Anan Phonimdang, Governor of the State Railway of Thailand (SRT), revealed that at present, Asia Era One Company Limited (AERA1) has sent a letter to the SRT announcing the termination of the joint venture contract for the High-Speed Rail Linking Three Airports (Don Mueang–Suvarnabhumi–U-Tapao) Project.
The rationale cited is the inability to obtain an investment promotion certificate from the Board of Investment (BOI) and the government’s failure to issue a notice to proceed (NTP) for construction.
AERA1 is a consortium comprising Charoenpokphand Holding Co., Ltd. (CP), Italian-Thai Development PCL (SET: ITD), China Railway Construction Corporation Limited (CRCC), CH. Karnchang PCL (SET: CK), and Bangkok Expressway and Metro PCL (SET: BEM).
Moving forward, the SRT will present the matter to the Eastern Economic Corridor (EEC)’s board in August 2026 for consideration. Reports indicate that the Eastern Economic Corridor Office (EECO) will hold a meeting of the joint venture contract management committee on July 15 to summarize the contract termination agreement between EECO, SRT, and AERA1 before submission to the EEC’s board.
The SRT Governor stated that AERA1 has notified that if the government does not reconsider amending the contract, it will be unable to proceed with the project. The key obstacle for AERA1 lies in the financial institutions’ lack of confidence in the project’s viability due to changing circumstances from the COVID-19 pandemic, which has reduced projected passenger numbers and affected loan considerations.
There are two preliminary approaches for submission to the EEC, including a contract revision previously negotiated with AERA1 and already approved in draft form by the Office of the Attorney General. The main contract amendment details are as follows:
1) Payment to AERA1 changes from the original—whereby the government would pay after the private sector commenced train operations, divided equally over 10 years totaling THB 149.65 billion—to staged payments aligned with construction milestones verified by SRT, with total capacity not exceeding THB 120 billion.
2) AERA1 must provide additional guarantees, totaling THB 152.16 billion, to ensure construction and train operations commence within five years. Ownership of the constructed assets will be gradually transferred to SRT based on payment installments.
Should the EEC’s board approve, the proposal will be forwarded to the Cabinet for subsequent decision. If not, contract termination will proceed, with negotiations on details to continue.
The High-Speed Rail Linking Three Airports Project spans 220 kilometers, with a total investment value of THB 224.54 billion. The SRT and the CP-led consortium signed the contract on October 24, 2019—nearly seven years ago, during General Prayut Chan-o-cha’s tenure as Prime Minister. However, the project has yet to start due to the pandemic.
The Cabinet resolved on October 19, 2021, to approve in principle the contract amendments to address COVID-19 impacts, prompting further SRT – AERA1 negotiations.
The contract amendment has five core elements:
1) Government payment method: From the original post-operation payment in equal installments over 10 years (THB 149.65 billion), changed to milestone-based payments, capped at THB 120 billion, with AERA1 providing additional guarantees on top of the original payment, totalling THB 152.16 billion, and the assets progressively transferred to SRT.
2) Payment of rights for the Airport Rail Link (ARL) project: AERA1 to pay THB 10.67 billion over seven annual installments, with the first due upon contract signing—a bank guarantee equivalent to the ARL fee and associated financial costs to be provided.
3) Additional profit-sharing mechanism: If future loan interest rates fall significantly and AERA1’s internal rate of return exceeds 5.52%, SRT has the right to call for a share of the extra benefit.
4) “Waiver” of the NTP issuance condition, allowing for immediate NTP issuance after signing the amendment.
5) Amending “force majeure” and “relaxation” clauses to align with other public-private partnership (PPP) contracts to address possible severe impacts on project finances.
However, negotiations over the contract amendment between SRT and AERA1 have not been resolved, despite changes in government. In the current administration, Deputy Prime Minister and Minister of Transport, Phiphat Ratchakitprakarn, maintains that the proposed amendment is unacceptable due to various risks, particularly the “pay-as-you-build” approach, as the private consortium was aware, at the tender stage, that the project was a PPP.
Implementing a “pay-as-you-build” approach like other projects would contradict the fundamental PPP model and could expose the government to legal challenges from other bidders, who would claim unequal treatment and lost opportunity.
