Technical Assistance Report

Project Number: 46095 Capacity Development Technical Assistance (CDTA) October 2012

Kingdom of : Improvement of Railway Passenger Services (Financed by the Government of France)

The views expressed herein are those of the consultant and do not necessarily represent those of ADB’s members, Board of Directors, Management, or staff, and may be preliminary in nature.

CURRENCY EQUIVALENTS (as of 1 September 2012)

Currency unit – baht (B) B1.00 = $0.0320 $1.00 = B31.2500

ABBREVIATIONS

ADB – Asian Development Bank GMS – Greater Mekong Subregion km – kilometer MOT – Ministry of Transport OTP – Office of Transport and Traffic Policy and Planning SRT – State Railway of Thailand TA – technical assistance

TECHNICAL ASSISTANCE CLASSIFICATION

Type – Capacity development technical assistance (CDTA ) Targeting classification – Targeted intervention—Millennium Development Goals Sector (subsector) – Transport, and information and communication technology (rail transport, urban transport, transport management and policies) Themes (subthemes) – Economic growth (widening access to markets and economic opportunities); social development (other vulnerable groups); environmental sustainability (urban environmental improvement); private sector development (public–private partnerships); capacity development (organizational development) Location (impact) – Urban (high), national (high), rural (low), regional (low) Partnership – Government of France

NOTE

In this report, "$" refers to US dollars.

Vice-President S. Groff, Operations 2 Director General K. Senga, Southeast Asia Department (SERD) Director J. Lynch, Transport and Communications Division, SERD

Team leaders A. Kunth, Infrastructure Specialist, SERD J. Leather, Principal Transport Specialist, SERD Team member O. Jetwattanna, Senior Project Officer, Thailand Resident Mission, SERD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

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I. INTRODUCTION

1. The Government of Thailand requested Asian Development Bank (ADB) support to help improve the performance of its railways so that they could take a more substantial role in the country’s transport system. The development of modern and efficient railways will help reduce the country’s transport bottlenecks, improve overall integration and safety of the transport system, and reduce negative environmental impacts, such as climate change.

2. Connectivity between Greater Mekong Subregion (GMS) countries is a key priority of ADB operations in the region. One of the most effective means of improving connectivity is by improving land transport links along major GMS corridors. Thailand—located at the geographic center of the GMS—will necessarily act as the hub of a GMS railway network, and as the gateway to and Singapore.

3. The capacity development technical assistance (TA) was first identified and agreed with the government when preparing the Thailand country operations business plan, 2012–2014. It was then confirmed and expanded through regular site visits and meetings with the government and State Railway of Thailand (SRT) carried out jointly by ADB’s Southeast Asia Transport and Communications Division and Thailand Resident Mission. The draft TA paper was submitted to the government’s Public Debt Management Office early in July 2012. ADB conducted consultations with senior government representatives (Prime Minister’s Office, Ministry of Finance, Ministry of Transport, and SRT). The government expressed its support and appreciation of ADB’s proposed interventions, and supported the TA impact, outcome, outputs, implementation arrangements, cost, financing arrangements, and terms of reference.1

II. ISSUES

4. The SRT-operated network is 4,130 kilometers (km) long; 3,880 km are single track. The network consists primarily of four main lines that radiate outward from (located in the central region), and serves the four outlying regions of the country: (975 km), northeastern line (1,143 km), (621 km), and (1,625 km). The SRT network serves 42 of the country’s 76 provinces, and has the potential to provide a strong foundation for passenger , and to connect with neighboring Southeast Asian countries. The current SRT-operated infrastructure is outdated, poorly maintained, and does not meet market expectations. Currently, SRT operations have high operation and maintenance costs, and low fares and charges; the service is poor. From 2007 to 2009, SRT had 171 rail accidents, and averaged 107 derailments per year.

