Makkasan project at B300bn
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Makkasan project at B300bn

50-year contract and renewal option deal

An aerial view shows part of the SRT-owned Makkasan plot, which the Treasury Department plans to lease for development under a green concept. KRIT PROMSAKA NA SAKOLNAKORN
An aerial view shows part of the SRT-owned Makkasan plot, which the Treasury Department plans to lease for development under a green concept. KRIT PROMSAKA NA SAKOLNAKORN

The Treasury Department's development plan for Bangkok's prime Makkasan area is estimated to need at least 200-300 billion baht in investment, making it one of the country's largest projects.

The department has set a green concept for the initial development of Makkasan's 497-rai plot that private sector partners will have to abide by, said director-general Chakkrit Parapuntakul.

The auction winner for the project will hold a 50-year contract with a renewal option, he said.

The loss-ridden State Railway of Thailand (SRT) has agreed to lease the Makkasan plot to the Finance Ministry for 99 years in a deal worth 61 billion baht to clear part of the railway operator's hefty debt.

The Treasury Department recently planned to develop the land into a commercial area and public park.

Mr Chakkrit said the project would be under a public-private partnership in which a Thai privately owned group or company must own at least a 51% stake.

The SRT will release 105 rai to the Treasury Department after it signs a memorandum of understanding with the department soon, with another 30 rai handed over within one year and the remainder within two years. However, a school on 40 rai will not be relocated.

The Treasury Department will seek approval from a committee overseeing the government's projects chaired by permanent secretary for finance Somchai Sujjapongse to amend a concession period for Bangkok's Mor Chit project from 30 years to 50 years plus two options for 10-year renewals, Mr Chakkrit said.

The move is aimed at raising the project's internal rate of return.

The concessionaire is also liable to pay 1.4 billion baht, of which 900 million is principal paid for foundation works of the skytrain's depot and the rest is interest.

The concession to develop the 63-rai Mor Chit project was won by Bangkok Terminal in 1996, but the company failed to start the project due to legal obstacles.

For the second phase of the upgrade of Queen Sirikit National Convention Center, the concession contract is under the attorney-general's deliberation.

The new contract will double the concession period to 50 years as Bangkok's height restriction laws have barred N.C.C. Management & Development Co from building a hotel as planned.

Under the previous contract, the company was required to construct a 400-room, four-star or five-star hotel with parking space for 3,000 cars.

Mr Chakkrit said the current centre will be demolished to construct a new building and enlarge the centre's space from 30,000 to 100,000 square metres.

The department has set up a committee to negotiate with SET-listed U City, a concessionaire with a prime plot on the east bank of the Chao Phraya River. If talks do not reach a conclusion, the department must seize collateral that the company placed, Mr Chakkrit said.

Natural Park was renamed U City after amalgamating with BTS Assets Co and Kamkung Properties Co. Its consortium won a 30-year concession from the Treasury Department in 2005 to develop and manage a boutique hotel with no more than 33 rooms on a five-rai plot on Charoen Krung Road, even though there were doubts over its financial status.

The project never got off the ground, with the company claiming the department did not hand over the plot as part of it was still being used as a river police station.

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