Thailand's Railways Set To Go Partially Private

[george]

Thailand's Railways set to go partially private

SRT cites chronic losses, huge debts and declining patronage

BANGKOK: -- The State Railway of Thailand is set to be partially privatised if Cabinet approves a multi-billion-baht double rail track investment scheme tomorrow, Transport Ministry sources said.

The proposal to build double rail tracks on five routes with a combined length of 2,644 km means the government is preparing to transfer the essential part of the country's logistics network to the private sector, said a senior official, who requested anonymity.

"The move follows SRT's chronic losses, making it not possible for the state unit to develop its network for modern logistics, even though rail transport per unit is much cheaper than road transport," he said.

The investment cost for more than 2,600km of double rail tracks will cost an estimated Bt367 billion.

Under the proposal set for tomorrow's Cabinet approval, SRT will grant long term concessions to private companies to build and operate the routes, but ownership of the infrastructure will be transferred to SRT when concessions expire.

Transport Minister Santi Prompat said Thailand's rail network would be expanded to link with those of Asean countries and southern China.

The proposal will also generate income for the SRT so that it can use the proceeds to cover losses.

Private investors will help improve railroad efficiency which is necessary if the cost of logistics is to be competitive.

At present, SRT cannot meet the rising demand for multi-mode transport services due to a shortage of rail carriages.

In addition, service quality is not competitive, as evidenced by frequent shipment delays and damage to goods.

A source in the logistics industry said Chinese firms could benefit as they have large oil and fertiliser shipments for Asean markets.

Besides the decline of passenger traffic, down about 2 per cent annually from 56 million in 2001 to just 52 million in 2006, SRT has also suffered from a high number of accidents, averaging 500 a year.

SRT is also shouldering a huge debt of Bt51.2 billion, costing Bt1.85 billion in annual interest payments. It also has a combined pension liability of Bt160 billion.

In 2006, the state enterprise booked a net loss of Bt6.57 billion. It is expected to post net losses of more than Bt10 billion over the next three years.

SRT currently has a total of 4,000km of track, of which 93 per cent are single track, 4 per cent double tracks and 3 per cent triple tracks.

--The Nation 2008-05-05

[Thai at Heart]

SRT is also shouldering a huge debt of Bt51.2 billion, costing Bt1.85 billion in annual interest payments. It also has a combined pension liability of Bt160 billion.

Little sticking point in this deal.

[Scott]

Lets see...."Chronic losses..." sounds like a good investment!

[Rinrada]

The future of Thai railways ....Now....

and Then.................

[wangsuda]

But will the privatization still continue the government policy of two tiered pricing on some lines? Specifically, the Bangkok Noi-Kanchanaburi line?

[ProfessorNiceGuy]

When can i buy ?........so excited to loose some money..........

[Supaporn]

But will the privatization still continue the government policy of two tiered pricing on some lines? Specifically, the Bangkok Noi-Kanchanaburi line?

Why not? Or...maybe widen the gap!!

[ratcatcher]

SRT is also shouldering a huge debt of Bt51.2 billion, costing Bt1.85 billion in annual interest payments. It also has a combined pension liability of Bt160 billion.

Little sticking point in this deal.

IF the State Railway of Thailand was actually serious about debt reduction, it surely could start by selling (for, no doubt, a huge profit,) the land that Central Department Store Lad Prao is standing on. Along with thousands more rai of valuable land (Chatuchak area,) throughout Thailand, that could be converted to cash.

Round up the hundreds of thousands of tons of rusty steel rail piled all over the system and that would be a start.

But that would be too easy?

[madjbs]

The English have seen this before and the results are far from pretty.

[mrtoad]

The English have seen this before and the results are far from pretty.

Yes, but we aren't guilty of the bed bugs on the sleeper trains, honest!

[yeeowww]

something needs to happen... the train is still the most pleasurable way to travel the country and it's upgrade is WAAAAAAAAAAYYYYYYY overdue, by whatever means.

