The State Enterprise Policy Commission (superboard) has agreed in principle to allow the State Railway of Thailand (SRT) to run the Red Line electric railway on the condition that it turn a profit in three years and seek no financial support.
"If the SRT can accept the conditions, then the superboard will seek cabinet approval later," said Charnvit Narkburi, a spokesman for the State Enterprise Policy Office.
To prevent the SRT from adding to taxpayers' burden, the SRT must operate the new line profitably in three years, he said.
"It means the SRT has no choice but to improve its efficiency seriously. We won't provide it with a subsidy even if it runs at a loss again," Mr Charnvit said.
The initial SRT proposal asked the Finance Ministry to help in guaranteeing 3 billion baht worth of loans the SRT says it needs for working capital to operate the Red Line. The SRT also asked for a further capital subsidy of 5.6 billion baht if after five years of operation the Red Line is running at a loss.
Amnuay Preemonwong, the deputy permanent secretary for finance, said earlier the SRT's requests were unreasonable. Mr Amnuay said the ministry will only act as loan guarantor, but the SRT will no longer receive more subsidies.
Though the superboard agreed in principle, the SRT still needs to seek superboard approval for the business plan.
"The SRT is working on the development and operation plan in details," said SRT governor Wuthichart Kalyanamitra. "We plan to include land development projects along the Red Line routes."
"It is too early to judge our final plan as it has not been completed."
Deputy Transport Minister Pichit Akrathit said the plan's crucial factors are route management, cash flow management and the business feasibility study.
In a related development, SRT reform may be disrupted as SRT employees try to change the government's mind about establishing a new department to improve railway and transport management, said a senior official at the Finance Ministry. The new department is a key part of the SRT's reform plan.
The source said strong opposition from SRT employees may cause a government switcheroo, adjusting the new department's responsibility from making policy, developing a strategic plan, and overseeing the whole rail network to only governing safety standards of track facilities and maintenance.
The cabinet approved the law to create the new department late last year.
"There is a discussion about this issue at the Transport Ministry. I heard the government may want to ease tensions from those opposed to it," said the source. "If so, the SRT will likely not improve."
The new department, under the Transport Ministry, would be responsible for safety standards, maintenance, operation and development of facilities for rail networks across the country.
"The new department is meant to gain management control from the SRT to work on improving the efficiency of the country's logistics and track transport systems. If we leave the railway and track logistics in the incompetent hands of the SRT, its management has proven itself incapable of making changes," the source said.
"However, SRT staff fear losing their power and benefits, prompting them to strongly oppose reform, even though the organisation is in serious need of an overhaul or it will keep asking for more money from taxpayers with no improvements."
The SRT has struggled with heavy debts for decades and has never made a profit.