Cabinet set to approve new contract for rail project linking 3 airports
After protracted delays, the parties to the contract for the high-speed rail project agree to the amendments
The amended contract for the high-speed rail project linking three airports is now in the final phase and will be presented to the cabinet for approval next Tuesday (October 29), the Eastern Economic Corridor Office (EECO) said yesterday (October 22).
The 276.5-billion-baht rail project will link Suvarnabhumi, Don Muang, and U-Tapao international airports and form a high-speed connection between Bangkok and EEC areas.
EECO secretary-general Chula Sukmanop said that after getting Cabinet approval, the contract will be signed before the end of December by the State Railway of Thailand (SRT) and the contractor, Asia Era One, an affiliate of Charoen Pokphand (CP) Group.
This will allow the construction of the much-delayed project to start in the first quarter of 2025, he added.
The move to amend the contract was approved by the cabinet on October 19, 2021 in a bid to compensate the contractor for a decrease in projected revenue from the Airport Rail Link due to the Covid-19 outbreak. The pandemic also caused SRT to fail to deliver construction areas to Asia Era One as per the schedule, resulting in further delays.
After nearly three years of working on the amendment, all parties have concluded that five aspects of the contract shall be amended, as follows:
1. The Public investment cost (PIC) shall be paid in instalments based on the project’s progress, at a maximum 120 billion baht, instead of a one-time payment when the project finishes of 149.65 billion baht. The contractor must also put up a collateral of 160 billion baht to ensure that they will finish the project in five years.
2. The contractor can pay for the administration rights of the Airport Rail Link in seven instalments, valued in total at 10.64 billion baht, instead of a one-time payment. The first instalment is due within this year.
3. In the event of the interest rate on the loans under the project significantly decreasing, resulting in the contractor enjoying an IRR (internal rate of return) of more than 5.52%, the SRT is entitled to demand increased revenue sharing.
4. SRT is allowed to issue the NTP (notice to proceed) to the contractor immediately after the contract is signed.
5. Contractual clauses related to force majeure and respite must align with those of other public-private joint investment projects, in a bid to prevent problems that may arise from events severely impacting the financial status of the project.
Deputy Prime Minister and Transport Minister Suriya Juangroongruangkit said on Tuesday that the amendment of the high-speed rail contract aims to jumpstart the construction of this project, which is part of the national strategy to boost the economy and establish comprehensive transport networks.
“The amendment is not meant to benefit private companies, as they must bear the interest burdens. The contract will also be reviewed by the Office of the Attorney General to ensure that no undue benefits are granted,” he said.
