The Treasury Department has promised a solid return of up to 46.8 billion baht to justify the development of the controversial no-bid Chao Phraya riverside observation tower.
The cabinet recently approved leasing a 4-rai plot to build the 459-metre tower. But the non-bid nature of the project, whose 30-year lease comes with a 70-million-baht price tag, has left a bad taste in many critics' mouths.
Department director-general Patchara Anuntasilpa yesterday cited a study by an "independent analyst" at Thammasat University to justify the project.
He said the study had found that the return on investment for the 4.62-billion baht mixed-use observation tower, boasting both a panoramic view of the capital and an exhibition honouring the monarchy, would result in a 600-million-baht loss from planned ticket prices over the leasehold period.
But the economic return of the project during that time could reach 46.8 billion baht.
The project is owned and operated by Bangkok Observation Tower Foundation, which was jointly formed by private business groups including Magnolia Quality Development Corporation Co, the property development arm of Charoen Pokphand Group and Siam Piwat Co, the operator of Siam Center and Siam Discovery.
The foundation will be responsible for the project's financing, both from business operators contributions and loans. No state funds will be invested in the project, the government said.
Magnolia and Siam Piwat are the joint developers of Iconsiam, a mixed-use project by the Chao Phraya River scheduled to launch by year-end. The project is next to the site for the planned tower.
Critics have questioned if the tower is intended to enhance the business groups' Iconsiam project.
Mr Patchara, meanwhile, called on the critics to think of the tower's benefits in a broader context. He said the new attraction is expected to draw between 1.1-1.4 million foreign tourists per year, potentially enticing visitors to spend an extra day in Bangkok.
According to the tower's management plan, foreigners will be charged an entry fee of 750 baht -- twice the price for Thai nationals.
Mr Patchara said the treasury land where the tower will be situated is landlocked and inaccessible to cars. It has been left vacant for several years.
The normal rental rate for the land plot for commercial purposes is 400,000 baht per month, he said. But Mr Patchara said the there will be a negotiation with Iconsiam's operator to allow access to the land plot for the tower.
He said the project will be carefully considered under the Public-Private Partnership law, enacted to govern multi-billion-baht state-private projects.
The land lease contract is expected to be signed within three months and construction will take around three years, said Mr Patchara.
Deputy Prime Minister Prawit Wongsuwon yesterday said there would be no bidding for the project because it is "for the people". He said the project did not favour any business group.