Public-Private Partnerships in Thailand: Transportation Practices

Transcription

1 Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009 Public-Private Partnerships in Thailand: Transportation Practices Prapatpong UPALA Lecturer Faculty of Architecture King Mongkut s Institute of Technology Ladkrabang Ladkrabang, Bangkok 10520, Thailand Fax: +66 (0) kuprapat@kmitl.ac.th / p_upala@yahoo.com Sorawit NARUPITI Associate Professor Faculty of Engineering Chulalongkorn University Patumwan, Bangkok, 10320, Thailand Fax: +66 (0) kong@chula.ac.th Abstract: Public-Private Partnership (PPP) is a channel for private contributions to financing any public projects. PPP is aimed at mutual benefits from both private and public sector. PPPs have been an important tool for implementing infrastructure and mega-projects both of developed world and developing countries since four decades ago, especially transportation projects. In Thailand, PPP Transportation projects have played a role in the two sectors, including Toll Road/Expressway sector and Mass Transit sector. Although there has been a number of projects completed through PPPs, and there has been a movable legal framework in place for PPPs. The regulatory and legal framework surrounding PPPs for infrastructure delivery is incomplete, outdated, and fragmented in Thailand. Therefore, the objective of this paper is to investigate the public-private partnerships in Thailand, towards Tollway Road/Expressway transportation project to outline the practices and its issues from Thailand project. Key Words: Public-Private Partnerships, Transportation Project 1. INTRODUCTION Asian Development Bank (ADB) described the Public-Private Partnership (PPP) is a range of possible relationships among public and private entitles in the context of infrastructure and the other services. Effective PPPs recognize that the public and the private sectors each have certain advantages, relative to the other, in performing specific tasks. The structure of the partnership should be designed to allocate risk to the partners who are best able to manage those risks and thus minimize cost while improving performance. Sectors in which PPPs have been completed world wide include: power generation and distribution, water and sanitation, refuse disposal, pipelines, hospitals, school buildings and teaching facilities, stadiums, air traffic control, prison, railways, roads, billing and other information technology system, and housing (Asian Development Bank, 2008). Now, PPPs have been an important tool for implementing Infrastructure and Mega-projects both of developed world and developing countries since four decades ago, especially transportation projects. The benefit of PPPs is that government could be utilized the private sector s resources (private funding, professional technicians, innovative technology, and sharing financial) in delivering infrastructure projects. In Thailand, PPPs Transportation projects have played a role in the two sectors, including Toll Road/Expressway sector and Mass Transit sector. Firstly, the Department of Highway (DOH) and Expressway and Rapid Transit Authority (ETA) have been involved in granting concessions to private contracts include the Don Muang Tollway by DOH and the Second Stage Expressway by ETA that is the Toll Road/Expressway Sector. Secondly, there are three major agencies in charge of granting concession to private participants for development and operation of mass transit system in Bangkok - Mass Transit Sector - the Mass Rapid Transit