5. Thailand’s Eleventh National Plan emphasizes the need for expanding infrastructure and transport systems to improve connectivity between Bangkok and the country’s provinces and neighboring countries. The cabinet approved an investment program requiring $6 billion equivalent in financing to launch a modernization program for the existing railway network, which is owned and operated by SRT.

6. The current SRT operation is mixed freight service and passenger service. The government is concentrating on the rehabilitation and upgrading of tracks, and procurement of locomotives and rolling stock. The core justification of these investments is to reduce Thailand’s high logistics costs in order for Thailand to remain competitive within the region.

1 The TA first appeared in the business opportunities section of ADB’s website on 14 September 2012.

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7. One of the key strategic issues for future SRT operation is the role of passenger transport in Thailand, with regard to (i) freight transport operations, and track and equipment access; (ii) the public service obligation, and (iii) integration with other modes of transport.

8. Historically, and as presently managed and operated, the railway passenger service is a key product that SRT provides to the public. Often it is the only transport mode that is affordable to the poor (passenger services are provided to the poor through the public service obligation at minimal cost and with low quality service).

III. THE TECHNICAL ASSISTANCE

9. The TA will directly support social inclusiveness by developing railway passenger services that are primarily used by the poor. The TA will assist the government in preparing a strategic (planning) framework for the development of SRT passenger services. In general the scope of work will be divided into three main components: (i) review existing SRT passenger demand forecasts and identify new commercial passenger service opportunities; (ii) prepare a draft SRT passenger station management and operations manual; and (iii) prepare a road map, implementation plan, and strategy framework for upgrading SRT passenger service.

10. The TA is part of ongoing and planned assistance provided by ADB to Thailand’s rail subsector, which focuses on (i) preparing a restructuring plan and reform agenda, 2 (ii) improving SRT’s financial and accounting systems,3 and (iii) planning for the GMS railway association.4

11. ADB’s involvement in the railway system is consistent with Strategy 2020, which targets climate change mitigation, as well as ADB’s Sustainable Transport Initiative Operational Plan, which focuses on rail transport. ADB’s involvement in rail transport is consistent with ADB’s Transport Sector Assessment Strategy and Road Map for Thailand. ADB will provide support to building a sustainable transport system in Thailand by modernizing railways. The TA is consistent with ADB's current country partnership strategy, 2007–2011 for Thailand; its strategies include environmental protection and increased global competitiveness. It identifies infrastructure development as a core strategic area of partnership. The TA is included in the Thailand country operations business plan, 2012–2014.

A. Impact and Outcome

12. The impact will be the establishment of a modern SRT passenger service by unbundling SRT business operations through implementation of a new passenger service strategy and guidelines. The outcome will be the adoption of a new passenger service strategy and guidelines.

2 ADB. 2012. Technical Assistance to the Kingdom of Thailand for Supporting Railway Sector Reform. Manila (small- scale TA 8078-THA). 3 Proposed policy and advisory TA for Accounting and Financial Management System Reform of Thailand’s Railway Sector (Project 45042). 4 ADB. 2010. Technical Assistance for Planning the Greater Mekong Subregion Railway Coordination Office. Manila (small-scale TA 7678-REG).

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B. Methodology and Key Activities

13. Three outputs are envisaged for the TA: (i) a review of SRT passenger demand forecasts and identification of new commercial passenger service opportunities, (ii) a draft SRT passenger station management and operations manual, and (iii) a road map and implementation plan and strategy framework for upgrading SRT passenger service. The key activities will be (i) collect and review data and planning methodology, and prepare a new forecast methodology; (ii) undertake railway station reconnaissance missions, benchmark with best international practices, and formulate recommendations for improvement; (iii) prepare a railway passenger strategy for SRT to determine if passenger services within the SRT network have a viable future, and prepare an analysis of the type and most effective use of public– private partnerships to finance some of the (station) upgrades and development.

