Skytrain passengers may be hit by a fare hike due to a new investment condition imposed for private companies bidding for the Pink and Yellow Line contracts, says skytrain operator BTS Group Holdings Plc.
BTS chairman Keeree Kanjanapas criticised the government's policy shift requiring any company winning concessions to construct and operate the electric rail lines to invest 100% of the project investment funds.
It was unlikely any private company would be able to break even within a 30-year concession under this condition, he said, so fares could skyrocket.
"In a large project, if the government wants to control service fares, it has to offer subsidies because if a private company holding a concession is required to fully invest in the project in exchange for permission to manage fares, passengers will suffer high prices," Mr Keeree said.
He was referring to the 34.5-kilometre Pink Line running from Khae Rai to Min Buri that requires 56.7 billion baht in funds, and the 30.4-km Yellow Line from Lat Phrao to Samrong that needs 54.7 billion baht.
A source at the Transport Ministry said the board of the Mass Rapid Transit Authority of Thailand (MRTA) had decided to add the new funding requirement.
The board believed this would help speed up implementation of the projects, according to the source.
Previously, the government agreed to invest in the construction of the rail system while the concession holder was responsible for the rest — purchasing the trains, operating the train service and shouldering maintenance costs for the system, the source said.
"The government still has to invest in the infrastructure of the rail routes because it is impossible for any company to fully invest in them while the concession lasts only 30 years," said Mr Keeree.
"Even the interest on the loans sought to fund such projects alone can never be paid off [with profits earned from the train service operation in only 30 years]," he said.
Mr Keeree said the projects need a more detailed feasibility study, in particular to project the number of passengers.
BTS had invested more than 50 billion baht in the skytrain and the average number of passengers per day was now 800,000, he said.
The company has yet to earn significant profits as almost all proceeds are still being used to pay back interest on loans, he said.
He estimated that each of the two train lines would have at most 200,000 passengers per day, while if more than 50 billion baht is spent on each project the interest alone will be around 2.5 billion baht a year.
Peerapol Thawornsupacharoen, director of the Office of Transport and Traffic Policy and Planning and an MRTA board member, confirmed the board's decision to implement the new requirement.
The main reason was that it would improve competitiveness in bidding, Mr Peerapol said, adding the government may subsidise the private companies to a certain extent.