2 Authority of Thailand (MRTA), and the State Railway of Thailand (SRT), and the Bangkok Metropolitan Authority (BMA). In 1999, the first MRT called the Sky Train or Green Line comprised 2 transit lines of the total length of 24 kms. Concession was awarded by the BMA to the Bangkok Transit System Plc., (BTS) on a Build Transfer Operate (BTO), including the infrastructure and rolling stock investment. The second MRT is a Subway line called the Blue Line contact with a total length of 20 kms. Concession was awarded by the MRTA to the Bangkok Metropo Company Ltd., (BMCL) on a Build Transfer Operate (BTO) under which the private concessionaire is required to procure rolling stock and operate the line. In addition, a new Airport Link line is currently under construction running parallel to the railway track plan to open on this year - providing a mass transit link from the new Suvarnabhumi airport to downtown areas. The SRT is the owner of the line and the rolling stock and the Government is reviewing the options for operation and management (Susangarn, 2007). A PPP project through service contract to private operator is one option under consideration. The Thai Government has set out a new plan to PPP concessions, especially the extensional lines in the mass transit system and the Mega projects. In the case of Thailand, even though there have been a relatively high number of infrastructure projects completed through PPPs, and there has been a loose legal framework in place for PPPs since 1992, the actual implementations and degrees of success of the projects have varies widely. The regulatory and legal framework surrounding PPPs for infrastructure delivery is incomplete, outdated, and fragmented (Valentine, 2008). According with Susangard s research in 2007, the issues and challenges of PPP Project in Thailand could be divided into 5 issues, including (1) Unclear Governing Framework - the law of Thailand is not based on PPP principle of sharing burden between public and private sectors but focusing on granting rights to operate or make use of state assets limits its usefulness. (2) Fragmentated Authorities - there are multiple and dispersed authorities involved the current institutional setup, approval, and implementation process which could be time-consuming process. (3) Time Consuming Procedure - time and resource spent on getting project approved and private participant selected discourage many of potential PPP projects. (4) Insufficient Institutional Support - the absence of a central agency that has institutional knowledge similar to those of more advanced countries to provide the necessary support, including documentation, bidding methodology and evaluation, contract formulation and negotiation. (5) Lack of Rules and Capacity with respect to Risk Allocation - the capacity of identifying, allocating and mitigating risks between public and private sectors are needs to be improved (Susangarn, 2007). The objective of this paper is to investigate the public-private partnerships in Thailand, towards transportation project to outline the practices and its issues from Thailand project. Apart from the introduction, the remaining of the paper is organized section by section. The second section presents the concept of PPP approach. Later, PPP in Transportation Projects of Thailand describing project objective, project value, project history and description, project proponent, the concession agreement, design of tariff and user charges, and lesson learned from project are provided in this section. The fourth section provides a summary of the main results of the present study. Some conclusions that provide a summary of the PPP transportation practices in Thailand are described at the end of the paper in the last section. 2. PUBLIC-PRIVATE PARTNERSHIPS

3 Public-Private partnership (PPP) is a channel for private contributions to financing any public projects. PPP is aimed at mutual benefits from both private and public sector. PPP is defined as An arrangement of roles and relationships in which two or more public and private entities coordinate/combine complementary resources to achieve their separate objectives through joint pursuit of one or more common objectives. (National Highway Institute, 1999) Transport sector infrastructure project delivery and operations has been among the forefront sectors in which PPP has been utilized since (Kert and Izaguirre, 2007 cited in Valentine, 2008). Road and Rail development are among the popular transport projects which have been implemented or considered with PPP schemes. International experiences on these sectors have also referred in many publications (Phang, 2007 and Valentine, 2008). PPP can be fitted to an array of institutional arrangement of public and private sectors. Internationally experienced in public finance, Table 1 shows the wide degree of private participation in infrastructure. Table 1 Types of private participation in infrastructure (adapted from Lawther, 2007) Type of Private Participation Case in PPPs Infrastructure Thailand Public Private provision and operation Outsourcing Operation and Management contracts Leasing Public-Private Partnerships Build-Operate-Transfer (BOT) BTS Skytrain Build-Transfer-Operate (BTO) Si Rat Expressway 2 nd Stage PAT (Ports) Design-Build-Operate-Maintain (DBOM) BMCL (MRT Subway) Don Maung Tollway (DOH) Build-Own-Operate (BOO) EGAT Build-Own-Operate-Transfer (BOOT) MWA PWA (Water & Sanitation) Design-Build-Finance-Operate (DBFO) Rehabilitate-Operate-Transfer (ROT) Build-Lease-Transfer (BLT) Build-Transfer-Operate-Concession (BTOC) Concessions Divestiture by license or by sale AIS Mobile Telecom Asia Thaicom TAC Mobile TT&T Referring to Table 1. PPP falls in between pure public and private provision and operation. Several types of PPP are named, by their different institutional arrangement. Note that types on the top of the table involve higher degree of public sector than those at the bottom of the list. With regards to transport infrastructure, notable types of PPP are widely used, Build-Operate- Transfer (BOT), Build-Transfer-Operate (BTO) (all of transport infrastructure projects in Thailand fall in these two categories).