C. Cost and Financing

14. The TA is estimated to cost $440,000, of which $400,000 will be financed on a grant basis by the Government of France,5 and administered by ADB. The government will provide counterpart support in the form of counterpart staff, office and housing accommodation, and other in-kind contributions.

D. Implementation Arrangements

15. The Ministry of Transport will be the executing agency; and the SRT will be the implementing agency. The SRT will appoint a project director for the TA. The consultants will be based in SRT headquarters and Hua Lamphong station to ensure in-house training of SRT staff.

16. Consulting services will be required: about 8 person-months of international consultants and 11 person-months of national consultants. An international consulting firm, or an international firm in association with a national consultant will be recruited to execute the TA. The key areas of expertise are (i) transport planning, (ii) railway safety and operations, (iii) railway and transport marketing, and (iv) public-private partnerships. The TA consultant will be selected using the quality- and cost-based selection method in accordance with ADB's Guidelines on the Use of Consultants (2010, as amended from time to time). Proceeds of the TA will be disbursed in accordance with ADB’s Technical Assistance Disbursement Handbook (2010, as amended from time to time).

17. ADB undertook regular consultations with the Ministry of Finance, the Ministry of Transport, the National Economic and Social Development Board, SRT, and the Thailand Development Research Institute during prereconnaissance, reconnaissance, and programming missions.

18. The TA review missions will monitor the TA findings and outputs, and provide the evaluation in a TA completion report. The TA findings and outputs will be disseminated via existing ADB external relations communication channels. The TA will be implemented from January 2013 to June 2013.

5 Financed through the Channel Financing Agreement (Technical Assistance Program) between the Government of France and the Asian Development Bank.

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IV. THE PRESIDENT'S DECISION

19. The President, acting under the authority delegated by the Board, has approved ADB administering technical assistance not exceeding the equivalent of $400,000 to the Government of Thailand to be financed on a grant basis by the Government of France for the Improvement of Railway Passenger Services, and hereby reports this action to the Board. Appendix 1 5

DESIGN AND MONITORING FRAMEWORK

Data Sources Performance Targets and and Reporting Assumptions and Design Summary Indicators with Baselines Mechanisms Risks

Impact Establishment of a On-time arrival of passenger Private sector Assumption modern SRT passenger trains increased by 10% by 2015 transport Economic growth of service by unbundling (targets and baselines to be industry Thailand continues to its business operations determined) association be robust through implementation reports and of a new passenger Stations accessible to all users, studies of SRT Risk service strategy and including women, children, and passenger Political instability guidelines the mobility impaired increased ridership data returns to Thailand by 20% by 2020 (targets and and records baselines to be determined) Office of Interconnectivity through the Transport and studied stations improved by Traffic Policy and 20% after 2015 (targets and Planning survey baselines to be determined) and studies

Outcome A new passenger The strategy is endorsed and SRT reports Assumptions service strategy and starts being implemented in Government continues guidelines are adopted relevant SRT’s departments by its policy to support end of 2013. the railway subsector

Government budget allocations to SRT continue as programmed

Risks Government does not adhere to its commitment to support SRT reform

Resistance from the unions to undertake reforms

Outputs 1. SRT passenger The new commercial passenger ADB project Assumption demand forecasts service opportunities reviewed monitoring Government approves reviewed and new and discussed by SRT and MOT missions and provides (in-kind) commercial TA project office passenger service The draft passenger strategy Monthly accommodations opportunities framework and road map coordination identified accepted by SRT and MOT meetings Risk between TA Government does not The methodology proposed by consultant and have adequate the consultants to prepare ADB staff ownership of the TA

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Data Sources Performance Targets and and Reporting Assumptions and Design Summary Indicators with Baselines Mechanisms Risks forecasts is reviewed and activities and discussed by SRT and MOT TA consultant recommendations reports 2. Draft SRT passenger The draft passenger station station management management and operations and operations manual is accepted by SRT manual prepared

