[sustran] Bangkok transport update

[Craig Townsend]

Progress is a ' boring ' job

Prinya Muangarkas

Eight six-metre-high ‘‘giant moles’’ are digging their way under Bangkok
streets. Twenty metres under the hustle and bustle of major thoroughfares,
the moles have been working for the Metropolitan Rapid Transit Authority
(MRTA) since early this year.

The boring machines are charting the course of the city’s future mass
transit service and were imported by two contractors to build dual tunnels
for Bangkok’s first subway which is expected to serve 400,000 commuters a
day in the next four years.

Prime Minister Chuan Leekpai officially activated the first two of the
eight tunnelling machines under Ratchadapisek Road in February. Both belong
to ION Joint Venture, led by Italian-Thai Development Plc, which was hired
for 28.5 billion baht to build the northern half of the 20-km Hua
Lampong-Huay Khwang-Bang Sue subway tunnels and underground stations for
the MRTA. The other six machines gradually started their mission under
Ratchadapisek Road in the first half of the year.

The machines were imported from Japan and Germany for more than 100 million
baht each. Each is 6.43 metres high, 8.35 metres long and weighs 320 tons.
They work non-stop and can advance 10 metres a day underground while
assembling 30-cm-thick concrete walls of the subway tunnels.

ION Joint Venture has four tunnelling machines and the other four belong to
Joint Venture BCKT, led by Ch Karnchang Plc, which was contracted for 23.9
billion baht to build the southern half of the subway tunnels and stations.
Subway tunnels will lie under Ratchadapisek, Lat Phrao, Phaholyothin,
Kamphaengphet, and Rama IV roads. Each night, earth is removed from the
tunnels and transported to Huay Khwang where the MRTA will develop its
subway depot. Some of the earth is given to construction projects of state
agencies. The MRTA expects all the tunnels to be finished in two years
after about three million cubic metres of soil have been dug from under
Bangkok streets.

Work on the 103-billion-baht subway has been proceeding since late 1997.
Other highlights of progress include the completion in May of structural
work for the 400-metre-long and 23-metre-wide Rama IX station, the biggest
underground station, which will serve passengers and provide switches for
trains to change tracks on the 20-km route.

Another important step, also in May, was the beginning of the subway depot
construction on Thiam Ruammit Road in Huay Khwang. The MRTA hired the
Siam/Nippon consortium to build the 6.3-billion-baht depot where electric
trains will be maintained, parked and tested and equipment will be stored.
The 300-rai (480,000-square-metre) depot is scheduled to be completed by
January 2002.

During the first half of this year, the MRTA also settled subway operation
contract details with the BMCL consortium led by Ch Karnchang Plc. The
authority awarded a 25-year concession to the consortium in exchange for
about 50 billion baht. The contractor will give part of subway fares and
income from the commercial use of subway stations and pay annual concession
fees to the authority.

The MRTA’s share of fares to be collected from the service will be 1% for
the first 14 years of operation, 2% in the 15th year, 3% from the 16th to
the 18th year, and 15% from the 19th to the 25th year.

Annual concession fees will start from the 11th year at 981 million baht
and increase annually to 5.561 billion baht in the 25th year. Besides, the
MRTA will have a 7% share of the income that the consortium will earn from
leasing commercial areas in subway stations throughout the concession
period. The fares of the subway are set at 15 to 37 baht, depending on
distances travelled. They will increase every two years with the first rise
set for 2005.

Above ground, operational tests are continuing for the 23-km elevated
electric train system of Bangkok Mass Transit System Corp (BTSC), which
plans to open the service to commuters on December 5 this year. Under its
30-year concession, the company will run its elevated trains from 6 a.m. to
midnight and expects to serve 1.15 million passengers a day.

Along with the successful test run, the BTSC won a wrangle with Mater Dei,
a school for girls, over plans for an elevated train station in front of
the campus on Ploenchit Road. The school’s representatives, who opposed the
station on the grounds of pollution and potential risks of assault on its
pupils, gave up their three-year fight after BTSC delivered an ultimatum.
The corporation said that without the Mater Dei station, the whole elevated
train system would fail and the Bangkok Metropolitan Administration (BMA),
the project owner, would have to pay it about 50 billion baht in
compensation. The BMA asked BTSC to scale down the station as a compromise.

Those who still keep fighting are the disabled, who demand elevators at
elevated train stations to ensure access to the mass transit system. The
BTSC passed the responsibility to the BMA, and Bangkok governor Bhichit
Rattakul promised to arrange for a total of 11 elevators serving at least
five main stations out of the 23-station network. However, the BMA still
has no idea how to fund the 170-million-baht installation of the elevators.

A fare structure is another matter for the BMA and the BTSC to settle
before the service starts. The company ranged the fares from 15 to 60 baht
depending on distances travelled. The BMA agrees with the rates, but city
councillors do not and complain that the 60-baht ceiling is too high. The
BMA tried to explain that the rates had been contracted and would have to
be honoured, but city councillors said that the Bangkok Metropolitan
Administration Act required the BMA to consult them on matters involving
its contracts with the private sector, and that included the train deal.

