Thailand plans to secure funding from China to finance the high-speed railway planned from Bangkok to Nakhon Ratchasima only if an overseas loan is needed and the rate is lower than that of the Thai government's 12.5-year-tenor bond, says a senior official at Public Debt Management Office (PDMO).
Loan conditions have not been concluded, but PDMO has joined 26 meetings under the Framework of Cooperation between Thailand and China for the high-speed rail project, said Jindarat Viriyataveekul, PDMO's deputy spokeswoman.
The Thai government bond with a 12.5-year maturity now carries a coupon rate of 2.8% per year.
The Thai-Sino high-speed railway stretching from Bangkok to Nakhon Ratchasima is the first phase of a rail route to Nong Khai. The first section is under construction and carries a cost of 179 billion baht, of which 13.2 billion will be financed by the government's budget and the remaining 166 billion by borrowing.
According to the plan, 80% of the 166-billion-baht in borrowing will be secured from domestic sources, with the remainder from overseas loans for expenses related to acquiring technology and machinery from abroad to eliminate a currency swap burden.
If the Thai government decides to borrow from China, it refuses to be limited by conditions to use Chinese technology, she said.
Ms Jindarat said the rail project is not a joint venture between Thailand and China. It is on Thai land and is managed by the Thai government.
PDMO is considering an overseas loan to finance expenses related to foreign-denominated currency.
No decision has been made on whether the loan will be from the Export-Import Bank of China or any other overseas financial institutions, and there is no concern the high-rail project will eventually be owned by China, she said.
The National Economic and Social Development Council, a government think tank, produced an analysis report on high-speed rail approved by the cabinet that estimated the project will enhance potential economic opportunities and support the country becoming a transport and logistics hub.
For domestic borrowing, the Finance Ministry already struck a deal for a 4-billion-baht loan, charged at a discount rate from the Bangkok Interbank Offered Rate.