Govt mulls domestic loans to fund dual-track railway project

The government will turn to borrowing from domestic sources if China won’t lower the interest rate it has offered for a Thai railway venture it will help build, says Transport Minister Prajin Juntong.

Thailand signed an agreement with China last year to build the 734km-long Nong Khai-Nakhon Ratchasima-Kaeng Khoi-Map Ta Phut rail line, and the 133km track from Kaeng Khoi to Bangkok.

ACM Prajin said if China won’t budge on the 3% loan offer it has made, the loan could be sought domestically, which should be enough to finance the first phase of construction.

“As far as I know, China normally requires a debtor to pay 3% interest. The special interest rate is lower than 2%, which we hope to obtain,’’ the minister said.

“However, if we cannot get the rate we want, another choice would be to turn to domestic loan sources.”

ACM Prajin said the domestic loan also may come with a higher interest rate, but the money would circulate domestically and help boost the economy.

He said the money could also be sought from an infrastructure fund.

Deputy Transport Minister Arkhom Termpittayapaisith said last week China had proposed the two countries apply for the loans from its EximBank with interest rates of 2-4%.

ACM Prajin said the 2-4% interest rate is too steep.

If China offers the loan at 2% interest, Thailand could partly borrow from China and borrow the rest domestically, he said.

China has told the government the firstphase of construction will be deferred from September to October, and the secondphase delayed from December to January. The first meeting between Thai and Chinese officials failed to reach decisions involving construction and investment plans, which led to the delay, ACM Prajin said.

As another meeting will be held this week in Beijing, the two sides must reach a conclusion on technical issues, including the construction timeframe, companies participating in the project as well as the track system and train operation.

China and the government must also come up with a conclusion on investment details, ACM Prajin said. Some decisions will have to be sent to the the cabinet or the National Legislative Assembly for deliberation.

Both sides will conduct surveys on areas where rail tracks are to be laid over the next month.

Meanwhile, permanent secretary for transport Soithip Traisuth said yesterday 98% of the Nonthaburi-Bangkok route, the Bangyai-Bang Sue Purple Line, is now complete.

Trains are scheduled to be delivered in September and the service would start early next year, she said.