Ministry seeks B40bn JBIC loan for Red Line

Business News - Monday December 17, 2007

Bangkok Post

MASS TRANSIT FINANCING

Ministry seeks B40bn JBIC loan for Red Line

WICHIT CHANTANUSORNSIRI

The Finance Ministry plans to seek a 40-billion-baht loan from the Japan Bank for International Co-operation (JBIC) to finance construction of the Red Line mass-transit system, according to Pongpanu Svetarunvra, the director-general of the Public Debt Management Office.

He said terms and conditions of the loan would be similar to those approved recently by JBIC to finance the Purple Line, a light-rail route from Bang Sue to Bang Yai.

The Purple Line loan repayment period is 25 years with an interest rate of 1.4% per year and a grace period of seven years.

JBIC officials are visiting Thailand until Thursday to study the Red Line before making recommendations to the bank.

The Red Line, which links downtown Bangkok with outer areas of the capital, will be built by the State Railway of Thailand (SRT). It has two routes _ Bang Sue-Rangsit and Bang Sue-Taling Chan _ with a total distance of 41 kilometres.

Mr Pongpanu said bids for the Bang Sue-Taling Chan section had already been opened and a committee was considering the results. Construction will be financed by local sources.

Officials envision using 40 billion baht in JBIC funding for the 26-km Bang Sue-Rangsit route.

The project requires a total investment of 60 billion baht for civil work and rails, and excludes rolling stock worth around five billion baht.

The remaining 20 billion baht will come from local sources, including the state budget and money from the state Oil Fund, which is expected to be debt-free in the next month or two.

It is expected that the Oil Fund will earn around 8.3 billion baht from fuel levies next year. Within five years, the accumulated contributions to the Fund will reach around 70 billion baht. The proceeds will be earmarked for investment in transport and communication systems in Bangkok and elsewhere in the country.

An international bidding competition will be opened for the construction of the Bang Sue-Rangsit route. All participating bidders will be required to have a joint venture with at least one Thai contractor.