High-speed rail cost tipped to rise

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Public Debt Management Office (PDMO) has warned that financial costs of the 179-billion-baht Thai-Sino high-speed railway line from Bangkok to Nakhon Ratchasima will increase if the project is delayed, as record low-interest rates are starting to rise globally.

If the Transport Ministry can start construction as scheduled, the project could still lock in low interest rates before they start rising, said PDMO director-general Suwit Rojanavanich.

The Thai-Sino rail project is likely to be pushed back, similar to the Red Line electric train that was postponed for three years, he said.

The 41-kilometre Red Line electric train with investment of 75.5 billion baht has two sections: Taling Chan to Bang Sue and Bang Sue to Rangsit.

Even though the market expects the Bank of Thailand to leave its policy rate on hold throughout the year to accommodate the uneven economic recovery, the US Federal Reserve’s persistent rate hikes will compel Thai policymakers to follow in its footsteps some time next year.

The US central bank lifted its benchmark lending rate by a quarter percentage point to a target range of 1 to 1.25% at last month’s meeting and is forecasting one more hike this year, while the Monetary Policy Committee (MPC) kept the policy rate unchanged at 1.5% in a meeting last week.

Mr Suwit said the PDMO plans to complete a borrowing master plan for the Thai-Sino rail project within a month and seek cabinet approval.

Initially, 70% of the 179-billion-baht project is expected to be borrowed from local financial sources, 20% is to be secured from China and the rest from the annual budget for expropriation. Moreover, the first lot of loans worth 1.7 billion baht are set in this fiscal year’s budget to finance the hiring of Chinese experts to study the project.

Borrowing for the high-speed train project in the early stage would not be significant, but it will accelerate in the final phase when investment for rail and traffic systems, as well as the trains are required.

Transport Minister Arkhom Termpittayapaisith earlier said that civil works for the first 3.4-kilometre section will start in October that services along the entire rail route should be ready in the next four years.

He said he did not know how much will be used for expropriation, as payment will be made gradually, whenever negotiations with landowners are successful.

Concerning the country’s financial liquidity, he said the surplus is ample for the project’s borrowing and such borrowing will span several years in line with its progress.

Six trips a day, with 600 passengers per trip are expected in the initial stage after the rail service begins in 2021, with the entire journey taking one hour and 17 minutes.

The government estimates that 5,300 passengers a day — about a quarter of the 20,000 commuters who currently travel on the route — will use the service soon after its introduction in 2021, rising to 26,800 in the next 30 years when the number of trips will increase to 26 a day.

Passengers will be charged a flat fee of 80 baht plus 1.8 baht per km. This would make the price of a ticket to Saraburi 278 baht, or 393 baht from Bangkok to Pak Chong, and 535 baht from Bangkok to Nakhon Ratchasima.

There will be six stations: Bang Sue, Don Muang, Ayutthaya, Saraburi, Pak Chong and Nakhon Ratchasima.