Thailand to revise EEC high-speed rail contract by next month

Government officials anticipate finalising the revised contract for the Eastern Economic Corridor (EEC) high-speed rail system by next month, paving the way for the project’s next phase.

This high-speed rail system, a cornerstone project for the EEC, aims to connect Don Mueang, Suvarnabhumi, and U-Tapao airports.

The State Railway of Thailand (SRT) and Asia Era One, a consortium led by the Charoen Pokphand Group, originally signed the contract in 2019. The contract included a concession agreement to operate the Airport Rail Link (ARL).

During the Covid-19 pandemic, Asia Era One sought compensation due to a significant decline in ARL passenger numbers. The Cabinet approved the contract revision in 2021 to address this issue.

EEC Secretary-General Chula Sukmanop mentioned this week that the contract adjustments will focus on the financial collateral required from the consortium and the government’s expedited payment for construction work. He expects the revised agreement will be submitted to the EEC Policy Committee by mid-September.

Once approved, the details will be reviewed by the Office of the Attorney-General before being sent to the cabinet for final approval. The EEC aims to sign the contract with the consortium before the end of the year.

A source from the SRT revealed that the consortium has agreed to pay the 10.6-billion-baht concession fee in seven instalments starting this year. Financial constraints caused by the pandemic, the global economy, and high interest rates have necessitated a condition for the government to expedite a 119-billion-baht payment before the 18th instalment following the issuance of a Notice to Proceed, rather than after the construction is completed.

To mitigate risks and ensure ongoing construction, the consortium has agreed to provide bank guarantees amounting to approximately 100 billion baht. These funds will be gradually returned upon project completion.

Additionally, the new contract eliminates the need for investment promotion certificates, which allows the SRT to issue the Notice to Proceed, enabling the consortium to access construction sites more efficiently.

The private partner must provide the financial guarantee within 270 days of signing the amended contract.

Efforts are also underway to resolve land issues associated with the U-Tapao Airport and Eastern Aviation City project. Construction is expected to take five years, with the project now anticipated to open in 2029, five years behind the original schedule, reported Bangkok Post.