4 Build-Operate-Transfer (BOT) One or a group of private companies or known as a specific purpose vehicle (SPV) creates a specific transportation system project, will first take design/build technique to construct a project for a much faster completion time. Then, the group will operate and maintain the infrastructure for a predefined period (normally 30 years). At the end, the operation is returned to public sector. The public sector may share some costs, such as right-of-way or any other support such as the environmental studies. Build-Transfer-Operate (BTO) This arrangement is similar to BOT. The major different Although PPP has a wide array of definitions, it has shared common characteristics: 1. Partnership means the pooling of resources; time, money, and expertise, to pursue the project. Theoretically, PPP aims at maximizing the value of all resources to be achieve partnership goals. 2. Partnership deals with the allocation (or sharing) of risk. Public sectors view PPP as the reduction of financial risks to deliver the projects. Other risks such as construction, technology, environmental, operating, regulatory, political risks etc. are also involved as the risk of the project delivery. It is important aspect in PPP structuring that the risk should be shared among the partners. Risk assessment and sharing is also a necessary component of due diligence for the lending bodies who will disburse the funds needed to finance projects (UNESCAP, 2007). 3. Partnership means that two parties are not working as owner and contractor, but with have relational linkage throughout project delivery. As the name described, partnership implies working together toward the PPP goals. 4. Partnership s ground rules or framework of interaction between two parties must be established. The framework must be written so that each party can follow. In the case that individuals involved in the partnership have changed, these rules can be used to continue the project without dispute or start from scratch. In 2008, Valentine proposed the PPP governance system for creating and managing sustainable PPPs from international experiences. The PPP governance system could be divided into two levels. Firstly, Macro level includes the legal, regulation, and institutional framework. The various elements of the framework (legal, regulatory, institutional) must be integrated with each other, which must be integrated with the national government s indicated directives- and then also must be integrated with the micro level implementation of particular projects. Secondly, Micro level includes risk management and sharing, project evaluation methodology, and contract structuring. The integration between macro and micro level operations for procuring and delivering PPP projects is what constitutions an effective an effective overall PPP governance system (Valentine, 2008). Detail of this theoretical function shown as Figure 1.

5 Figure 1 The overall PPP governance system 3. THE SECOND STAGE EXPRESSWAY SYSTEM (SES) - SI RAT EXPRESSWAY Si Rat Expressway is constructed as an elevated 6 traffic lane expressway for a total length of approximately 38.5 kilometers, connecting the upper areas of Bangkok, Nonthaburi and Pathumthani at Chaeng Watthana Road to the central area of Bangkok at New Rama 9 Road and also extending to the southern area of Bangkok at Bangkhlo. The service areas are categorized into Urban and Suburban networks. Figure 2 The Second Stage Expressway System (SES) network

6 3.1 Project Objective The SES was planned with the objective to complement the successful First Stage Expressway System (FES) serving as shot cuts between the inner city and the outer areas, hence reducing the heavy traffic in the city center. 3.2 Project Value (Cost of the Project) 48 billion Baht (US $ 1,370 billion) ( Baht = 1 US $) 3.3 Project History and Description Si Rat Expressway (The Second Stage Expressway System) is the first large-scale construction project in Thailand which was created through the cooperation between the public and private sectors. In 1982, the SES was planned with the objective to complement the successful First Stage Expressway System (FES) serving as shot-cuts between the inner city and the outer areas, hence reducing the heavy traffic in the city center. The Expressway Authority of Thailand (EXAT), formerly Expressway and Rapid Transit Authority of Thailand (ETA), however, was unable to build the second expressway due mostly to financial constraints. As a result, the Thai government turned to the idea of BOT as the financing method for the second expressway. The Terms of Reference (TOR) was issued in 1987 by the EXAT inviting private sector investors to submit proposals to design, build, and finance the construction of the SES with the right to receive toll revenues from the operation within the certain concession period. In 1988, the Build-Operate-Transfer (BOT) concession for the 32-km SES was granted to Bangkok Expressway Consortium, which later became the Bangkok Expressway Company Limited (BECL). BECL invests in the design, construction and management of Si Rat Expressway whereby the title to the various permanent structures relating to or used for Si Rat Expressway are vested in EXAT. In this respect, BECL has the right to undertake management of Si Rat Expressway and is also entitled to revenue sharing on tolls collected from Chalerm Mahanakorn (FES) and Si Rat Expressway in the proportions as specified in the Second Stage Expressway Agreement. The Project has a term of 30 years commencing from 1 March 1990 to 28 February 2020 which may be renewed twice for a period of 10 years each. The original source of finance came from private contributors, both domestic and foreigners. BECL was headed by the giant Japanese construction firm Kumagai Gumi, holding a % interest, with the remaining % interest in the hands of local Thai partners. Financing for SES was truly an international effort. BECL s lenders included 11 Thai banks, 30 foreign banks and the Asian Development Bank. SES s BOT agreement was signed by BECL, the concessionaire, and the host government, represented by EXAT. SES Urban network is divided into two sectors as follows: Sector A is a route between Ratchadapisek Road at Prachachuen to Rama 9 Road for a total distance of approximately 12.4 kilometers whereby this Sector was open for service on 2 September This route starts from Ratchadapisek Road southward to cut across the northern railway at Phaholyothin warehouse parallel to Rama 4 Road to pass Pradipat Road, Ratchavithee Road and to connect to Sector B at Payathai Interchange. The eastward route

