years in the making, and some justified cynicism, the BTS
skytrain actually opened on schedule
They said pigs would never fly
Poona Antaseeda & Krissana Parnsoonthorn
After a long wait, Bangkok residents
are now enjoying the capital's elevated electric train system,
which brings hope to the city that the chronic traffic congestion
will gradually ease.
Dubbed Thailand's first modern mass transit system, the BTS skytrain
project was officially opened for service on Dec 5.
Although some confusion persisted with automatic ticketing machines
during the first week of service, the 23.5-kilometre skytrain
system operated by Bangkok Mass Transit System Plc (BTSC) is a
milestone for a city famous worldwide for its inability to solve
the most terrible of traffic jams.
BTSC received a 30-year concession from the Bangkok Metropolitan
Administration (BMA) to run its elevated trains from 6 a.m. to
midnight. The network has two routes -- the Sukhumvit Route from
On Nut Intersection to Banthad Thong Road, and the Silom Route
connecting Mor Chit to Silom and Taksin Bridge. The fares range
from 10 to 40 baht based on distance.
The company expected patronage of 600,000 trips a day to cover
its costs, but at this stage, no one is making a fortune and the
record so far is 200,000 trips on the first day of official service.
The BTS skytrain system is not only a new alternative for travel
in crowded Bangkok, but also brings a new perspective and way
of life. People need spend only a few minutes to travel between
two places in the central business district, faster than by bus,
private car or taxi.
Moreover, businesses near the outer train stations, such as shopping
complexes and hotels, have become more lively than in the past
few years. As well, tourists like to ride the skytrain as a new
way of looking around the city's attractions.
Bangkok's landscape is expected to change dramatically in the
near future. Middle-income earners, say city planners, are forecast
to move closer to the skytrain stations due mainly to their greater
However, Bangkok people need time to change their habits and
forget their obsession with private transport in imported luxury
vehicles. When this happens the root of the traffic problems will
be cured and the cost of wasted man-hours and gasoline -- estimated
at between 50-100 billion baht a year -- will be reduced and a
better quality of life will emerge. Nobody enjoys being trapped
on snarled roads as happened during the boom times when almost
740 new cars were registered every day.
That's the ultimate goal of the Thai government and success will
eventually draw more foreign investment to the country. Bangkok
has a master plan to construct 260 kilometres of mass transit
networks comprising trains and subways in five to six years to
carry up to 10-12 million people, according to the Office of Megaprojects.
Policy makers have not always supported the plan. The government
has changed its policy many times about infrastructure projects,
which require billions of baht in investment. It feared that building
new roads would have led to more cars. As a result, some tollways
and expressways as well as skytrain projects were suspended in
the 1980s. Things changed and the policy was revised in the early
1990s. Many new infrastructure projects then got off the ground.
The BMA under the governorship of Chamlong Srimuang in 1985 initiated
the BTS skytrain project and decided the project should be fully
funded by the private sector on a build-operate-transfer (BOT)
Getting on track
In 1992 when the BMA sealed a deal with BTSC to build the skytrain,
the concessionaire planned to spend four years to complete it.
Unfortunately, the project needed seven years to become reality
after facing protests from many parties, including bird watchers,
academics, environmentalists, the disabled and even representatives
of an expensive private school for the privileged.
BTSC awarded construction and civil work worth $670 million to
Italian-Thai Development Plc, and the electrical system contract
worth $650 million to Munich-based Siemens AG.
Originally, the system was designed to run only 15 kilometres
with two routes, Victory Monument and Sukhumvit, with a depot
and maintenance centre located at Lumpini Park. Criticism arose
over the depot at Lumpini Park, with complaints of possible air
and visual pollution in the heart of capital. BMA spent three
years moving the depot to Mor Chit bus terminal and the route
was then extended to 23.5 kilometres.
Hurry up and wait ... excited commuters found bottlenecks
at the ticket booths when they arrived for the first ride.
In 1995, the BTS skytrain project was strongly opposed by a group
of environmentalists led by Khunying Chodchoi Sophonpanich. They
were concerned about possible environmental impacts caused by
the skytrain and demanded the Council of the State (COS) rule
on whether the extension should be the subject of an environmental
COS ruled the new section must undergo an assessment and its
construction then began.
This did not mean everything went as smoothly as expected. Teething
problems remained when some teachers and parents encouraged pupils
at the Mater Dei School in protests against the construction of
a station in front of the all-girl institution on Ploen Chit Road,
making bizarre claims of risks of crime and air pollution. BTSC
caved in to the elite by moving the station stairway away from
the school to near Mahathun Plaza.
Accidents also occurred repeatedly during the construction due
to carelessness. In March 1998, a taxi driver was killed and five
others injured when a steel beam fell on the car. Then, a construction
segment fell in front of the Police Hospital, though no one was
Another unexpected problem was the baht's depreciation when the
economic crisis erupted. As a result, the project cost ran to
54 billion baht from an initial 32 billion.
