Thailand's Railways set to go partially private

The State Railway of Thailand is set to be partially privatised if Cabinet approves a multi-billion-baht double rail track investment scheme tomorrow, Transport Ministry sources said.

The proposal to build double rail tracks on five routes with a combined length of 2,644 km means the government is preparing to transfer the essential part of the country's logistics network to

the private sector, said a

senior official, who requested anonymity.

"The move follows SRT's chronic  losses, making it not possible for the state unit to develop its network for modern logistics, even though rail transport per unit is much cheaper than road transport," he said.

The investment cost for more than 2,600km of double rail tracks will cost an estimated Bt367 billion.

Under the proposal set for tomorrow's Cabinet approval, SRT will grant long term concessions to private companies to build and operate the routes, but ownership of the infrastructure will be transferred to SRT when concessions expire.

Transport Minister Santi Prompat said Thailand's rail network would be expanded to link with those of Asean countries and southern China.

The proposal will also generate income for the SRT so that it can use the proceeds to cover losses.

Private investors will help improve railroad efficiency which is necessary if the cost of logistics is to be competitive.

At present, SRT cannot meet the rising demand for multi-mode transport services due to a shortage of rail carriages.

In addition, service quality is not competitive, as evidenced by frequent shipment delays and damage to goods.

A source in the logistics industry said  Chinese firms could benefit as they have large oil and fertiliser shipments for Asean markets.

Besides the decline of passenger traffic, down about 2 per cent annually from 56 million in 2001 to just 52 million in 2006, SRT has also suffered from a high number of accidents, averaging 500 a year.

SRT is also shouldering a huge debt of Bt51.2 billion, costing Bt1.85 billion in annual interest payments. It also has a combined pension liability of Bt160 billion.

In 2006, the state enterprise booked a net loss of Bt6.57 billion. It is expected to post net losses of more than Bt10 billion over the next three years.

SRT currently has a total of 4,000km of track, of which 93 per cent are single track, 4 per cent double tracks and 3 per cent triple tracks.