On April 5, 2019, Mr. Worawut Mala, the acting governor of the State Railway of Thailand (SRT) and chairman of the selection committee for private investment in the 224 billion baht high-speed rail project connecting three airports, announced that after negotiations with the CP Group, progress has exceeded 70%. It is now possible to eliminate all 12 proposals that were outside the Terms of Reference (TOR).

          However, after discussions with various international partners and private financial institutions, the CP Group agreed that they could better manage the risk figures and decided to withdraw all the aforementioned proposals. Moving forward, a meeting will be scheduled with the legal subcommittee and the CP Group to clarify the details of the proposals to ensure mutual understanding. This adjustment will only involve minor content changes and will not affect the proposals outside the TOR.


          Mr. Worawut further stated that once a conclusion is reached, a meeting of the main committee is expected to be scheduled after the Songkran festival to summarize all key points before submitting them to the Attorney General for contract draft review and forwarding to the Eastern Economic Corridor Policy Committee (EEC Board) by the end of this month. This will then be presented to the Cabinet for approval. Therefore, it is anticipated that the contract could be signed by May. However, even after negotiations are completed, there is still a need to expedite the submission of the Environmental Impact Assessment (EIA) report for approval from the Environmental Impact Assessment Expert Committee (EIA Committee) before the contract can be signed.


          The conditions that the CP Group proposed outside the TOR include: 1. Extending the project duration from 50 years to 99 years; 2. Requesting government subsidies from the first year of operation, including a guaranteed IRR return of 6.75% per year; 3. The government must provide subsidies in years 1-6 instead of at the start of operations; 4. Allowing a reduction of the major shareholder's stake in the project to 5% in the future, as the company may seek to raise funds through the Stock Exchange of Thailand; 5. Requesting the Bank of Thailand to relax the borrowing ceiling for the CP Group due to current borrowing limits; 6. Requesting government guarantees for the State Railway of Thailand in case of future issues; 7. Allowing payment for the Airport Link project over 11 years at an interest rate of 3%, instead of immediate payment upon government transfer of the project; 8. The government must support low-interest loans at a rate of 4% for the project; 9. Requesting payment for land lease at Makkasan and Sriracha when returns are achieved; 10. If the U-Tapao airport project is delayed, the government must compensate for damages; 11. Prohibiting the SRT from competing with private operators; and 12. The details of the 12th proposal have not yet been disclosed.

 

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