The State Enterprise Policy Office (Sepo) has managed to convince the Transport Ministry to put two expressways as underlying assets for Thailand Future Fund (TFF), which the ministry had earlier feared would have high financial costs.
Sepo explained through the Budget Bureau that raising money through the infrastructure fund could have financial costs of 5-8%, exceeding the 3% cost of borrowing backed by the Finance Ministry, but it could help avoid a rise in public debt, said director general Ekniti Nitithanprapas.
TFF can allow the government to prevent public debt from hitting the 60% threshold under the Finance Ministry's sustainable framework, he said.
Public debt stands at 43% of GDP, meaning there is only 2.6 trillion baht left before reaching the threshold, Mr Ekniti said, adding that the government's big-ticket infrastructure projects for transportation alone need a combined investment of 2.3 trillion.
State investment in hospitals, telecommunications, electricity, tap water, social development and other projects remain necessary.
If public debt reaches the ceiling, it will affect the government's creditability and raise state borrowing costs, he said.
The government plans to raise the first batch of 40-50 billion baht from the initial public offering (IPO) of TFF, expected to start trading on the Stock Exchange of Thailand in the second quarter. Sepo will apply a small-lot first basis for that imminent IPO to enable more retail investors to invest in the fund.
The plan entails using three expressway projects as underlying assets for TFF. The three projects comprise two brownfields -- Chalong Rat Expressway (Ram Intra-At Narong) and Burapha Withi Expressway (Bang Na-Chon Buri) -- and one greenfield; an expressway linking Rama III Road to Dao Khanong.
Finance Minister Apisak Tantivorawong earlier said a second batch of TFF units will raise funds for the Electricity Generating Authority of Thailand and Provincial Waterworks Authority projects.
Mr Ekniti said the government plans to offer a return of 8% on TFF, which includes principal payments, to shareholders.
The government will soon launch the book-building process to gauge investor interest in the fund, he said.