EEC board sets 4-month deadline for SRT to resolve high-speed rail contract issues
The EEC board has given the State Railway of Thailand 4 months to resolve issues with CP Group’s high-speed rail contract for the Don Mueang–Suvarnabhumi–U-Tapao link.
A source from the Eastern Economic Corridor Office (EECO) revealed that during the EEC board meeting on Monday (November 3), members were updated on the progress of the high-speed rail project connecting Don Mueang, Suvarnabhumi, and U-Tapao airports, valued at 224 billion baht. The contract, a 50-year concession, is between the State Railway of Thailand (SRT) and Asia Erawan Co. Ltd, part of CP Group.
The board has instructed the SRT to engage in discussions with CP Group to resolve issues raised by the Office of the Attorney General (OAG) regarding the contract. The government is seeking a clear resolution within 4 months to ensure the project can proceed smoothly.
Key points requiring clarification, as per the OAG’s 18 observations, are recommendations, and the SRT is expected to explain its reasoning and proposed actions. However, six points proposed by the OAG have legal implications and must be addressed before any amended contract is signed. The main issue concerns the 120 billion baht guarantee, with private sector and bank stakeholders expressing concern over the revised contract clause related to project success guarantees (Bank Guarantee), which now requires the private sector to provide additional financial guarantees. This revision follows a change in the payment structure from a completion-based payment model to a progressive payment model.
The OAG’s amendment stipulates that the 120-billion-baht guarantee will be treated in a way similar to the existing 4.5 billion baht guarantee, meaning the SRT can use the guarantee to compensate for damages even in cases of minor breaches, such as project delays, provided the work is not completely abandoned.
The source added that the next step will involve the private sector and SRT providing financial and investment justification for the guarantee to be applied only in cases of abandonment, to enable the banks to accept the risks and issue the required financial guarantees. A joint meeting between all parties is planned in the next 2-3 weeks to resolve the issues.
Once an agreement is reached between the SRT and the private sector, the revised contract draft will be submitted to the Attorney General for review, which is expected to take 1-2 months. If approved, the agreement will then be submitted to the EEC board and Cabinet for final approval.