7 connects to the Chalerm Mahanakorn Expressway at Makkasan Interchange to cut across Ratchadapisek Road and ends at Rama 9 Road. Sector B is a route between Samsen Water Refinement Plant and Bangkhlo, continuing from Sector A at Phayathai Interchange heading southward to connect to the Chalerm Mahanakorn Expressway at Bangkhlo Interchange, for a total distance of approximately 9.4 kilometers. Since the opening of Sector B for service in the month of October 1996, there has been an inner ring road in the heart of the city, thereby successfully alleviating the traffic problems around Sathorn, Silom, Surawong and Hua Lamphong, the business centers of the city. Sector C extends Sector A at Ratchadapisek Road, passing Prachachuen to the north and ends at Chaengwattana Road. This section is the suburban expressway section, with the length of 8 km. It was opened in September Sector D links Sector A at Rama 9 road to the east and ends at Srinakarin road. This section is considered the suburban expressway section with the length of 8.6 km. Two sections on Sector D were opened in December 1998 and March The categories of the expressway sector are used to identify the revenue sharing scheme, which will be explained in the following section. 3.4 Project Proponent The Ministry of Finance: provides government support (Investment, guarantees) for projects. National Economic and Social Development Board (NESDB): is under the Office of Prime Minister and responsible for strategic infrastructure planning, but no veto over projects. Expressway Authority of Thailand (EXAT) is a state enterprise under the Ministry of Transport, responsible for new expressways. Ministry of Natural Resource and Environment: requires environmental impact assessments for major projects. (Former Ministry of Science, Technology and Environment) Bangkok Expressway Company Limited (BECL): invests in the design, construction and management. 3.5 The Concession Agreement The 30-year concession agreement was signed in December of The agreement specified a 3-year construction period for SES, and 27 years for BECL s operation of the facility. At the end of the 30-year concession, SES would be turned over to the Thai government at no cost. The SES BOT project got off to a good start with the spirit of cooperation evident during negotiation for the BOT concession agreement. Because projected traffic on the SES would not generate enough revenue to provide for an adequate return, or was it sufficient to service the debt, BECL presented a proposal for a revenue-sharing scheme between FES and SES over the 27-year operating period of the concession. The EXAT agreed, and the final negotiated formula called for BECL to receive 60% of the combined revenue collected by FES and SES during the first 9 years of the operating period. The EXAT and BECL would then each receive 50% of the combined revenue in the second 9-year period. For the third and last 9-year period, EXAT would collect 60% of the combined revenue, with BECL collecting

