BANGKOK, THAILAND – The Ministry of Transport strictly rejects any changes to the contracts for the planned high-speed rail project. If the private partner Asia Era One withdraws, the billion-dollar project faces massive delays of several years.
Government rejects new payment plans
Transport Minister Phiphat Ratchakitprakarn made clear that the state will not alter the payment structure. The consortium Asia Era One had demanded to receive money from the state already during the construction phase.
The original contract stipulates payments only after completion and commissioning of the line. The government maintains this hard line and firmly rejects the proposed model.
Global crises burden the billion-dollar project
Rising energy prices and construction costs put the private consortium under enormous financial pressure. Particularly the conflicts in the Middle East create great uncertainty on the world market.
If the project becomes no longer viable for the private partners, only withdrawal remains. A cabinet resolution allows contract termination in such external crises without legal disadvantages.
State plans takeover upon termination
The state railway SRT is already preparing for a possible failure of negotiations. If the contract is terminated, the state intends to take over construction of the important rail line itself.
This scenario would however lead to a massive delay of two to three years. New planning and tenders would be mandatory for a restart of the project.
Long construction time for important connection
The SRT estimates the pure construction time for a state takeover at about five and a half years. Although land expropriations are already complete, the bureaucratic effort for a new start remains enormous.
The planned line is intended to connect the three major airports Don Mueang, Suvarnabhumi and U-Tapao. A final decision on the project’s future is expected by July.
Future of Thai infrastructure
The failure of the private consortium would be a heavy blow to the economic development of the region. The government must now weigh whether it can truly bear the financial risk of going it alone.
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