3-airport rail link amendment ‘will not benefit CP-led consortium’
An adviser to the Eastern Economic Corridor Office (EECO) has rejected any concern that amendment of the 276.5-billion-baht public-private rail contract to link three airports will benefit the private partner.
The State Railway of Thailand (SRT) is currently amending the contract the government signed with a Charoen Pokphand (CP) Group-led consortium in October 2019 to link Don Mueang, Suvarnabhumi and U-Tapao airports.
Both parties have agreed the contract needs adjustment to ensure that CP’s subsidiary Asia Era One Co Ltd is properly compensated for reduced passenger volume on the Airport Rail Link during the Covid situation.
EECO’s special adviser, Kanit Sangsubhan, said SRT and EECO have been carefully considering the contract amendment to ensure the project can continue and the government retains benefit from it.
“The amendment is not aimed at benefiting the private partner, but to ensure that the project can go ahead and not affect other projects in the EEC,” he said.
Kanit, who is a former EECO secretary-general, said impacts from the Covid-19 pandemic and Russia-Ukraine conflict – both of which occurred after the contract was signed – had caused the budget to rise by over 200 billion baht, prompting both parties to revise the contract to ensure the project’s bankability.
Kanit said the amendment will bring forward the schedule of payments to Asia Era One for construction work from the 7th year to the 2nd year. In return, the company will take over SRT’s job in constructing the link from Don Mueang airport to the national rail hub at Bang Sue.
The faster payment schedule will save the government 26.49 billion baht in SRT budget and interest while ensuring the project is finished in time, said Kanit.
The amendment also allows the private partner to pay SRT for the right to manage the Airport Rail Link during Covid-19 in instalments to reduce its financial burden, he added.
“This move will not cost the government anything as SRT is still entitled to the 11.73 billion baht for the Airport Rail Link rights,” said Kanit.
“Moreover, the operational loss of 200-300 million baht per year during the outbreak will still be covered by the company.”
Kanit said other parts of the contract remain intact, including the stipulation that reduces the CP-led consortium’s return on investment from 5.52% to 5% due to risks such as inflation, rising interest rate, and increasing construction cost.
