Asia Era One seeks contract exit talks over high-speed rail project

Asia Era One, a CP-linked company, has confirmed it submitted a letter to exercise its right to seek the termination of the joint investment contract for the high-speed rail project linking three airports, but stressed that the move should not be interpreted as an immediate withdrawal from the project or contract cancellation.

The development has raised fresh questions over the future of the Eastern Economic Corridor’s flagship rail project, which is designed to connect Don Mueang, Suvarnabhumi and U-Tapao airports.

Asia Era One said the letter was submitted under mechanisms set out in the joint investment contract to preserve the rights of the contracting parties and clarify facts relating to the project’s implementation. The company insisted that consideration of the project remains subject to contractual and legal procedures.

The project, a public-private partnership between the State Railway of Thailand (SRT) and Asia Era One Co Ltd, in which CP is a major shareholder, has yet to reach the stage of issuing a notice to proceed, or NTP, for construction. The project was first opened for bidding on May 30, 2018, and the joint investment contract was signed on October 24, 2019.

Asia Era One won the bidding under the condition of seeking the lowest state co-investment contribution, worth 117.226 billion baht. However, after the Covid-19 pandemic hit in 2020, the company sought relief measures from the government due to the impact on Airport Rail Link passenger numbers. The Cabinet later approved the principle of relief measures, including contract amendments, on October 19, 2021.

Negotiations among the SRT, Asia Era One and the Eastern Economic Corridor Office, or EECO, have continued for more than three years across several governments without a conclusion, leading the parties towards the current process.

Anan Phonimdaeng, governor of the State Railway of Thailand, said after an SRT board meeting on July 9 that Asia Era One had sent a letter to the SRT seeking to exercise its right under Clause 6.2 of the joint investment contract. The company cited the inability to issue the NTP because it could not obtain the complete investment promotion certificate from the Board of Investment, or BOI, under the project conditions.

The SRT reported that the three parties — the SRT, EECO and Asia Era One — had discussed two possible ways forward. The first is to amend the contract in line with the previous resolution of the Eastern Economic Corridor Policy Committee, or EEC Policy Committee, and the draft amendment already reviewed by the Office of the Attorney-General. If approved, the matter would be submitted to the Cabinet for approval of the revised principles and contract signing.

The second option is contract termination. If the EEC Policy Committee decides that the contract cannot be amended, the case would move into a process of considering the grounds for termination, with the SRT and the private partner required to examine the legal details.

The SRT is preparing to report the matter to the joint investment contract management committee on July 15. It will then be submitted to the project supervisory committee within July before being proposed to the EEC Policy Committee for consideration in August.

Asia Era One later clarified that the project had received approval in principle from the BOI in 2022, and that the BOI had cooperated throughout the relevant procedures. However, the company said the application for an investment promotion certificate expired in 2024, and a fresh application requires clear project details and conditions, some of which remain under consideration as part of contract-amendment discussions.

The company said this should not be interpreted as the BOI refusing to support or approve the project. It also said the use of contractual rights should not automatically be regarded as a breach of contract, abandonment of work, or the responsibility of either party.

Asia Era One said that after the contract was signed, both sides found certain facts and limitations affecting the project, particularly the issue of a public drainage canal in the Makkasan area, which is linked to project development and land use. Economic, financial and investment conditions have also changed significantly, requiring joint consideration with relevant agencies.

If the contract is ultimately terminated, compensation and investment already made by both sides will become a key issue. The SRT has already spent on land expropriation, while the private sector has indicated that it has invested in work related to the Airport Rail Link. Transport Ministry sources said CP had referred to investment of about 12 billion baht, particularly in Airport Rail Link operations, while the Cabinet approved an SRT land expropriation budget framework of 5.74 billion baht in March 2021.

Anan said the SRT is reviewing clear figures with its finance division, including expenses, revenues and interest that may have to be offset against one another. A final figure has not yet been concluded.

Another critical issue is the future operation of the Airport Rail Link. Anan said the high-speed rail contract and the Airport Rail Link management rights are connected, meaning that if the main contract ends, the private operator’s right to run the Airport Rail Link would also end. The current operation contract is due to expire on September 30.

The SRT is preparing contingency plans to prevent any impact on passengers. One option under consideration is negotiating with the private operator to continue managing the Airport Rail Link for a temporary period, although the legal details have yet to be finalised.

Sources from EECO said Asia Era One had placed a bank guarantee worth several billion baht under the joint investment contract. If termination proceeds, the parties will have to consider actual investment made, whether any damage occurred, and whether the grounds for termination meet conditions that could allow the guarantee to be seized.

Sarit Jinnasith, president of Asia Era One, said the company had continuously cooperated with the SRT, EECO and related agencies to find an appropriate way forward under the contract, law and national interest.

He said the company remained committed to the project and believed cooperation among all parties would lead to a fair and suitable outcome that benefits the country, the public and all stakeholders.