He was expressing disappointment at the Transport Ministry's cold response to the Finance Ministry proposal, which involves the government issuing bonds for direct financing of the first three routes.

The source said government-raised funds could save at least Bt3 billion on the red lines, and lower investment would result in lower transport costs for the public.

The ministry's estimates are based on issuance fees of only 0.4 per cent for government-issued bonds, while private firms must pay issuance fees of about 2.5 per cent. Moreover, the coupon rate for government bonds is about 5 per cent, compared with a corporate bond rate of about 7.5 per cent.

Government borrowing for the projects would not have much affect on public debt, because the current rate of public debt is about 41 per cent of gross domestic product (GDP), while the Finance Ministry's public debt ceiling is 50 per cent of GDP.

Meanwhile, a source in the Office of the Auditor-General also disagreed with the Transport Ministry's approach.

It intends to use turnkey contracts under which private firms will have to find their own funding sources. But the ministry is also offering to pay an advance of 15 per cent to bidders who win the contracts. The source said that if the ministry used turnkey contracts, it should not offer advance payments.

Caretaker Transport Minister Pongsak Ruktapongpisal has insisted on going ahead with the first three mass-transit lines without waiting for a new government to be formed. The ministry is currently drafting tender bidding documents for the Purple Line, from Bang Yai to Bang Sue, the Blue Line from Hualamphong to Bang Khae and Bang Sue to Tha Phra, and the Red Lines from Bang Sue to Rangsit and from Bang Sue to Taling Chan.

Wichit Chaitrong

The Nation