Transport minister vows to pay cost difference to struggling contractors soon

He said on Monday that this measure will speed up the payment of escalation factor or “K factor” compensation and help contractors like Italian-Thai Development Plc (ITD) overcome their liquidity crunch.

ITD, Thailand’s third-largest construction contractor, has been suffering from a liquidity crisis since the fourth quarter of last year and does not have enough to pay its workers.

The escalation factor is used by state agencies to compensate contractors for rising costs by comparing prices from the date the bid was won to the date the completed work is handed over.

Suriya said his ministry is in talks with the Budget Bureau to speed up K compensation payment to ITD and other contractors working on the Rama II highway.

He said his ministry had instructed the contractors building an elevated expressway and motorway on Rama II highway to only work at night instead of throughout the day. This, he said, has extended the time taken to complete the projects and increased the cost.

“When I talked with the contractors of Rama II projects, they said they wanted the government to speed up K compensation payments,” the minister said. “The government is required to pay the K compensation and since I find the Rama II projects to be the only ones affected, we will need an emergency fund to compensate them.”

He added that a discussion with the Budget Bureau has resulted in a decision to use the central fund to pay K compensations in a few months.

Meanwhile, Sarawut Songwilai, director-general of the Highway Department, said ITD has been working on two construction projects for his department worth a combined 4.2 billion baht. They are:

• The 3rd phase of elevated highway No 35 from Thonburi to Pak Thor or a 1.65-kilometre elevated road from Bang Khunthien in Bangkok to Ekkachai in Samut Sakhon. This project is worth 2.49 billion baht. Sarawut said his department gave ITD 24 million baht on March 13 after it handed over the 36th part of project on March 5.

• The 7th part of motorway No 82, covering 1.44km from Ekkachai to Ban Praew, is worth 1.868 billion baht. As the project came to a standstill due to the Covid pandemic, its deadline has been extended to June 14 next year.

Separately, Expressway Authority of Thailand (EXAT) governor Surachet Laophulsuk said the ITD had won a contract for the third phase of the Phra Ram III-Dao Khanong-Outer Ring Road expressway. The third phase covers 5km from Bang Pakok Hospital to the Dao Khanong expressway gate.

Surachate said the EXAT did not owe ITD any funds and had paid for all jobs completed.