From whatever angle, the SRT has received too little from leasing the 47.22-rai area to Central Group, and it is time the state agency found a way to maximise the possible returns from the commercially lucrative plot.

Though not in the central business district, the land is in a prime location. On the site are the five-storey shopping complex, an eight-storey parking building which can accommodate 3,000 vehicles, a 600-room hotel and a 10-storey rental office building, and all these buildings will be transferred to the SRT once the 30-year lease expires in December 2008.

Adding to the location's attraction is PTT's plan to turn a nearby site into the Energy Complex, a large development project where all energy-related agencies and private companies are expected to move. Meanwhile, Bang Sue, which is near the site, is being developed into a mass-transit centre. All these promise a larger number of people in the area.

Over the past 30 years the SRT has received less than Bt300 million from the tenant. This figure is based on a return of Bt3 million in the first year of the contract plus 5 per cent per annum. Last year's lease cost Bt10.6 million, tiny compared to the number of commercial activities on the site.

However, Central Group claims it has invested a large sum of money in the plot, because at the time there was no commercial activity there or nearby. High-rise buildings sprang up along Vibhavadi-Rangsit Road in the 1990s, buoyed by the property boom. The only huge structure on the road 29 years ago was Bangkok International Airport. In a way, Central built the site from scratch, when nobody was sure if the business decision was worthwhile or not.

According to Central Group's figures, it invested Bt2 billion on constructing the buildings, currently valued at Bt8 billion.

While Central Group has gained Bt6 billion from the rising property value, the SRT has reaped less than Bt300 million from the lease.

And now that Central Group claims the right to negotiate with the SRT on renewing the lease, many parties have urged SRT to consider more potential benefits if it is to renew the contract.

Right on cue, Kobchai Chirathiwat, president of Central Patana and in charge of the development of the plot, said at a press conference last week that to have the lease renewed the company was ready to up the returns to hundreds of millions of baht a year. He said this should be appropriate given that the lease value so far is twice higher than what is specified in the terms of reference. The terms of reference require the tenant to pay only Bt1.5 million a year while the investment in buildings cannot be lower than Bt500 million, he said.

Kobchai also expressed the opinion that the negotiations should be completed within the tenure of the interim government. Central Group has written to the SRT five times since 2000 about negotiations, most recently on December 1, 2006.

However, the Transport Ministry, which supervises SRT, apparently wants open bidding. According to Transport Minister Theera Haocharoen, whose relatives are rumoured to have taken money from Central Group for a smooth renewal, the bidding will be transparent and the returns probably higher.

The Council of State decided last week that Central Group should be given the right to negotiate, but if SRT disagrees it could open the bidding to competitors.

The issue now is that SRT, like other state enterprises, should be given the tools to maximise returns on their assets for the Kingdom's benefit.

A source from the Transport Ministry suggested that a committee of experts from state organisations should be established to negotiate with Central Group and an independent appraiser appointed to assess the property value and potential income.

"The appraisal should lay down guidelines on how the state can maximise returns from the plot, which could be done through open bidding, equity participation or other types of profit-sharing with Central Group, as well as rent. This should set a precedent for SRT in managing other plots across the country," the source said, adding that the SRT now got less than Bt2 billion from leasing hundreds of thousands of rai.

"SRT should not be left to negotiate lease terms on its own as in the past. A committee should ensure transparency and the best returns for the country," he said.

Central Group has indicated reluctance to accept equity participation, saying that as a state enterprise, SRT should not share business risks. Yet it withholds information about how it manages over 300,000 square metres of commercial area, saying that it is a trade secret.

It should know better: although under the contract it has the right to negotiate first with SRT, it is up to SRT whether to accept Central Group's offer. The prime plot has attracted several groups, among them The Mall and Wal-Mart.

The public is all ears for the final decision. One hopes the returns are high enough to defend SRT from any criticism over transparency.

Watcharapong Thongrung

The Nation