Bangkok Metro Plc (BMCL), the SET-listed subway operator, has been awarded the Purple Line contract for 80 billion baht, hoping to increase ridership and improve its financial results.
The company has not broken even since the subway began operating in 2004.
President Chaiwat Utaiwan said BMCL's board agreed yesterday to the company entering into the agreement for the Purple Line project of the Mass Rapid Transit Authority of Thailand (MRTA).
The elevated route running from Bang Sue station to Bang Yai in Nonthaburi covers a distance of 22 kilometres.
With a total term of 30 years, work will be divided into two phases including the 20.7-billion first phase of design, supply, installation and testing of the mechanical and engineering (M&E) systems for a period not exceeding 1,200 days from the date of execution of the concession agreement.
The MRTA will make monthly payments for the work during the first 10 years of operation.
The second phase is for operation service and maintenance of the M&E system, with a contract value of 80.3 billion baht.
The MRTA will pay monthly service fees for BMCL, said Mr Chaiwat.
BMCL, meanwhile, has signed an agreement with the SET-listed Ch. Karnchang (CK), Thailand's third-largest contractor by market value, to manage the project including supplying the trains and all equipment.
CK, which is also one of BMCL's major shareholders, will be responsible for project financing.
The construction will take 40 months to complete, and the route should be operational in 2016.
BMCL said the operation should boost its ridership to more than 300,000.
At present, the subway services 230,000 to 240,000 passengers on weekdays and less than 200,000 on weekend days.
BMCL has suffered annual losses since beginning operations in 2004 due to lower-than-expected growth in ridership as a result of the delay of the Purple Line.
The current subway runs for a distance of 20 kilometres.
Analysts, however, gave a lukewarm welcome to the new contract, saying the subway operator has shouldered high accumulated losses.
Sittidath Prasertrungruang, an analyst at Krungsri Securities, said BMCL has total liabilities of 15 billion baht, with interest charges of 1 billion baht to service each year.
"The gross-cost contract awarded by the MRTA gives the agency a return of 11% compared with 30-40% return on the build-operate-transfer contract such as for the current skytrain concession," he said.
With the current ridership, Mr Sittidath said BMCL could break even three years from now.
He said Mr Chaiwat admitted during a meeting with analysts that BMCL's equity could turn negative by year-end, and the company is considering several options.
Mr Sittidath said the company must increase its registered capital by 15 billion baht or enter debt restructuring negotiations with creditors to reduce the financial burden.
Shares of BMCL closed yesterday on the Stock Exchange of Thailand at 71 satang, up six satang, in trade worth 259 million baht.
About the author
- Writer: Nareerat Wiriyapong
Position: Business Reporter