February 11, 2014

Thai projects given new impetus

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New railway projects in Thailand have long been hampered by a lack of finance and government bureaucracy. But with a new $US 68.5bn transport infrastructure financing package secured in November, Dr Chula Sukmanop, director of Thailand's Office of Transport Policy and Planning, tells Kevin Smith how this agreement has bred new life into the country's investment plans.

SERVICES on the Bangkok - Chiang Mai line north of Uttaradit in Thailand were suspended in September following a spate of derailments in the area caused by the poor condition of track and subgrade.

A Baht 2.8bn ($US 87.2m) emergency project was enacted to solve the issues, including installing new track and reinforcing the subgrade, but services did not recommence until December due to a shortage of labour to do the work and poor weather, leaving 2000 daily passengers to seek alternative means of transport.

Unfortunately this is not an isolated incident on Thailand's 4000km mainline metre-gauge network, which continues to suffer from chronic under investment. Speeds are low and derailments common, while the picture is not much better on the country's roads which are underequipped to handle the high volumes of traffic making travelling dangerous.

Poor cross-country connections mean that Bangkok, with a population of 9.4 million, remains the country's economic powerhouse with a per-capita income nearly triple the national average of $US 8135 per year.

Yet a desire exists to spread this wealth and ease the pressure on the capital which is burdened by its own transit issues. The growth of the tourism industry in particular over the past two decades has increased calls to improve links to the rest of the country, specifically through better train services.

Various proposals to develop a dedicated high-speed railway network have been mooted in the past few years, but have so far failed to get off the drawing board primarily due to the sheer expense of such an undertaking, as well as government bureaucracy.

However, the news in November 2013 that Thailand's senate had voted to approve a bill allowing the government to borrow up to Baht 2.2 trillion over the next seven years to finance infrastructure projects is a sign the initiative might finally get up and running.

The bill enables the government to borrow from domestic and international lenders, avoiding the need to seek funds through the annual budget process. Up to 80% of the funds are set to go towards rail including the first phase of the country's high-speed network. And while observers may be forgiven for having limited confidence that this development will result in anything concrete, particularly given the anti-government protests which have rocked the capital since late November, the announcement that Laos broke ground on its inaugural high-speed project on December 18, which will run to the Thai border and could eventually form part of a southeast Asian network, might be a sign that the tide is about to change.

Indeed Dr Chula Sukmanop, director of Thailand's Office of Transport Policy and Planning (OTP), which oversees and implements transport projects consistent with the objectives of masterplans, says that feasibility studies are currently underway for four proposed high-speed lines. He told IRJ in December that he expects these studies to be approved by the cabinet in April or May at which point OTP will be able to move ahead with the next phase of the project.

The lines in question all radiate from Bangkok, running southwest to Hua Hin, southeast to Pattaya, northeast to Nakhon Ratchasima, and north to Phitsanulok and Chiang Mai. Sukmanop says the feasibility studies encompass the financial viability of the project, the economic benefits, engineering sites and requirements and environmental impact.

Each is being carried out by a different international consultant. Sukmanop says technical bidding is expected to commence in June with bids for the final contract anticipated from six consortia. Bid evaluation will take around four months before construction starts in 2015.

"At this stage it is not a matter of price, but whichever project is ready first is the one that we will proceed with first," Sukmanop says. "In general we feel that developing a network of four different systems for four different lines will not work. It has to be interoperable. Bidding on the technical side of the project is important for the country because it will determine what kind of system we choose for Thailand."

China has long been linked with supporting Thailand's high-speed ambitions, in particular through its proposals for a Southeast Asian network that will link Thailand and Laos to its own lines at Kunming. Indeed a memorandum of understanding (MoU) was agreed by Thailand and China in 2012 to facilitate transport developments in the region, and share prices at Chinese manufacturers CSR and CNR rose following the funding announcement in November.

Bo-Takhro -Thailand1However, Sukmanop says there will be no special treatment of Chinese bids which are anticipated alongside those from national consortia from France, Germany, Korea and Japan. The OTP has also ruled out allowing China to provide finance for one line without a bidding process.

"For us this is difficult to do because there are certain regulations in place that have to be followed, one of which is to allow competition," he says. "It would have to be a very exceptional case not to follow these regulations, and from a political perspective it is important to have negotiations between various bidding parties."

Double track

In addition to high-speed, the infrastructure financing bill will also allocate money towards State Railway of Thailand's (SRT) long-held ambition to double the track on 873km of its mainline network, which could increase mainline traffic by up to 300%.

Six projects are earmarked for the scheme with bidding on the first - the 106km section from Chachoengsao east of Bangkok north to Klong Sib Kao - currently underway after an Environmental Impact Assessment (EIA) was completed. Sukmanop says the projects pose significant challenges, particularly in dense forests in the northeast of Thailand, and that work will proceed on the projects "one by one." The next undertaking to get underway will depend on the results of EIAs, which are expected to be secured later this year. The five other projects are:

• Map Kabao - Nakhon Ratchasima (132km)

• Nakhon Pathom - Hua Hin (165km)

• Lop Buri - Pak Nampo (118km)

• Nakhon Ratchasima - Khon Kaen (185km), and

• Prachuap Khiri Khan - Chumphon (167km).

Securing new rolling stock for the lines is another major priority for the enhanced mainline network. "A tender for the supply of 50 locomotives was issued and bidding had started but we experienced technical problems with the bidding so we called off this process until late January or early February," Sukmanop says. "We expect delivery to occur roughly two years after the contract is awarded and these will come from international suppliers with all units imported."

Sukmanop says he expects additional locomotives to be secured through a leasing process while around 130 of SRT's existing coaches are set for upgrades, with another 100 set to follow. He says extra wagons will also be introduced to increase freight capacity.

Evidence that railway construction is set to boost economic development is already apparent in the rapid increase in property prices in specific regions. While new residential developments continue to pop up alongside Bangkok's existing lines and the sites of proposed urban rail developments, rices alongside the proposed double-track corridor in the northeast provinces of Khon Kaen and Udon Thani increased by more than 30% in 2013. Sukmanop reports that he expects the same to occur as the high-speed routes develop.

"The movement has started already with developers looking to buy up land close to the proposed high-speed lines," he says.

Political unrest

Inevitably questions have been raised about how the current political unrest will impact Thailand's high-speed ambitions. The plans were an issue in the previous election in July 2011, with every political party supporting investment in a network, but Sukmanop admits that the outcome of a fresh election planned for February 2 in response to the protests could impact the project.

"The plans for the lines were put forward in legislation approved by the government," he says. "If a new government comes in and decides to enact its own legislation it is likely that we will have to resubmit the plans which will inevitably delay the process and we may have to find some other source of financing to start up the project."

The OTP's determination to advance the high-speed initiative in particular is certainly evident in the progress made on the projects in 2013. Sukmanop concedes that some people still need convincing of the network's value and that the scheme is far from being over the finish line. But the obvious need to improve inter-city connections in Thailand puts the OTP, and whichever government is formed in Bangkok in the next few months, in a strong position to win the debate.

"The major objections concern whether Thailand is ready to adopt the high-speed train, that the studies are happening too soon and accusations that it is an expensive toy with little benefits," he says.

"However, every political party is behind the objective and the majority of the population are in favour of building high-speed lines. In the long term it is an extremely important project for the country."

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