[Seneque]

it's about time something's done... i am getting a bit bored to see people along the track walking at a faster pace than the train...

[samran]

won't happen. I worked on proposals back in 2001 and 2002 under a yet unblemished and powerful Thaksin government.

We are now in 2008, this being done by a jelly back government.

[Scott]

I agree that the RR needs to be upgraded. I love to travel by train and do so whenever possible. Beats driving and much more enjoyable than flying--especially with all the security. I just can't imagine putting money into it.

[madjbs]

Apart from the fact that they are a bit slow I think the trains here are great.

[scyriacus]

i live in thailand 9 years now and hope nothing would change neither with these old trains nor with the ordinary old busses. they are incredibly cheap (less than 1 baht/km) and speed should not become an issue in los. i leave trang in the evening, dine & sleep on the train and arrive in bangkok in the morning. if they doubled the speed from 50 to 100km/h average , i would arrive after midnite, so what? from hadyai to sungai kolok (>200km!) i went by train for incredible 42 baht this year. if anything changes it could be only to the worse, and most likely more expensive.

Edited May 11, 2008 by scyriacus

[Bagwan]

The English have seen this before and the results are far from pretty.

I think you mean the Brits. I'm rather tired of us splendid Anglos taking the blame for everything especially in present times when the Jocks seem to be running everything.

The railways in the UK never recovered from the effects of the First World War; successive governments refused to fairly remunerate the railway companies for their efforts and the ravages of wartime. Materials for maintenance and replacements were redirected into munitions and weapons. The rerun twenty years later left the companies in a hopeless position and in 1948 the railways were nationalised. It has been a downward path ever since.

[shiatsuman]

Slow, often late sometimes dirty but cheap and full of.. well ordinary Thais

Give me SRT any day instead of outrageously over priced UK trains, with matching ridiculous ideas of customer service

[Jefferson]

Let's face it, they're doomed. Sad but true.

Anyone who hasn't yet done an overnight long distance train ride, I suggest to do it soon.

[cclub75]

IF the State Railway of Thailand was actually serious about debt reduction, it surely could start by selling (for, no doubt, a huge profit,) the land that Central Department Store Lad Prao is standing on. Along with thousands more rai of valuable land (Chatuchak area,) throughout Thailand, that could be converted to cash.

Round up the hundreds of thousands of tons of rusty steel rail piled all over the system and that would be a start.

But that would be too easy?

I fully agree : they think they can "sell" theirs losses to private investors, and keep all their real... assets.

It's a typical "thai deal".

SRT, like BMTA (read article here about this other disaster), is a national shame. A public one.

And will remain so for a long time.

Wait for a little strike (like we had a few months ago)... the thai officials are so chicken, that they didn't wait long before to give up to the "unions".

The privatization of the SRT is nothing but a dream.

[samran]

Unfortunately there is a very strong coalition of:

- do gooders who simily don't believe in privatisation and will do anything to stop it.

- SRT chiefs who fear losing thier fifedoms after spending 30 years climbing a very greasy poll

- A management that is more focused on property (mis) management than rail management

- the lack of proper business units focused on their individual responsibilities

- the lack of commercial attactiveness to run an SRT given the current fare structure.

- huge pension and HR related liablities

One of the things about SRT is that lots of poor people use it. As is their right, and a government obligation, they should be subsidised for their journeys. Those who travel second and first, should pay however the 'true' price for the journey. But, getting the powers that be to do that is easier said than done.

The other issue is that SRT should be raking in alot more money in from frieght. The problem is that due to lax regulation, trucks and semi's on the road are often overloaded with cargo's that may be better to haul by train. However, given the lax regulation, it is cheaper at the moment simply to haul goods by road, overloading a vehicle.

[OldgitTom]

The English have seen this before and the results are far from pretty.

Arrr matey! 'n I cud tell a tale or two (but won't). Briefly; Brit trains are/were a bloody shambles, & horribly expensive, to add insult to many real accident injuries.