For its own cashflow, BTSC won approval from the Securities and Exchange
Commission in January for an initial public offering of shares. The company
later revealed a plan to float about 220 million shares in October, raising
about 4.4 billion baht. Despite the offering, property developer Tanayong
Plc will still maintain its control over BTSC. The sharp fall in prices on
the Stock Exchange of Thailand has delayed the share issue since 1997.




Hopewell project

Above ground, with no sign of surrounding life, are pillars of the stalled
Hopewell elevated road and train project. After terminating the contract
with Hopewell (Thailand) Ltd in 1997, the government still has not found a
way to revive the project to solve Bangkok’s traffic congestion.

The first half of this year saw the occasional wrangle between the
government and Hopewell while the state sought the advice of consultants.

Hopewell repeated its demand to retain control of the project. As it had
invested US$575 million (about 21 billion baht) in past construction, it
believed it was right in claiming a stake in any new consortium formed by
the government to revive the project.

The company also demanded compensation from the government for unilaterally
terminating its contract and sought the return of the 2.85-billion-baht
concession fees it had paid.

In response, the government simply turned down the demands, saying that
Hopewell’s delayed implementation of its project warranted the cancellation
of the contract.

The government threatened to sue Hopewell if the company filed a lawsuit.
Hopewell would have to bid for the project if it wanted to play a further
part, the government said.

By August, the government expects to select consultants to look at ways to
revive the project. It hopes the study will be completed in the following
eight months. German development bank Kreditanstalt fadir Wiederaufbau
(KfW) offered an unconditional grant of US$1.5 million (about 55 million
baht) toward meeting the costs estimated at 100 million bahtHopewell
(Thailand) Co, a subsidiary of Hong Kong-based infrastructure developer
Hopewell Holdings, stopped construction of the project in August 1997 after
failing to raise enough funds from its creditors.

Under the original timetable, part of the 60-km project should have been in
service by December 1995. The whole system, designed mainly to run above
Bangkok’s existing railway, was originally scheduled for completion by
December this year.

Before Hopewell halted its work, only 13% of the project had been built in
seven years of construction. Hence the concrete pillars and beams along
Bangkok’s northern and eastern railway tracks.



Bus services

The city bus agency’s cashflow and on-road problems continued.

The Bangkok Mass Transit Authority (BMTA) made repeated requests for
financial help from the government in the first half of this year. In
February, the agency called on the Finance Ministry to clear its old debts
of 10 billion baht and to subsidise the ordinary bus service, as the fares
are deliberately kept low to help commuters and do not cover costs.

The agency also sought approval to borrow five billion baht from existing
creditors to have old buses repaired, buy new ones, and to clear overdue
fuel bills with the Petroleum Authority of Thailand. The bills alone cost
about 3.1 billion baht. While waiting for the government’s help, the BMTA
gradually sold its loss-ridden bus routes plus some old buses to private
operators to cut costs.

The Finance Ministry responded in May by saying it would help clear the
overdue fuel bills, but was silent on the BMTA’s request to borrow more and
to have all its old debts cleared. Earlier, the ministry said the bus
agency should not borrow more as its burden would worsen.

As of May, the BMTA had accumulated debts of about 20 billion baht,
creating a monthly interest burden of about 200 million baht.



Railways

The problem of fares much lower than operating costs also plagues the State
Railway of Thailand (SRT), which said the current fares caused it to face a
monthly operational loss of about 200 million baht.

It needed about eight billion baht in cash this fiscal year to solve its
liquidity problem. However the SRT is more strongly placed than the bus
agency in that it has about 270,000 rai (432 square kilometres) of land
nationwide.

Of the total, 60,000 rai (about 96 square kilometres) throughout 13
provinces has commercial potential and should generate more than enough
income to offset its loss-ridden train operation. However, the property
development will affect about 40,000 encroachers who live on its land.

Those people have already voiced their opposition to the development. About
100 encroachers from the northeastern province of Khon Kaen arrived at the
Transport and Communications Ministry headquarters in Bangkok early in
March to denounce the plan.

Another protest by southern encroachers later in same month was more
aggressive, with about 300 people blocking railway tracks in Hat Yai
district of Songkhla province in defiance of an eviction order. The
community had for decades operated goods and food stalls. The protest
paralysed most rail services between Bangkok and the South for eight hours.
The SRT, in a search for a solution, began talks for the National Housing
Authority to build cheap residential units for the encroachers. In Bangkok,
the SRT has hired a contractor to renovate six main railway stations for
commercial use. The SRT will collect a monthly rent of 170,000 baht in return.

As property development will take a long time to yield a significant
return, the SRT announced it would seek a low-interest loan of about 23
billion baht from Japan’s Special Yen Loan to maintain old railway tracks
and lay new tracks alongside to improve train services.

Although the loan requires the SRT to hire Japanese contractors for at
least half the work, it seems the best option as the SRT has difficulty
raising funds elsewhere.

However, France has offered a low-interest loan of about nine billion baht
to help the project.


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For the original text of this Bangkok Post 1999 Mid-Year Economic Review
update on transport projects and public bus operations in Bangkok, go to: 

http://www.bangkokpost.net/99mideco/99mye12.html


*****************************************
Craig Townsend
Institute for Science & Technology Policy
Murdoch University
South Street, Murdoch
Perth, Western Australia 6150

tel: (61 8) 9360 6293
fax: (61 8) 9360 6421
email: townsend at central.murdoch.edu.au