8 the remaining 40%. The revenue sharing per Sector under SES Agreement is as shown in Table 2. Table 2 Revenue sharing per Sector under SES Agreement Agreement BECL ETA Urban Network (FES and the Urban network of SES) (1) First 9 years from the Priority Component Opening Date 60% 40% (2) Last 9 years ending 28 February % 60% (3) Period between the first 9 years and the last 9 years 50% 50% Suburban Network (1) From the opening until the SES sector B is completed 60% 40% (2) Period after the opening of the SES sector B 100% 0% 3.6 Design of Tariff and User Charges (The Second Stage Expressway) except the following toll plazas Srinagarindra Toll Plaza, Ramkamhaeng Toll Plaza, Rama IX Toll Plaza, Asoke 3 Toll Plaza Table 3 Design of tariff and user changes under SES Agreement Toll Plaza Vehicle Fee (THAI Baht) 4 wheels 6-10 wheels more than 10 wheels 4 wheels 6-10 wheels more than 10 wheels Rama IX-1 Toll Plaza (Si Rat) 4 wheels 6-10 wheels more than 10 wheels Prachachuen Toll Plaza (inbound) 4 wheels 6-10 wheels more than 10 wheels Prachachuen Toll Plaza (outbound) 4 wheels 6-10 wheels more than 10 wheels Prachachuen 1 Toll Plaza (from Prachachuen road) Prachachuen 2 Toll Plaza (to Prachachuen road) Ngamwongwan 1 Toll Plaza (outbound) Ngamwongwan 2 Toll Plaza (inbound) ***Since September 1 st, wheels 6-10 wheels more than 10 wheels 4 wheels 6-10 wheels more than 10 wheels Lessons Learned from the Project The Second Stage Expressway in Bangkok (SES) was taken over by its local contractor from its original concessionaire after a serious dispute among the concessionaire, the Thai Expressway Authority. It was the first infrastructure project in Thailand built on a Build, Operate and Transfer (BOT) basis, and is regarded as a test case for BOT possibilities throughout the region. The financing and management of the project were innovative. It came out without a government guarantee, and was then Thailand's largest and longest maturity financing ever.

9 The SES is popular expressway with over 200 million trips made on it (2008). The number of vehicles has gradually increased in the past 5 years. The SES BOT scheme could fulfill EXAT objectives on capital investment finance. They help EXAT to launch expressway development without much dependence on government budget. The BOT created an efficient company (BECL) who is capable of effective construction and management of the expressway. BECL performs well as a private expressway operator to ascertain high-standard services to motorists. BECL has relatively autonomy to determine the operation and maintenance methods. With the experience on construction and management of expressway, BECL then founded another company, North Bangkok Expressway Company Limited (NBECL) in 1996 to construct and manage 32-km Udon Rathaya expressway (the expressway connected to SES sector C. To EXAT, many responsibilities are now turned to the management of the contract. EXAT has to monitor the operations of the entire expressway. At least, the traffic on the SES is related to other expressway systems. The traffic affects not only the road operations and mobility performance, but also the revenue to the both EXAT and BECL. One drawback on the BOT scheme is that the toll rate (tariff) must be determined by EXAT, and the share of revenue between EXAT and BECL is not flexible to adapt according to the current situations or policy. Moreover, situations which affect revenue (the amount of traffic and toll rates) become serious issues. In the case of SES, many court cases are now under arbitration process. The cases are mainly the interpretation of the contract. These disputes imply the degrading level of interactions between EXAT and BECL, even though they still have to run the expressway together. 4. DON MUANG TOLLWAY - UTTARAPHIMUK EXPRESSWAY Don Muang Tollway is constructed as an elevated 6 traffic lane expressway for a total length of approximately 38.5 kilometers, connecting the upper areas of Bangkok, Nonthaburi and Pathumthani at Chaengwattana Road to the central area of Bangkok at New Rama 9 Road and also extending to the southern area of Bangkok at Bangkhlo. The service areas are divided into Urban and Suburban networks. 4.1 Project Objective To provide additional traffic capacity in Viphavadi-Rangsit road in both the inbound and outbound among Bangkok, the North, and the North East of Thailand in the future To increase convenience and mobility for the vehicles that need for speedy in Viphavadi-Rangsit Road. To link directly between the central part of Bangkok and the Don Muang International Airport. To provide additional traffic flow at the Laksi and Bangken Intersection 4.2 Project Value (Cost of the Project) 12 billion Baht (US $ 343 billion) ( Baht = 1 US $)

