Ministry still backs plan to split SRT into separate units

The Finance Ministry still backs a proposal that would separate investment in rail infrastructure from rolling stock operations and land management, despite strong opposition to the idea from the labour union of the State Railway of Thailand.

The staff of SRT would not lose anything from the restructuring plan, which had been approved by former leaders of the workers' union, said Kulit Sombatsiri, deputy director-general of the State Enterprise Policy Office (SEPO).

According to the restructuring plan approved by the Cabinet in June, the SRT would be responsible for investment in the rail system and depots and the government would provide financial support for these activities.

In addition, two companies, which would be wholly owned by the SRT, would be set up: one to operate rolling stock and the other to manage land owned by the agency.

Kulit said about 10 per cent of the SRT's plots have high potential for commercial use, including land in Lat Phrao district rented by Central Group, and plots in Makkasan and Bang Kra Jao's Chong Nonsee.

For rolling stock, one business unit would operate the Airport Rail Link between Suvarnabhumi Airport and downtown Bangkok.

Kulit said if SRT executives and workers could not solve their conflicts, Germany's Seimens may be asked to run the Airport Rail Link temporarily when its starts service early next year.

The other two rolling-stock business units would operate passenger and goods transportation.

"Workers of the SRT would be transferred to these three business units and their welfare would be protected," he added.

The reorganisation of staff would be similar to that implemented by PTT, the country's largest energy group, he said.

However, the business units of the SRT would not be listed on the stock exchange, according to the plan.

The government has earmarked Bt180 billion under the second economic-stimulus package for new investment in the rail system and mass-transit projects over the next three years. Bt60 billion of this will be managed by the SRT, including buying new locomotives and carriages.

Following the Cabinet's approval of the planned revamp earlier this year, the SRT labour union held a national strike, causing the government to delay the restructuring plan.

The latest strike by some workers operating the southern route has forced Prime Minister Abhisit Vejjajiva to step in, vowing to push forward SRT reform. Public sentiment was against the recent action by the union.

Kulit said the matter was now beyond the duty of the SEPO, but the government had to take action.

"If the government insists on the previous Cabinet's resolution, then the SEPO will consult with the Transport Ministry and other agencies about an implementation plan," he said.

The SEPO predicts that an upgrade of the rail system would provide significantly lower costs for goods transportation when compared with road transportation.

For example, the cost of transporting manufactured goods by road would be Bt3.39 per tonne per kilometre, while that for rail would be Bt2.70. The cost of transporting farm products by truck would be Bt2.88 per tonne per kilometre, against Bt2.19 by train.

Overall logistics costs are currently estimated to be about 19 per cent of gross domestic product, due to the over-reliance on road transportation rather than rail.

The private sector has called for this proportion to be reduced to 10-15 per cent over the next five years.

The SEPO estimates that the SRT will this year report a loss of about Bt10 billion, against last year's Bt8.5-billion deficit.

In a related development, the SEPO will closely scrutinise whether several state concessions are being properly implemented.

Kulit said the office would in particular look into the telecom concessions of TOT and CAT Telecom, about which the Council of State - the government's legal adviser - said in 2007 that previous concession amendments were unlawful.