3. Road map, SRT accepted new guidelines implementation plan, for private sector participation in and strategy the operations of passenger framework for the stations upgrading of SRT passenger service prepared Activities with Milestones Inputs 1.1 Review past and ongoing SRT and railway subsector studies and reports 1.2 Review existing traffic demand forecasts (end of month 1) Government of 1.3 Identify on-the-job training activities to be carried out (end of month 1) France: $400,000 1.4 Review requirements and impact of public service obligation on traffic forecasts and prepare sensitivity analysis (end of month 2) Consultants: $349,100 1.5 Identify new commercial opportunities for railway passenger service and Workshops: $4,000 related pricing and cost options (end of month 4) Surveys: $6,000 1.6 Summarize new commercial opportunities and develop costs and program Miscellaneous: $7,500 (end of month 4) Contingencies: 2.1 Complete detailed reconnaissance of three SRT railway stations (end of $33,400 month 3) 2.2 Complete draft of the passenger station management and operations The government will manual (end of month 4) provide counterpart 3.1 Analysis of potential for private sector participation in implementation of support in the form of strategic framework (end of month 5) counterpart staff, office 3.2 Road map, implementation schedule, and strategic framework for SRT and housing passenger service (end of month 5) accommodation, and other in-kind contributions. ADB = Asian Development Bank, CO2 = carbon dioxide, MOT = Ministry of Transport, SRT = State Railway of Thailand, TA = technical assistance. Source: Asian Development Bank.

Appendix 2 7

COST ESTIMATES AND FINANCING PLAN ($'000) Item Amount Government of Francea 1. Consultants a. Remuneration and per diem i. International consultants (8 person-months) 232.00 ii. National consultants (11 person-months) 77.00 b. International and local travel 36.10 c. Reports and communications 4.00 2. Workshops, training, seminars, and conferences b 4.00 3. Surveys 6.00 4. Miscellaneous administration and support costs 7.50 5. Contingencies 33.40 Total 400.00 Note: The technical assistance (TA) is estimated to cost $440,000, of which contributions from Government of France are presented in the table above. The government will provide counterpart support in the form of counterpart staff, office and housing accommodation, and other in-kind contributions. The value of government contribution is estimated to account for 9% of the total TA cost. a Financed through the Channel Financing Agreement (Technical Assistance Program) between the Government of France and the Asian Development Bank. Administered by the Asian Development Bank. Source: Asian Development Bank.

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OUTLINE TERMS OF REFERENCE FOR CONSULTANTS

A. Objective

1. The capacity development technical assistance (TA) will assist in the preparation of a strategic (planning) framework for the development and/or upgrading of the State Railway of Thailand (SRT) passenger services.

B. Scope of Work

2. In general the scope of work will be divided into three main elements: (i) updating of passenger service demand forecasts and identification of new commercial passenger opportunities, (ii) preparation of an SRT passenger station management and operations manual, and (iii) preparation of a strategic framework for SRT passenger service.

3. Component 1: Review passenger service demand forecasts and identify new commercial passenger service opportunities. The scope of work will include the following: (i) Review past and ongoing studies, reports, and assessments on SRT and on the railway subsector of Thailand.1 (ii) Review existing and ongoing reports, studies, and detailed designs on the SRT Red Line Mass Transit Project.2 (iii) Review existing SRT passenger service data, including information and data on passenger service rolling stock. (iv) Review existing SRT financial information related to passenger service, including income and expense statements. (v) Identify relevant data on passenger volume, routes, and fare structure data from other transport modes that are in direct passenger travel competition with SRT. (vi) Identify relevant data from the National Economic and Social Development Board, other government agencies, and independent national and international entities regarding economic and financial forecasts for Thailand. (vii) Review the specific requirement and impact of the public service obligation on passenger services presently imposed by the government on SRT for the provision of very low- cost passenger service to the poor, typically through the use of 3rd class service. (viii) Review the direct and indirect subsidy arrangements that benefit other transport modes. (ix) Based on a rapid assessment of the data available and analysis of the existing forecasts, and a review of relevant reports and studies, propose a methodology to prepare traffic demand (20-year) forecasts3,4 for various sections5 (including sensitivity analysis) along the four main SRT routes and map them.