Under the monetarist-globalist-Thatcherite-Reaganite-Friedman-screw-you-poor-people philosophy, Britain's rail network was cut up, sold off, buggered around, then the resulting mess was handed back for gov. to sort out. It's sad that Thailand is following down this dismal road.

Private enterprise (hogs in clover) buys, cashes in the real estate & assets, then sells to some mickey mouse outfit to mismanage. Hey, who gives a s- - t about passengers? Let them use private jets. MM outfit can't make a viable buck, so whines for taxpayer subsidies or bail-out.

Contrast union-dominated, socialistic, un-privately-enterprised France. They've had a high-speed rail system for years. It was built regardless of protest & expense. It's comfy, safe, efficient & incredibly fast. It has boosted regional development. In the age of rocketing jet fuel prices, it's economically & eco-friendly. Vive la France!

You gotta have a national-cum-international transport uber-plan plus investment for this sort of thing. That means kicking the <deleted> of all the fat pigs crowding the profits trough - as unlikely in LOS as in UK or USA. Vive la France gauche! Old git Tom

[Jefferson]

One of the things about SRT is that lots of poor people use it. As is their right, and a government obligation, they should be subsidised for their journeys. Those who travel second and first, should pay however the 'true' price for the journey. But, getting the powers that be to do that is easier said than done.

You make very good points including the one above, but at real cost, they will find they cannot compete with budget airlines and even long distance VIP busses. (Even at current prices it's already hard to compete against those..)

[Bagwan]

Let's face it, they're doomed. Sad but true.

Anyone who hasn't yet done an overnight long distance train ride, I suggest to do it soon.

Nearly 50 years ago I took 14 days station leave while one of the ship's steam turbines was replaced at the Singapore Naval Base. I decided to enjoy my R&R in Penang at the Sunnyside Rest Camp ( so named by the Army! ).

Armed with a travel warrant and a ticket for the sleeper, excited by the prospect of travelling on The Night Mail express train, I presented myself at Johore Bahru station. The train arrived on time and the diesel loco looked pretty impressive to me. Being a train buff I took a particular interest, hoping that the haulage would be a steam Pacific locomotive.

However I was pretty well pissed to find that all the sleepers were occupied due to overbooking (and probably a little bribery) and I had to endure the racket of a dozen or so Chinese playing mahjong very noisily for most of the night. My lack of joy was compounded by the train never travelling at more than 40 mph and at about 0300, just after I had managed to drift off in the arms of Hypnos, the train gave a lurch and came to a grinding halt. A couple of carriages had left the rails, and there we were, light years away from civilisation and stuck in the jungle. Apart from concerns about the wildlife, thoughts entered my young head of terrorist attack since the Commie uprising had not yet been finally put down.

All the able bodied were dragooned and we levered the carriages back onto the track before resuming our journey. After such an experience and aware of what passes for a train service along the East Coast, wild horses wouldn't get me on a Thai train.

[stevehaigh]

i love traveling by train and like the other poster said, the slow speed isn't a big deal on the overnight trains, who want to arrive in bkk at 3am?

if they were to improve the single line sections, they could add a lot more trains and improve the freight service and make money that way, especially now the fuel price is going through the roof.

how much can it cost to add a few hundred km of track on land they already own?

[bannork]

Unfortunately the late arrivals are getting beyond a joke. I travelled from Bangkok to Udon at Songkran, April 14, we arrived at Udon 11 pm, 6 hours late. On April 28 I made the same journey on the night train, we arrived at Udon at midday, 4 hours late. In both cases the locomotive broke down, an official told us the line only had 2 functioning locomotives. coming back from Udon the night train is invariably an hour or two late in Bangkok. The time is important as a lot of people like myself use the train to go home at weekends and holidays so the Sunday and weekday trains have many going straight to work in Bangkok.

