Inept Handling By Thai Politicians Takes A Toll On Public

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ANALYSIS

Inept handling by politicians takes a toll on public

By Watcharapong Thongrung

The Nation

Published on December 29, 2009

If anyone is to blame for the hefty increase in Don Muang Tollway (DMT) toll fees, it is politicians and high-level officials who have dipped their hands into the concession.

Though the involvement benefited the general public at first, the true beneficiary is the concessionaire.

DMT made headlines in 2003, during the Thaksin administration, when Suriya Jungrungreangkit was the transport minister. The tollway was built mainly to ease traffic leading to Don Mueang International Airport. But the opening of Suvarnabhumi Airport four years later hit DMT's economic potential.

Then, DMT, which faced huge losses and shouldered accumulated losses of Bt5.4 billion, sought assistance from the government. It asked for an increase in toll rates, government help in debt restructuring, the extension of the 25-year concession by another seven years, or a concession buy-back. However, the government asked the company to lower toll rates from Bt55 to Bt20 for a year to ease traffic congestion, and DMT would be compensated 80 per cent of total revenue loss. The toll rate cut boosted the number of vehicles from 100,000 to 120,000, while the revenue dropped Bt1 million a day. Yet, the government also helped convince creditors, mostly state-owned, to reduce the debt burden by 35 per cent. The concession life was, though, maintained at 25 years.

However, delayed toll increases only intensified the financial problems. DMT threatened in 2007 to sue the government for a compensation of Bt15 billion.

The issue was dealt with by the Surayud administration when Theera Haocharoen was the transport minister. With guidance from Nikorn Boonsri, then director-general of the Highways Department, which had awarded the concession, the government decided to extend the concession by another 13 years to 2034.

It was the second extension for DMT.

Changes in DMT concession

1996: A seven-year extension up to 2021 due to delayed transfer of construction areas. In return, DMT invested an additional Bt4.5 billion to extend the route to the National Memorial

2007: A 13-year extension up to 2034 as several toll increases were delayed. The government then faced the threat for Bt15 billion compensation.

In 1996, DMT had secured a seven-year extension for the concession, which originally would have ended in 2014, as the government could not transfer the construction areas in time. In return, DMT invested an additional Bt4.5 billion to extend the route to the National Memorial.

Following the 1996 amendments, DMT was eligible to raise maximum toll rate in 1999 to Bt55 from Bt43. Its attempt to raise the rate to Bt70 also failed to win the government's endorsement. Worse, in 2005, the Thaksin government even asked the company to cut the maximum rate to Bt20, before allowing DMT to raise the rates to Bt30 in 2006-2007. Though stated in the concession that in 2007 the maximum rate must be Bt70, the actual rate was Bt55.

Indeed, during the Surayud government, DMT was entitled to raise the rate to Bt85 in mid-2009.

Despite criticisms from commuters, DMT President Thanin Panicheewa was adamant that the recent toll rate increases were legal. These are a result of concession amendments, but the amendments took place only because the government first breached the contract, he noted.

While they used to enjoy the Bt20 maximum rate, now commuters with four-wheel vehicles shoulder Bt35-Bt60 on the Din Daeng-Don Muang section and vehicles with more wheels from Bt65 to Bt90. On the Don Muang-National Memorial section, tolls for vehicles with four wheels would increase from Bt20 to Bt25, and for vehicles with more wheels from Bt30 to Bt35. The toll rate for the entire route for four-wheelers will rise from Bt55 to Bt85 and for vehicles with more wheels from Bt95 to Bt125.

The Transport Ministry's only weapon now is to ease the consequences. Transport Minister Sophon Saram earlier urged commuters to use other routes. But while the Highways Department launched five urgent measures to ease traffic on Vibhavadi Rangsit Road, all are aimed at easing the troubles only on a short-term basis.

Prime Minister Abhisit Vejjajiva has ordered the ministry to look at the concession. The government's only weapon is Water Braun, a founding shareholder of DMT. The government had earlier this year paid ค30 million (Bt1.4 billion) in compensation to the German company, against the general belief that all legal threats must end following the 13-year concession extension.

Vira Suksriwong, current director-general of the Highways Department, admitted that the December 22 increase in toll rate was a result of the concession amendments.

A source from the Transport Ministry said the permission for higher toll rates and concession period extension was allowed when a military-appointed government was in office. It is normal for a post-coup government to be empowered to make quick decisions without facing much scrutiny.

"It must be thoroughly investigated if the action was transparent and in line with the promise of current prime minister Abhisit Vejjajiva. This will reveal if mistakes were committed.

"To date, it seems that DMT is the only beneficiary from the changes. Though the number of vehicles dropped 30-40 per cent (after the toll rate increase), its revenue is increasing 10 per cent. However, this leaves commuters at a disadvantage. If they use the service, they have to pay higher rates. They would only face traffic problems if they opt to use the Vibhavadi Rangsit Road," he said.

Another official who asked not to be named also attributed the mess to frequent changes of the Highways Department chief. For nearly a decade, the chief has been in office for just a year.

Given data that a concrete road lasts 50 years, the government would have to pay dearly in fixing the expressway when the 45-year concession ends. At the end, commuters and taxpayers as a whole are suffering from the amendments. And nobody believes that any politicians or state officials would be held responsible for the changes that guarantee no business risks to DMT.

Now, the only hope is that no politician or officials would propose another amendment.

-- The Nation 2009/12/29

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[Bagwan]

Quote :-

The tollway was built mainly to ease traffic leading to Don Mueang International Airport. But the opening of Suvarnabhumi Airport four years later hit DMT's economic potential.

Now there's a surprise. Who could have forecast that?

[givenall]

Quote :-

The tollway was built mainly to ease traffic leading to Don Mueang International Airport. But the opening of Suvarnabhumi Airport four years later hit DMT's economic potential.

Now there's a surprise. Who could have forecast that?

Actually this is the highest increase I have seen for this expressway. It has gone up from 45 to 85bht in less than 2 years. What is the problem with this economic system? Like many I have stopped using the expressway, and I have found not only I save the toll cost I also get better gas millage since I can’t go very fast. I guess I have to thank them

[RegularReader]

Quote :-

The tollway was built mainly to ease traffic leading to Don Mueang International Airport. But the opening of Suvarnabhumi Airport four years later hit DMT's economic potential.

Now there's a surprise. Who could have forecast that?

Actually this is the highest increase I have seen for this expressway. It has gone up from 45 to 85bht in less than 2 years. What is the problem with this economic system? Like many I have stopped using the expressway, and I have found not only I save the toll cost I also get better gas millage since I can't go very fast. I guess I have to thank them

I enter the tollway at Laksi and go right down to Din Deang and return the same way. Accepting I work Monday-Friday, it used to cost me

THB350 per week x 4 = THB1,400 per month (av). Now I pay THB600 per week x 4 = THB2,400.

That is an average increase of THB1,000 per month.

For the average Thai mid-level executive, that is a significant drain on their salary.

For the lower paid office workers, celaners, warehouse people etc., who work downtown, it is catastrophic.

This could be a significant issue at the next election, for people north of Bangkok, who go downtown daily.

Edited December 29, 2009 by RegularReader

[amanda1114]

wow.....leave my words.tnank yoo~~~~~~