Published on January 11, 2006

Renegotiating contracts a priority: source

The government should first solve its problems with existing Skytrain and subway operators before opening bids for the construction of new lines, said a source from the Transport Ministry.

The source said the government could pursue several options to achieve this.

These might include negotiating a share buy-back, asking operators to cut ticket fares when the new lines come into service, setting up a new organisation to manage the whole system and having existing operators convert their shares into holdings in the new firm.

Negotiations with existing operators are needed, otherwise they will gain great advantages from the expansion of the new routes, he said.

“The government should try to conclude these issues before opening the new bids. Otherwise, it would be in a disadvantageous position when talking with them later and that could have a negative impact on mass-transit investment overall,” said the source.

Transport Minister Pongsak Ruktapongpisal is scheduled to hold a meeting with related agencies on Friday to find conclusions to all the issues involved with the mass-transit programme.

The programme will be open for interested investors to receive their terms of reference on January 25.

While many have raised concerns over the investment worthiness of the Bt550-billion mass-transit plan, the source said he viewed renegotiating with existing operators as a more important issue.

Once the new routes are opened, existing Skytrain and subway operators would gain from increased passenger numbers from connecting lines and could levy the most expensive fares.

“Unless the government tackles the issue, we’re going to have profitable and loss-making routes. The most profitable lines would belong

to the existing operators while the government would be forced to shoulder the burden for the loss-making routes which go to areas where the population is lower but are needed for development purposes,” he said.

He pointed out that foreign funds have recognised the opportunity and are buying up shares in both the Bangkok Mass Transit System, which operates the Skytrain, and Bangkok Metro Co Ltd, which runs the subway.

Besides getting a better ticket price, renegotiating with the operators would prevent the private sector from gaining excessive benefits from new state investment and reduce the future state burden, he said.

In 2004, Suriya Jungrung-reangkit, the then transport minis-ter, set up a committee to negotiate a share buy-back with BMCL and BTS and had almost concluded a deal.

However, after political changes, the negotiations ended.

Watcharapong Thongrung

The Nation

Post your comment to this story here