Government under fire over QSNCC contract extension
published : 24 Jan 2017 at 22:02
writer: Online Reporters
The government's decision to extend the contract to manage a landmark convention centre in Bangkok by another 25 years instead of calling a new bid has drawn criticism it favoured a liquor tycoon.
The cabinet approved the Finance Ministry proposal on Jan 17 to alter its contract with N.C.C. Management & Development Co (NCC), a company under the business empire of Charoen Sirivadhanabhakdi.
The firm can now run the 65,000-square-metre Queen Sirikit National Convention Center (QSNCC) for a total of 50 years, an increase from 25 years stated in the previous version of the contract. The contract was made in 1991 when the QSNCC was officially opened and expired last year.
Under the amended contract for the third phase of the upgrade of the QSNCC, the company is required to upgrade and extend the existing convention complex, increase the space for conferences, commercial activities and car parking by not less than 180,000 sq m.
The planned construction of a 400-room, four- or five-star hotel as stipulated in the previous version was put on hold due to Bangkok's building height restriction laws.
The investment cost of the QSNCC facelift is estimated at 60 billion baht.
The Thammasat University Research and Consultancy Institute was hired by the Treasury Department to study the benefits and returns to be obtained by the government under the new 50-year contract.
It estimated total income, based on present value, of about 5 billion baht, and 19 billion baht based on future value over the 50-year period.
Sumet Sudasna, president of the Thailand Incentive and Convention Association, said the failure to call a bid blocked the chance for other companies to compete with NCC and for the government to maximise its income from the property.
“The estimated return of 100 million baht a year or less than 10 million per month on average is too low, given the prime location of the QSNCC,” Mr Sumet said.
A source at NCC Management & Development Co, told Post Today the renewal of the contract without calling a bid was stipulated in the previous contract.
Former finance minister Thirachai Phuvanatnaranubala wrote on Facebook the contract with NCC would set a bad precedent for other private companies which might try to do the same. He also questioned the country would gain the most from the renewed contract.
“Will such a criteria be used in contracts with companies in the petroleum exploration and production sector and duty-free businesses as well?” Mr Theerachai wrote.
"How can the Finance Ministry and the Treasury Department be so sure these are the maximum gains the country would get [from the contract]?”
Prime Minister Prayut Chan-o-cha on Tuesday denied an allegation that the deal favoured Mr Charoen and said the finance ministry would clarify the matter later.