10 4.3 Project History and Description The Don Muang Tollway (DMT) is an elevated road link between the central part of Bangkok and the Don Muang International Airport. This project was required a huge investment and with severe budgetary restraints, a government thus finds the BOT scheme as the attractive means to develop the DMT projects. At the end of 1988, the 6 Paper Privatization of Highway Infrastructure in Thailand Bureau of Planning, Department of Highways, Thailand Ministry of Transport and Communication, via the Department of Highways, called tenders for the implementation of an elevated viaduct on the Viphavadi-Rangsit Highway. It was a functional tender with no details about the project given except a few guidelines for the design of the viaduct. Bidders were required to finance the project on a non recourse BOT scheme. Each bidder had to establish his/her own feasibility study, investment cost and income study and take into account the risks involved. Figure 3 Don Muang Tollway (DMT) network The DMT project starts north of the existing First Stage Expressway at Km and follows Viphavadee Rangsit Road towards Don Muang International Airport. The viaduct ends north of the Chaengwattana intersection at Km giving a total length of 15.4 Km. The horizontal alignment of the project follows strictly the axis of the existing highway utilizing the 5.0 meter wide median for construction. The existing highway has 5 lanes in each direction, upon which traffic flow exceeds 180,000 vehicles per day. 4.4 Project Proponent The Ministry of Finance: provides government support (Investment, guarantees) for projects. National Economic and Social Development Board (NESDB): is under the Office of Prime Minister and responsible for strategic infrastructure planning, but no veto over projects. Department of Highways (DOH): is under the Ministry of Transport and is responsible for national highways and motorway. Ministry of Natural Resource and Environment: requires environmental impact assessments for major projects. (Former Ministry of Science, Technology and Environment)

11 Don Muang Tollway Company Limited, comprising DYWIDAG (a German firm), Delta Construction (a Thai construction company) and GMI (a French contracting company): build and operate the DMT project 4.5 The Concession Agreement Three BOT proposals were submitted by private sectors, where the Don Muang Tollway Company Limited, comprising DYWIDAG (a German firm), Delta Construction (a Thai construction company) and GMI (a French contracting company) was chosen to build and operate the DMT project. The 25-year concession agreement was signed in August of The government also agreed to not to allow competing road facilities adjacent to the project. Therefore, it was agreed that the SES which was then being constructed would not be connected to the project. The government also granted some privileges under the Board of Investment Rules. 4.6 Design of Tariff and User Charges Table 4 Design of tariff and user changes under DMT Agreement Toll Plaza Vehicle Fee (THAI Baht) Toll Plaza ( North) DinDeang 4 wheels Suthisarn 4 wheels Ladphraw (inbound) 4 wheels Radchadapisake 4 wheels Bangkaen 4 wheels Laksi (outbound) 4 wheels Anusornsatan 4 wheels Total DinDang-Anusornsatan 4 wheels Toll Plaza ( South) Don Maung 4 wheels Laksi(inbound) 4 wheels Chaengwattana 4 wheels Ladphraw Toll Plaza (inbound) 4 wheels

12 4.7 Lessons Learned from the Project The Don Muang Tollway (DMT) project ran into serious financial difficulties because of the Thai government s deferral of demolishing two existing flyer roads to improve the usage of the Don Muang toll road. DMT project was initiated in the global economic boom year (1994). The construction was completed and started the operation in Few years later, it hit the economic crisis (in 1997 baht devaluation). Thus, the actual traffic has never gone up to the projected number. Many disputes occur in this DMT project, since revenues miss the target and many situations have been changed. Major disputes are the alteration of the Laksi and Bangkhen flyovers and the construction of local (parallel) roads. Many of disputes end at the arbitration. DOH, the public sector partner, seems to negotiate with the DMT, the private sector, to end many cases. For instance, DOH decided to revise the contract to extend the concession period for another 11 year (total of 27 years) in exchange that DMT will not sue DOH for their construction of local roads (Naewna News, 2006). Since the private sector consists of some foreign private companies, the original contract involves the foreign investment law. Thus, the legal action is not against DOH, the partner in the project, but Thai government, according to the investment law. The other dispute is the revenue. DMT and DOH need to discuss and agree upon the sharing of revenue between both parties due to unmet number of users with all circumstances. This is a good example to show that the risk of the project should be well determined and properly allocated among partners. 5. CONCLUSIONS The Future Agendas for PPP Projects in Thailand to support country s development: The current amendments are limited due to nature of the law itself. In future a new PPP law may be needed to provide a better framework for PPP projects to cover broader definition of PPP concept and provide enabling environment for PPP Project. Create central agency to act as clearing house and provide technical and legal support to project Create more acceptable rules for risk allocation and mitigation. Develop template documents for use in Request for proposal (RFP), bidding, contract negotiation, model contract framework etc. Develop guidelines such as TORs for project development studies, tools for financial assessment and management as well as value for money assessment PSO etc. Undertake pre-feasibility studies across various infrastructures to identify candidates for PPP projects. Create Project Development Fund to finance project development studies and repay by successful tender (Susangarn, 2007) In this paper could be conclude that PPPs have been an important tool for implementing infrastructure and mega-projects both of developed world and developing countries, such as power generation and distribution, water and sanitation, refuse disposal, pipelines, hospitals, school buildings and teaching facilities, stadiums, air traffic control, prison, railways, roads, billing and other information technology system, and housing. Because of Effective PPPs, the public and the private sectors each have certain advantages, relative to the other, in performing specific tasks. In Thailand, PPPs Transportation projects have played a role in the

