Sepo expects project delays

Sepo expects project delays

Cargo trucks stuck in heavy traffic in Songkhla's Sadao district. Experts say rising fuel prices are expected to increase logistics costs and lower the country's competitiveness.
Cargo trucks stuck in heavy traffic in Songkhla's Sadao district. Experts say rising fuel prices are expected to increase logistics costs and lower the country's competitiveness.

The State Enterprise Policy Office (Sepo) has voiced concerns that delays in rail projects as oil prices continue to rise would push up logistics costs and blunt Thailand's competitive edge.

Low energy prices during the lengthy investment process of rail projects should not affect logistics costs much, said director-general Ekniti Nitithanprapas. However, higher oil prices would add to costs as rail investments have been postponed.

Logistics costs account for 13-15% of the GDP and higher costs would erode the competitiveness of both the country and the business sector, he said.

Crude prices increased after the Middle East-dominated Opec group and other exporters led by Russia reached a deal to cut output by nearly 1.8 million barrels a day, reducing oversupply and shoring up prices. That increased forecasts for average oil prices next year to US$55-$60 a barrel, up from $45-$55 before the latest production cuts.

Mr Ekniti said the main goal of the rail megaprojects is to improve the country's economic potential in the long run rather than raise economic growth, as every 100 billion baht invested in infrastructure projects adds a mere 0.4% to the country's GDP.

The State Railway of Thailand (SRT) earmarked 60.7 billion baht in investment for fiscal 2016, but only 32.2 billion or 53% of the budget was disbursed from October 2015 to November 2016.

The SRT is expected to be the largest investor among state enterprises in fiscal 2017, starting from October 2016. The state rail agency allotted 76 billion baht for investment, compared with 57 billion for the Electricity Generating Authority of Thailand (Egat), 54 billion for PTT, and 36 billion for the Mass Rapid Transit Authority of Thailand (MRTA).

For the 14-month period to November 2016, 45 state enterprises took out 210 billion baht from a 297-billion investment budget, or 81%.

Egat drew down the highest amount from its investment budget among state enterprises, some 120% because of front-load investment. The MRTA disbursed 100% of its investment budget, Provincial Waterworks Authority 99% and Provincial Electricity Authority 94%.

Investment budget disbursement among the 45 state enterprises is expected to reach 240 billion baht at the end of December. Their combined investment for 2017 amounts to 370 billion baht, with a disbursement target of 95%.

In another development, Mr Ekniti said the Small and Medium Enterprise Development Bank will soon exit from the superboard's list of seven financially ailing state enterprises, as the bank is expected to lower its non-performing loans to 16 billion baht next year.

Thai Airways International, on the same list, managed to deliver a net profit this year, while the SRT has created a plan to generate higher income from its vacant land plots.

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