Bangkok airports high-speed rail project hits the brakes

The high-speed rail project set to connect Bangkok’s three major airports has been thrown into limbo, as contract amendments grind to a halt. The delay is blamed on the lack of a new chairman for the Eastern Economic Corridor (EEC) Policy Committee, a role that must be filled by the incoming Cabinet—still nowhere in sight.

The ambitious 276.5-billion-baht project promises to link Suvarnabhumi, Don Mueang, and U-Tapao airports, offering a high-speed rail connection between Bangkok and the EEC. The EEC Office’s secretary-general, Chula Sukmanop, reassured that despite the current standstill, construction could still kick off this year, with completion expected within five years, aiming for a 2029 opening.

Chula revealed that all state-managed construction areas are fully prepped and ready to be handed over to Asia Era One, a Charoen Pokphand Group affiliate, which leads the project. However, the real stumbling block lies in a critical amendment to the contract that has been gathering dust since October 2021.

The State Railway of Thailand (SRT) has been in talks with the CP Group-led consortium to revise the contract terms to jumpstart the much-delayed project. Initially, the contract required the contractor to secure a certificate of investment privileges from the Board of Investment before breaking ground. But Asia Era One has yet to obtain this certificate, leading to calls for the clause’s removal.

The amendment would also allow the contractor to pay for the Airport Rail Link’s administration rights in seven instalments, totalling 10.64 billion baht, with the first payment due this year. Additionally, it revises the state’s payment schedule for its 119-billion-baht share of the joint investment, with the 18th instalment now due on the date a notice to proceed is issued, rather than after construction wraps up, reported The Nation.

ORIGINAL STORY: High-speed rail link between three airports to start this year

The high-speed rail project connecting Don Mueang, Suvarnabhumi, and U-Tapao airports is set to kick off later this year following a revised agreement between the state and project developers.

Anan Phonimdang, Deputy Governor of the State Railway of Thailand (SRT), confirmed that the SRT’s board has acknowledged the agreement. The Eastern Economic Corridor (EEC) Policy Committee and the Cabinet will review the matter to ensure the state benefits from the project. The Notice to Proceed (NTP) is anticipated to be issued by the end of the year.

Asia Era One, a consortium led by CP Group, secured the 224.5 billion baht contract to construct the rail system in 2018. However, the project, a key infrastructure development within the EEC, faced delays due to various issues, including the impact of the pandemic.

Negotiations between the SRT, the Office of the EEC, and the consortium have led to modifications in the contract to ensure project completion.

“The solution is clear and based on principles. The company is required to submit an additional bank guarantee as an assurance it will be completed.”

The contract revision covers four main areas: the payment of the joint venture right, government investment in the project, an additional bank guarantee, and investment promotion privileges.

Under the revised terms, Asia Era One will pay the joint venture right in full, plus interest, amounting to 11.7 billion baht, in seven instalments. The state’s investment in the project will commence 18 months after the NTP is issued, rather than immediately after the trains start operating. The company is required to submit an additional bank guarantee of 111.9 billion baht within 270 days of the contract revision.

Original budget

Originally, the government committed to investing approximately 111.9 billion baht under a public-private partnership scheme. This includes 3.57 billion baht for land appropriation, with the remaining 108.33 billion baht to be paid starting in the sixth year or after the commencement of train operations.

Asia Era One has requested that the government provide payments for ongoing construction work. For the NTP to proceed, the company must first receive an investment promotion certificate from the Board of Investment. However, the state has agreed to remove this requirement after the review process concluded yesterday, reported Bangkok Post.

Anan stated that if the NTP is issued as planned, the construction is expected to be completed by 2029.