The Transport Ministry wants the State Railway of Thailand (SRT) to adopt the Public-Private Partnership (PPP) gross cost scheme for the 26km Light Red Line electric train from Bang Sue to Rangsit to mitigate expected losses.
As the electric rail route is likely to face huge losses due to a low estimated number of passengers, the ministry has recommended the SRT consider adopting the PPP scheme.
Under this scheme, the state assumes responsibility for collecting revenue and makes a fixed payment to the private investor, said Deputy Transport Minister Pichit Akrathit.
A study done for the project's investment estimated the number of passengers per day who will use the new route at about 100,000.
The income generated will not be sufficient to cover costs, said Mr Pichit.
Under the PPP gross cost scheme, the state would bear the responsibility of income collection while a private company would be granted a concession for operations and maintenance, he said.
Citing the cabinet's Feb 9, 2016 resolution, Mr Pichit said the government plans to invest 61.5 billion baht in the construction of the Light Red Line project and allow a private company to invest about 32.3 billion baht for procuring the trains, train operating system development and repair and maintenance services.
However, the SRT had initially expressed its intention to manage the train service on this route on its own, meaning it would be willing to shoulder the 32.3 billion baht investment, he said.
The SRT will submit its final plan for operating the Light Red Line service to the cabinet on Sept 25.
Mr Pichit said that despite the projected risk of losses, this electric rail project is still promising as three other extended rail routes will connect with it and track sharing will be possible, improving its overall prospects.
The three other routes are the 5.7km Taling Chan-Siriraj, the 14.8km Taling Chan-Salaya and the 8.84km Rangsit-Thammasat University's Rangsit Campus extensions.
The Light Red Line project is scheduled to commence services in 2020, said Mr Pichit.