THAILAND: Two new companies are to be launched within six months, following the adoption of plans for restructuring State Railway of Thailand last month. Meeting in early March, the State Enterprise Policy Committee chaired by Deputy Premier Korbsak Sabhavasu instructed the Ministry of Finance to bring forward proposals for endorsement by the cabinet before the end of the month.
According to Deputy Finance Minister Pradit Phataraprasit, the change is seen as the only way to put the railway back on a sound financial footing. SRT’s accumulated liabilities total 72·8bn baht, plus a further 52·6bn in pension liabilities. In the year to September 30 2008, SRT recorded an operating loss of 200m baht and a net loss of 12bn baht after financing charges.
As with other state railways, SRT’s finances have been crippled by government policies to keep fares and freight tariffs low. Deferred maintenance and a lack of investment have resulted in a rapid shift of traffic from rail to road.
Director-General of the State Enterprise Policy Office Areepong Bhoocha-oom says the new companies’ finances and assets will be kept separate, and that SRT’s debt repayments will be suspended until the railway becomes profitable.
Pradit sees the Bangkok airport rail link as the model for the operating business, which he expects will recruit international experts to help run the network. He is also looking at the scope for private-sector involvement. According to SRT Governor Yuthana Thapchareonm, the company will take over the rolling stock, with a registered capital of 7bn baht, but would need a start-up grant of 500m baht. He believes the business could be profitable within six years.
The asset management company will have a starting capital of 60bn baht, and will oversee SRT property assets valued at 200bn baht. This business is expected to become profitable after 10 years, but it is not yet clear whether its main income will come from property sales, development opportunities or access charges.