I love the train, and the price is excellent, a sleeper for less than 500 baht to Udon (fan), plus it's safe, comfortable and relaxing with a buffet car and washing facilities, long term overhaul is necessary but unlikely.

[OldgitTom]

Posters make many very good points, but it seems increasingly to me the ‘economics’ arguments are used to screen dirty politics made by fat pigs round their financial troughs. Word on the street is, the bus/coach/road lobby is very generous with its pol friends – so there will be no second rail lines – a ‘political’ decision dragged up in the fair garments of economics. No, the money IS there.

This is a global problem. Thirty years back, LA & New York planners knew the road transport solution was non-viable. Yet, rail line closures went ahead. The low incomes suffered worst.

When the UK sold off its railways, a guy we shall call the Laughing Hippie took a slice of a main north-south rail route. When a coach service competed, he bought in, & the two services ‘competed’ in raising fares in harmony. Cozy, eh? Result, more & more of the low income, carless sectors are excluded from travel.

Economics arguments exclude human values. Coaches? Road building is financed by taxation. Efficient if you discount fuel wastage, the impossibility of eliminating localized road congestion, pollution, & human life. Last year, my friend lost his wife, one of several women dead from a minibus crash. Where to log that cost, Mr Economist? How do you factor in all those overweight kids whose parents are afraid to let them loose to cycle & play in streets made lethal by traffic?

And budget airlines? The fares war is destroying airlines world-wide. How can aircraft manufacturers continue to invest billions in new designs if their customers cannot be sure they will be in business in five years time?

Transport needs national & international PLANNING, not hog-economics. Old git Tom

[Ricardo]

And budget airlines? The fares war is destroying airlines world-wide. How can aircraft manufacturers continue to invest billions in new designs if their customers cannot be sure they will be in business in five years time?

The solution to this (good) question was, sell the new planes to finance-companies, who then only lease them to their operators, the budget-airlines. When the airline folds, the plane is quickly repossessed, all ready to paint the new lessee's name on the side, and off it flies again.

Even established airlines, like Thai, often use leasing rather than ownership, to keep down their up-front capital-requirements. Of course they lose-out, on the potential capital-gains, if the prices of 2nd-hand aircraft rise due to high-demand.

The problem is more complex, when it comes to costly fixed-assets, such as railway networks, as they're harder to repossess & relocate. But the good news is, there are a few high-volume freight-railways in the world, which do cover their costs, they're mainly used to ship very high volumes of heavy raw-materials like coal or iron-ore. Whether this might also be true of a new Thai freight-network, shipping bulk-rice or 20-foot-containers as part of a regional transport-system, who knows ?

But think of the corruption-benefits, to the commissioning politicians & civil-servants, involved in building it !

[OldgitTom]

The solution to this (good) question was, sell the new planes to finance-companies, who then only lease them to their operators, the budget-airlines. When the airline folds, the plane is quickly repossessed, all ready to paint the new lessee's name on the side, and off it flies again.

Short-term, a cunning plan, Ricardo. But road transport in UK went that way years back. At first the leasing companies made a packet, then the profit margins went as more & more leasers appeared. There's no substitute for (people-friendly) planning.

The problem is more complex, when it comes to costly fixed-assets, such as railway networks, as they're harder to repossess & relocate.

When it comes to publicly-owned assets (whatever that means), economists always moan about costs, never exult in their blessings. The rail systems (Thai & UK) were free gifts from the past. The only costs were upkeep & modernization. Those costs are a fraction of the mountains of gold bricks sunk into road building - a bottomless pit that has globally failed to solve tansport problems - rather, added to them as cornbeef tins on castors clog the cities.

But think of the corruption-benefits, to the commissioning politicians & civil-servants, involved in building it !

Corruption is always with us, a parasitic loss. Planning aims to minimise induced, systemic inefficiencies. The sticking point is the control the parasites have over the system. Plus ca change - Bangkok Bandits in Thailand, Aristocratic Mafia in UK/US. Old git Tom