed rail passenger projections. The Cabinet approved the relief measures on October 19, 2024, leading to ongoing negotiations for contract amendments.
The Eastern Economic Corridor Policy Committee (EECPC) approved five amendments to the contract in October 2027, and the Eastern Economic Corridor Office (EECO) is preparing to submit them to the Cabinet.
Initially planned for submission within 2027, the process was delayed to seek legal opinions from the Council of State due to the government's emphasis on legal thoroughness.
Mr. Chula Sukmanop, Secretary-General of the EECO, stated that the revised draft of the joint investment contract is currently under review by the Council of State. The workflow has been adjusted to avoid redundancy.
Previously, the contract amendment would have been submitted to the Cabinet in two phases: first for in-principle consideration, followed by a revised draft reviewed by the Attorney General before final Cabinet approval. The revised plan streamlines this process by having the Attorney General review the new draft directly, allowing for a single Cabinet consideration. This necessitates meticulous legal scrutiny.
Mr. Wirith Amrapal, Governor of the SRT, said that the EECO is preparing to submit the contract to the Cabinet for consideration in January 2025.
He confirmed that the project will proceed according to the EECPC's resolution, focusing on amending the existing joint investment contract. There have been no discussions on terminating the contract for a new bidding process or having the SRT take over civil works while seeking a private partner for train operations.
"Currently, the working group, comprising representatives from the SRT, EECO, and the private sector, agrees on amending the joint venture contract and moving forward with the project. There have been no discussions about terminating the contract and re-tendering. However, if it becomes government policy, the SRT is prepared to undertake this project," Mr. Wirith stated.
He added that if the Cabinet decides against amending the contract and opts for re-tendering with separate contracts for civil works (government responsibility) and train operations (private sector responsibility), similar to many other electric train projects, the SRT will comply. However, the government must secure funding for the civil works.
Mr. Wirith believes that such an approach would require prioritizing investments. The SRT has planned investments in Phase 2 of the double-track railway (7 routes) and Phase 2 of the Thai-Chinese high-speed rail (Nakhon Ratchasima - Nong Khai), both commencing in 2025. He emphasized the SRT's numerous investment commitments and the need to prioritize if the three-airport high-speed rail project reverts to SRT management.
"We have to wait for the government's decision. If the contract is terminated, we must consider the implications, including legal aspects of compensation and liability. Re-tendering would not only delay this project but also impact the Thai-Chinese high-speed rail contract, which awaits construction in the overlapping Bang Sue - Don Mueang section."
**Contract Termination Possible if CP Does Not Sign**
Mr. Chula stated that terminating the contract and re-tendering is a contingency plan if amending the joint investment contract proves impossible. However, the project currently awaits the Attorney General's review of the draft contract for submission to the Cabinet, expected in January 2025, followed by signing with the private partner.
This revised plan delays the overall process by one month. The initial expectation was for Cabinet consideration in December 2027, enabling immediate construction in Q1 2028. The timeline now shifts by one month, with Cabinet consideration expected in January 2028. However, the EECO remains confident that the SRT can deliver the site for construction in Q1 2028 as planned.
Mr. Chula added that contract termination with CP would occur only if the company refuses to sign or commence construction. In such a scenario, the SRT, as the project owner, would assume responsibility. The project's budget, pending Cabinet approval, is 120 billion baht.
If the private sector withdraws, the government can use this budget for construction and subsequently explore PPP options for train operations.
**Ministry of Finance Highlights 5 Key Points for Contract Amendment**
The EECPC, chaired by Deputy Prime Minister and Minister of Finance Mr. Pichai Chunhavajira, approved five key amendments to the joint investment contract:
1. **Payment method for Public Investment Cost (PIC):** Instead of the original lump-sum payment of 149.650 billion baht upon commencement of high-speed rail operations, the revised method adopts a "build-as-you-pay" approach. The government will provide installment payments based on construction progress verified by the SRT, with a cap of 120 billion baht.
CP must provide additional guarantees, increasing the total to 160 billion baht, to ensure construction and operation within five years. Ownership of structures will progressively transfer to the state with each payment installment. CP is not required to provide these guarantees immediately upon signing the amended contract but must do so before receiving any payments.
2. **Payment schedule for Airport Rail Link rights:** CP will pay the 10.671 billion baht fee for co-investment rights in the Airport Rail Link in seven equal annual installments. The first installment is due upon signing the amended contract. CP must provide bank guarantees covering the Airport Rail Link fee and other related financial costs borne by the SRT.
3. **Additional revenue sharing:** If future loan interest rates for the project decrease significantly, increasing CP's internal rate of return (IRR) beyond 5.52%, the SRT can demand additional revenue sharing based on a mutually agreed amount.
4. **Waiver of Notice to Proceed (NTP) conditions:** The parties will execute a memorandum of understanding waiving unfulfilled NTP conditions, allowing the SRT to issue the NTP immediately upon signing the amended contract.
5. **Protection against future risks:** Contract clauses related to force majeure and extenuating circumstances will be revised to align with other public-private partnership contracts, safeguarding against severe financial impacts on the project.
SRT Ready to Build High-Speed Rail Linking Three Airports If Government Doesn't Amend Contract, But Needs Funding
Source: Daily News Website, Thursday, December 26, 2024, 08:41
The State Railway of Thailand (SRT) clarified that there have been no discussions about terminating the contract for the high-speed rail project connecting three airports (Don Mueang - Suvarnabhumi - U-Tapao). The SRT expects the Eastern Economic Corridor Office (EECO) to submit the amended contract to the Cabinet for consideration in January 2025.
Mr. Wirith Amrapal, Governor of the SRT, stated that the EECO is preparing to submit the revised joint investment contract for the project to the Cabinet for review in January 2025. Currently, there are no negotiations to terminate the contract and re-tender it to a new private operator, nor are there plans for the SRT to take over civil works and seek a private partner solely for train operations.
However, if the government ultimately decides against amending the contract and opts for termination or re-tendering, the SRT is prepared to construct the project itself, provided the government secures the necessary funding.
Mr. Wirith emphasized the urgency of finalizing the contract amendment by January 2025 to avoid impacting the overall progress of the Thai-Chinese high-speed rail Phase 1 (Bangkok - Nakhon Ratchasima). This is particularly crucial because Contract 4-1 (Bang Sue - Don Mueang) involves overlapping infrastructure with the three-airport project.
Additionally, he stressed the need to resolve issues with Contract 4-5 (Ban Pho - Phra Kaeo), which faces delays due to the Ayutthaya station, by January or February 2025. UNESCO experts are scheduled to visit Ayutthaya province on January 18-22, 2025, to assess the Heritage Impact Assessment (HIA) report. If no issues arise, the SRT will proceed with signing the contract with the chosen contractor.
The SRT maintains its target for completing the Thai-Chinese high-speed rail and commencing operations in 2028.
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