June 25, 2018 / 1:33 PM / 2 years ago

Thailand eyes private investors' help for $40 billion rail upgrade

BANGKOK (Reuters) - Thailand is seeking private investors’ help for a $40 billion upgrade of its rail network aimed at reducing logistics costs and boosting trade, Minster of Transport Arkhom Termpittayapaisith told Reuters on Monday.

Thailand Transport Minister Arkhom Termpittayapaisith speaks during an interview with Reuters in Bangkok, Thailand, June 25, 2018. REUTERS/Panu Wongcha-um

Lowering transport costs is crucial because exports account for two thirds of Southeast Asia’s second-largest economy.

Thailand’s transport system will “place greater emphasis on rail,” Arkhom said in an interview, adding the country had “overly depended on roads and trucks.”

“We are looking for more active participation of private investment (in rail),” he said, while ruling out the privatization of operator State Railway of Thailand.

The projects include upgrading the network to dual-track rails. The government has already approved 123 billion baht ($3.7 billion) of such upgrades, with nine more worth 407 billion baht to be approved this year, Arkhom said.

In addition, bidding for a 229 billion baht, 220-kilometre (km) high-speed rail project linking three airports, including the country’s main Suvarnabhumi airport, will take place in November.

“Construction and operation is open to the private sector,” Arkhom said of this project, adding Chinese, Japanese and European companies had expressed interest.

Thai companies including energy giant PTT Pcl (PTT.BK), urban rail operator, BTS Group Holdings (BTS.BK) and construction company, CK Karnchang Pcl (CK.BK) are also interested.

The government will invest in the project’s civil work, Arkhom said.

Another ambitious plan, forged with China, is a 179 billion baht high-speed rail link stretching some 355 km to connect central and northeastern Thailand with Laos.

Arkhom said bidding for this project would take place before the end of the year and foreign companies could participate in construction if they were part of a Thai joint venture.

Construction of the first phase began last year after the Thai military government, which came to power in a coup in 2014, intervened and cleared legal hurdles.

The government signed two contracts last year worth $157 million with Chinese state enterprises for engineering and design work, which are expected to be delivered this month, Arkhom said.

Another project, this time with Japan, is a 672-km railway linking central and northern Thailand. Bidding on the 420 billion baht plan is expected to begin in 2020.

Editing by Mark Potter

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