BTSC cited the increased cost as a reason to change the fare
structure to between 15-60 baht on distance travelled, while BMA
wanted a flat rate of not over 15 baht. The dispute over the fare
structure was finally settled and BTSC agreed to charge 10-40
baht fares based on distance. Among the obstacles the BTSC has
dealt with, a hostile takeover battle with foreign creditors was
Tanayong Plc, the BTSC's biggest shareholder, was threatened
with loss of control of the skytrain's operation. A portion of
265 million BTSC shares it pledged as collateral against a $80
million syndicated loan with 12 creditors was auctioned by Schroder
International Merchant Bankers on Nov 5.
Credit Suisse First Boston (CSFB) won the bidding at 3.763 billion
baht or 14.2 baht per share. The auction diluted Tanayong's holding
in BTSC to 28.05% from 51.05%, breaching the contract with the
BMA that required Tanayong to hold at least a 51% stake in BTSC
on the first day the train was commercially operated.
Tanayong, as the share custodian, did not accept the auction
and did not transfer the shares to CSFB. Both sides vowed a battle
to claim the shares through lengthly court procedures.
The situation became worse when CSFB planned to auction another
batch of 248.5 million BTSC shares, representing 20%, on December
Tanayong, led by chief executive Keeree Kanjanapas, kept fighting
for control of BTSC. Finally, the company obtained money from
''Chinese friends'' -- about 3.6 billion baht to repay CSFB --
and claimed the 248.5 million shares back on December 1, the day
the skytrain was handed over to BMA and BTSC by the Siemens-Italian-Thai
The planned auction on Dec 7 was automatically called off.
Now Tanayong's holdings in BTSC remain unchanged but there is
no clear answer about the ownership of the 265 million shares
auctioned by Schroder. Mr Keeree claimed to have found new funds
to redeem the shares from CSFB, through an invitation to new strategic
partners. However, the talks with CSFB are still pending and the
share price has not been determined yet.
Yet this project was luckier than the other mass transit system
projects, which were often threatened by political changes and
policy instability, thus ending up being delayed or even cancelled.
Apart from the skytrain project, work on the 20-kilometre subway
-- the blue line -- from Hua Lampong via Rama IX to Huay Kwang
and Bang Sue, has progressed very well. The subway is scheduled
to service 400,000 commuters a day by year 2002.
Although digging the subway tunnels is a tedious task, making
the streets narrow, Bangkok residents have to live with the situation.
Several giant six-metre-high moles are digging the 25-metre dual
tunnels every day under the hustle and bustle of major roads in
Prime Minister Chuan Leekpai set the subway drills in
motion with the flick of a switch early in 1999
The Metropolitan Rapid Transit Authority (MRTA), which is now
handling Bangkok's first subway, hired the ION Joint Venture led
by Italian-Thai Development Plc for 28.5 billion baht to build
the northern half of the blue line tunnels and underground stations.
The southern half has been undertaken by Joint Venture BCKT, led
by Ch Karnchang Plc, which was contracted for 23.9 billion baht.
Both contractors report that each has already constructed subway
tunnels for two kilometres.
The MRTA, in September, borrowed another 20 billion baht from
Japan's Overseas Economic Co-operation Fund to fund the project.
This brought combined borrowings to 55 billion baht, from 35 billion
baht in 1996. MRTA wants to borrow a total of 70 billion baht
for this project's entire cost.
Initially, the state intended to borrow only 60% of the cost
from the Japanese fund but the financial crisis dried up domestic
Early in October, MRTA gave a contract worth three billion baht
to the consortium of Ch Karnchang Plc and SNC Lavalin of Canada
to lay tracks for the first subway line.
Five international mass transit system manufacturers -- Siemens,
Bombardier, Alstoms-MELCO, JMC-Mitsui and Adtranz -- have proposed
supplying MRTA subway trains.
There have been reports that MRTA will extend the blue line from
Hua Lampong to Bang Khae and from Bang Sue to Phra Nang Klao Bridge.
However, no more details have been released. It was also reported
that Ch Karnchang and Bangkok Bank were interested in investing
in the new subway route, the Orange Line, which will open bids
for contractors in 2000.
Like a Bangkok version of Stonehenge, about one thousand tall
concrete pillars stand mysteriously idle from the North of Bangkok
to the inner city. They are the remnants of the Hopewell elevated
road and train project.
Good news was that Extra K Group and BTSC, the operator of the
BTS skytrain, have shown a strong interest in taking over the
project. Extra K may team up with SNC Lavalin of Canada while
BTSC may have assistance from Chinese partners.
No specific proposals have been submitted to the Transport Ministry.
After terminating the US$3.2 billion contract with Hopewell (Thailand)
Ltd in 1998, the government still has not found a feasible way
to revive the project.
On the other hand, Hong Kong-based Hopewell Holdings led by Gordon
Wu still seeks compensation of 2.85 billion baht from the Thai
government for its initial investment costs.
