ECONOMY: EUROMONEY INVESTOR FORUM
PARISTA YUTHAMANOP
Thailand's new mass-transit projects will use a new cost and revenue-sharing formula to shift risk to the public sector.
Pongpanu Svetarunda, the director-general for the Public Debt Management Office, said the new formula was aimed at addressing past problems relating to how risk was borne under the BTS Skytrain and MRT subway systems.
''The results of the existing system, as used by the MRT and BTS, have not been satisfactory. The private sector invested in the entire system and is still running at a loss because of the large debt expenses,'' he told investors at yesterday's Euromoney conference.
''Under the new system, the public sector will bear the risk of ridership, while the private sector is just an operator.''
The mass-transit projects are a major component of plans to invest 1.8 trillion baht in new infrastructure through 2011, including airport expansion and new education, health care and low-income housing facilities.
For mass-transit projects, the government would be responsible for collecting revenue and distributing funds to concessionaires under a gross cost concession concept. This contrasts with the net cost concession formula used by the BTS and MRT.
Mr Pongpanu said the new model was being jointly developed by the National Economic and Social Development Board and the Japan Bank for International Co-operation (JBIC), a major lender for mass-transit projects.
The PDMO would finance 70% of the infrastructure megaprojects from the local capital market and banking system.
Mr Pongpanu said that for the mass-transit projects, 37% of the financing would come from the domestic market, 33% from the foreign capital market, 20% from public-private partnerships and the rest from the government budget and JBIC loans.
The government is expected to finalise bids for the new Red Line running from Bang Sue to Taling Chan shortly, with construction to start at the end of the year.
Loans with JBIC for the Purple Line, running from Bang Sue to Bang Yai, were finalised two weeks ago, with construction to start in November.
Mr Pongpanu said the country's fiscal position remained supportive of new infrastructure investment.
Public debt would rise to just 40% of gross domestic product from 37% now if the planned 1.7-trillion-baht investment was made, he said.
Masato Ari, the director-general of JBIC's international finance department, said it would operate under a public-private partnership (PPP) framework in lending to the Thai government.
He said the most successful model was for the government to finance basic infrastructure and procurement and allow the private sector to operate the system.
Sirichai Sombutsiri, a senior executive vice-president at Siam Commercial Bank, said the banking system had sufficient liquidity to finance the new infrastructure projects.
New investment would also likely lead to a larger presence of foreign financial institutions in the country, he added.
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