Photo courtesy of Khaosod
Thailand's $6.8 billion high-speed rail project, intended to connect Don Mueang, Suvarnabhumi, and U-Tapao airports, is on the verge of collapse nearly six years after the signing of a public-private partnership contract. Asia Era One Company, the project's private partner, has not met the required conditions to proceed, stalling development due to multiple factors, including the COVID-19 pandemic.
The delay has substantially affected the project's viability, with reduced investment returns and lower-than-expected passenger numbers undermining its feasibility. The consortium faced difficulties securing financing and paying the 10.67-billion-baht concession fee for the Airport Rail Link, halting construction. As a result, options considered included contract termination, amending the PPP agreement, or letting the State Railway of Thailand proceed independently.
To address these issues, the Eastern Economic Corridor Policy Committee approved contract amendments allowing government co-investment to be paid in installments. Asia Era One agreed to provide an additional 160 billion baht in guarantees, and the contract was reviewed by the Office of the Attorney General for Cabinet approval. However, a recent government change led by Prime Minister Anutin Charnvirakul disrupted this plan, with the administration opposing the revised contract terms citing legal concerns.
Transport Minister Phiphat Ratchakitprakarn rejected the revised payment structure, advocating for adherence to the original contract. Consequently, the amendment framework was nullified, and the SRT Governor's resignation plunged the project into further uncertainty. This stalled high-speed rail project jeopardizes the overall development of the Eastern Economic Corridor, including key projects like the U-Tapao Airport expansion.
The project's future remains unclear, with termination under the current PPP contract seemingly likely. Such a decision could lead to significant legal battles and compensation claims, impacting not only the rail line but the wider region's growth prospects.
Key Takeaways
- Thailand's high-speed rail project is stalled with possible termination.
- Government changes have halted progress on proposed contract amendments.
- Broader EEC development is at risk due to the rail project's uncertainties.
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