The government, in response, has turned down Mr Wu's demand,
saying if Hopewell wanted to play a further part, it would have
to bid for the train/road project. The government vowed to countersue
Hopewell if the company filed a suit. The only government progress
has been the hiring of Team Consulting Engineers Co in November
to study the possibility of reviving the Hopewell project.
The feasibility study is scheduled to finish in eight months
and KfW, the German development bank, unconditionally granted
60 million baht for the study.
Originally, the 60-kilometre Hopewell project, to run above existing
railway lines, was planned to fully serve commuters by the end
of 1999. Hopewell built only 13% of the project in seven years
of construction, blaming the difficulties on obtaining funds from
creditors as well as the need to 'deal'' with officials and ministers
of a succession of Thai governments.
A network of crowded, unreliable public buses remains the largest
transport system in Bangkok. However, cashflow and on-road troubles
are still plaguing the city bus agency.
Paying toll on the new Bang na-Chon Buri expressway
To solve these prolonged problems, the government has a long-standing
plan to transfer Bangkok Mass Transit Authority (BMTA) to the
Bangkok Metropolitan Administration (BMA), but BMA has said it
would accept responsibility for the operation of BMTA only after
the agency has solved its huge debt problem.
BMTA has therefore asked the government to help clear its 20-billion
baht debt and the request came closer to being met toward the
end of 1999.
The cabinet ordered the Finance Ministry and the Bureau of the
Budget to guarantee a 6.5-billion baht loan to BMTA to clear some
debts in five years. The repayments will go towards a 4.5-billion-baht
fuel bill with the Petroleum Authority of Thailand (PTT) and 1.8-billion-baht
in maintenance contracts with leading garages.
In the long run, the plan to transfer BMTA to the supervision
of BMA will continue. The government will find ways to repay the
remaining debts of BMTA when it is transferred to the city administration.
BMTA now has a total of 20 billion baht in debts. It has an accumulated
loss of up to 22 billion baht, an average loss of 200 million
baht per month.
The cabinet has given a working group, comprising BMA, BMTA and
relevant agencies, a three-month timetable to study the transfer
of BMTA and present a conclusion to the cabinet again in early
The working group has a principle that the private sector will
be brought into daily administration of the city bus agency. After
that, the agency must be privatised as a public company. The transfer
will change the status of BMTA from a state enterprise to a public
company or a co-operation. By law, BMA itself is not allowed to
run other state enterprises.
The transfer should result in overhauling and streamlining of
the agency which now has 20,000 staff. BMTA's financial structure
must also be revised before the transfer.
BMTA began re-directing its bus network to facilitate the skytrain
project and the future subway and Hopewell projects which should
be finished in the next few years.
Protests from BMTA staff over the transfer remain but they are
not as strong as in 1998. Staff are worried about their employment
The opening of the BTS skytrain in December provided Bangkok
commuters with a chance to use feeder bus services on 13 routes.
BMTA granted a feeder bus concession to BTSC, developer of the
skytrain project. BTSC, through Bangkok Transit Feeder Co (BTFC),
will open feeder bus services in mid-January, delayed from December
BTFC plans to introduce 175 air-conditioned buses with fares
ranging between 8-18 baht to feed passengers to the skytrain stations.
The feeder bus concession has caused a duplication of existing
BMTA routes for 135 buses. Consumer rights' protection groups
opposed the new concession, claiming it would cause some impact
on the poor.
The cabinet asked the Finance Ministry to find and guarantee
some conditional loans for the State Railways of Thailand (SRT)
to pay unpaid fuel bills totalling 3-4 billion baht to PTT.
SRT cannot make operational profits from its railways service
because of the problem of low fares which have been fixed for
several years. The state enterprise said it faces a monthly operational
loss of about 200 million baht. It needs about eight billion baht
in cash this fiscal year to ease its liquidity problem.
The cabinet suggested SRT slash some loss-ridden train routes
that the agency cannot encourage more people to use.
The Transport Ministry, in July, did not object to SRT doubling
its first and second class train fares if the services were largely
improved. The third-class fares were to rise by 40%.
SRT said the fare hike was part of plans to solve its financial
problems. Moreover, the state-owned agency asked the government
to subsidise it to the tune of 13 billion baht a year to shore
up the losing operation.
At the end of November, the agency received approval from the
ministry to overhaul its 244-kilometre southern line at a cost
of four billion baht. This included a track replacement, train
and station improvements and an updated ticket booking system.
Another way to solve SRT's liquidity problem is to utilise its
270,000 rai of land nationwide with more rational and efficient
The Thailand Development Research Institute has predicted that
if SRT had good property management, it would yield between 400-500
million baht a year.
Some 60,000 rai throughout 13 major provinces have high commercial
potential for development, although new developments would affect
about 40,000 encroachers who live on the land.
Altogether, SRT plans to lease some 100,000 rai of trackside
land to generate additional income and reduce maintenance costs.