Expressway Authority of Thailand to include its existing projects in the Thailand Future Fund (TFF)

Photo Credit: Expressway Authority of Thailand

May 31, 2017

THE CABINET yesterday agreed to allow the Expressway Authority of Thailand (Exat) to include two of its existing projects in the Thailand Future Fund (TFF) to mobilise financing for two new projects worth a total of Bt44.82 billion.

At its meeting yesterday, the Cabinet also approved a concession to the BSR Joint Venture group for construction of the urban rail line from Kairai to Min Buri and the line from Lat Phrao to Samrong worth a total of Bt100 billion. The group is a collaboration of BTS Group Holdings, Sino-Thai Engineering and Construction, and Ratchaburi Electricity Generation Holding.

Under the concession, the government will invest Bt50 billion by paying an average of Bt5 billion annually for 10 years, and the rest will invested by private firms.

Nattaporn Jatusripitak, an adviser to the Office of the Prime Minister, said the Cabinet gave the green light for Exat to raise funds through 45 per cent of the estimated toll-based income from the two existing expressways for the next 30 years.

They are the Chalong Rat (Ramindra-At Narong) Expressway and the Buraphavithi Expressway that runs from Bang Na to Chon Buri.

The planned proceeds will be used to finance the Bt30.44-billion Rama III-Dao Khanong-Western Bangkok Outer Ring Expressway project and the Bt14.38-billion expressway project for the northern (N2) route and East-West Corridor in the Eastern region.

 The move is expected to relieve the government’s infrastructure-investment costs.

The government has approved several investment plans, including large-scale projects worth about Bt1.4 trillion, covering railways, roads, airports and ports throughout Thailand.

“The prime minister said in the Cabinet meeting that selling TFF units when deposit rates have not yet increased will find the fund’s unit returns higher than the deposit rates. This is a good opportunity for people to take ownership. Therefore, [relevant agencies] were assigned to allow wide access to the fund,” Nattaporn said.

TFF to be open to general investors

Ekniti Nitithanprapas, director-general of the State Enterprise Policy Office, said the TFF would sell units to general investors in the third quarter of this year, though the number of units has not been fixed yet – it will depend on investors’ interest.

The closed-end fund with no maturity will later be listed on the Stock Exchange of Thailand.

In regard to people’s involvement in the TFF, Ekniti explained that a discussion had been held with the Securities and Exchange Commission on using the “small but first” principle to allocate the fund’s units for general people first and institutional investors later.

“The current market conditions accommodate infrastructure-fund investment. This type of fundraising has also been used by many countries such as South Korea, India and the United States,” he said.

To build up confidence for investors, the Cabinet also gave the green light for the Finance Ministry to hold more of TFF units in an amount not exceeding Bt9 billion, up from the earlier approved Bt1 billion.

In response to concerns over the estimated funding cost of 8 per cent to be faced by Exat, higher than state-guaranteed funding at 3 per cent, Ekniti said 8 per cent was the discount rate expected by an independent evaluator, based on forecasts of future income and the number of vehicles on expressways. If the expected income is higher in the future, the discount rate will decline.