13 two sectors, including Toll Road/Expressway sector and Mass Transit sector. The Thai Government has set out a new plan to PPP concessions, especially the extensional lines in the mass transit system and the Mega projects. For Toll Road/Expressway Sector, the Department of Highway (DOH) and Expressway and Rapid Transit Authority (ETA) have been involved in granting concessions to private contracts include the Don Muang Tollway by DOH and the Second Stage Expressway by ETA. The Lesson Learned from this PPPs Project. The summary of PPPs of Tollway Road Transportation Project in Thailand could be summarized in Table 5. The Second Stage Expressway in Bangkok (SES) was taken over by its local contractor from its original concessionaire after a serious dispute among the concessionaire, the Thai Expressway Authority. It was the first infrastructure project in Thailand built on a BOT basis, and is regarded as a test case for BOT possibilities throughout the region. The financing and management of the project were innovative. It came out without a government guarantee, and was then Thailand's largest and longest maturity financing ever. One drawback on the BOT scheme is that the toll rate (tariff) must be determined by EXAT, and the share of revenue between EXAT and BECL is not flexible to adapt according to the current situations or policy. Moreover, situations which affect revenue (the amount of traffic and toll rates) become serious issues. In the case of SES, many court cases are now under arbitration process. The cases are mainly the interpretation of the contract. These disputes imply the degrading level of interactions between EXAT and BECL, even though they still have to run the expressway together. While, The Don Muang Tollway (DMT) project ran into serious financial difficulties because of the Thai government s deferral of demolishing two existing flyer roads to improve the usage of the Don Muang toll road. Many disputes occur in this DMT project, since revenues miss the target and many situations have been changed. For instance, DOH decided to revise the contract to extend the concession period for another 11 year (total of 27 years) in exchange that DMT will not sue DOH for their construction of local roads. Since the private sector consists of some foreign private companies, the original contract involves the foreign investment law. Thus, the legal action is not against DOH, the partner in the project, but Thai government, according to the investment law. The other dispute is the revenue. DMT and DOH need to discuss and agree upon the sharing of revenue between both parties due to unmet number of users with all circumstances. This is a good example to show that the risk of the project should be well determined and properly allocated among partners. Table 5 Summary of PPP of tollway road transportation projects in Thailand Project Project Description Project Value** Operation/Service Si Rat Expreeway 2 nd Stage BOT Consists of 4 sections around Bangkok & urban area, 37 km 48 billion Baht (US $ 1,370 billion) ( Baht = 1 US $) Construct/collect toll fees and revenue shareing with ETA Don Muang Tollway (DOH) DBOM Central to North Bangkok, 28 km 12 billion Baht (US $ 343 billion) ( Baht = 1 US $) Construct/collect toll fees

14 REFERENCES Asian Development Bank. (2008) Public-Private Partnership (PPP) Handbook. Available at Bangkok Expressway PCL. (BECL). (2008) Available at Don Muang Tollway PCL (2008) Available at Expressway Authority of Thailand. (2008) Annual Report. Available at Lawther, W.C. (2007) Privatization of transportation systems, in Handbook of Transportation Policy and Administration. Plant, J.F. (ed.) CRC Press, Naewna News. (2006) Available at Phang, S-Y (2007) Public-private partnerships in urban rail transit: Recent international experience, in Handbook of Transportation Policy and Administration. Plant, J.F. (ed.) CRC Press, Susangarn, C. (2007) Public Private Partnership in Thailand: Past Experiences and Future Prospects. Available at http//: Valentine, Jon. (2008) Public-Private Partnerships in Infrastructure: Best-Practices from the International Experience and Applications for Thailand Available at