1 Some of the key reports are (i) ADB. 2008. Rapid Assessment Report: State Railway of Thailand. Manila (consultant’s report); (ii) Japan International Cooperation Agency. 2010. Data Collection Survey on Basic Information of Railway Sector. Tokyo (consultant’s report); (iii) Thailand Development Research Institute. 2009. Railway Sector Reform Study. Thailand; (iv) SRT. 2009. Action Plan Management Reform. Thailand; (v) SRT. 2009. Urgent Investment Plan Report. Thailand; and (vi) Office of Transport and Traffic Policy and Planning (OTP). 2010. Railway Development Master Plan Report. Thailand 2 SRT is currently implementing this 26.35-kilometer mass transit, elevated commuter line. It will run north–south within the existing SRT right-of-way utilizing the previously constructed (and abandoned) Hopewell project foundation and column structural systems. It will start at a new to be sited above (and connected to) the existing Bang Sue mass station, and terminate on the northern outskirts of the Bangkok Metropolitan Region. The project will include 11 new commuter stations; and with an estimated daily ridership of about 0.66 million at opening (2015), and increasing to an estimated 1.66 million passengers per day by 2025. 3 The most current traffic model used for Bangkok and the surrounding area is the ―eBUM model‖ prepared and periodically updated by OTP. 4 OTP developed the National Area Model for the forecasting of passenger traffic on SRT routes; this model should be considered for use on this project. 5 The four lines are the northern, northeastern, eastern, and southern lines. Appendix 3 9

4. Component 2: Preparation of an SRT passenger station management and operations manual. The scope of work will include the following: (i) Gather and review existing data, maintenance records, staffing, and operating and financial (income and cost) data for SRT passenger stations. (ii) Review current SRT and the Ministry of Transport (MOT) directives and manuals dealing with SRT management and SRT passenger services operations. (iii) Undertake a detailed reconnaissance of three preselected passenger stations,6 two of which will be Bangkok’s Hua Lamphong Station,7 and the main railway station in .8 SRT will select a third station, in consultation with the TA consultant during the initial month of the project. The reconnaissance is to gather information regarding ―typical‖ existing SRT railway station operation and management; and to undertake a rapid condition survey of each of the stations. The condition survey should cover the building structure, including mechanical, electrical and structural systems, station utility connections, including actual and potential hazards, entrance and exit roads and driveway, use and underuse of adjoining SRT property, and connections to other public and private transport services. (iv) Conduct detailed interviews with each station manager with regard to quality of station operations and station management requirements. (v) Conduct a series of questionnaires and interviews with passengers to determine a representative cross section of suggestions from national and international passengers for improvements at each station. (vi) Benchmark with international best practices and discuss findings and recommended options with SRT management; prepare a program for a 6-day international study tour. (vii) Based on the information and data collected, prepare a draft SRT passenger station management and operations manual focusing on (a) quality of customer services, (b) station integration (urban integration and accessibility and with other modes), (c) safety, (d) financial sustainability, private sector participation and public–private partnership options, and (e) comfort and architectural attractiveness. (viii) The manual will be divided into the following general sections: (a) operations: to include management of platforms and passenger flow, safety of passengers, equipment and buildings, and station management; (b) comfort and internal design; (c) traveler information, including signs, dynamic information and message boards and displays, audio announcements; (d) additional space allocations: toilets, bag drops, clinics, shops, and restaurants; and (e) intermodalities: parking, taxis, car rentals, and connections to urban transport.

5. Component 3: Preparation of a strategy framework for SRT passenger service. The scope of work will include the following: (i) Prepare a railway passenger strategy for SRT that determines if passenger services within the SRT network are viable, and if so, lay out in detail (a) the viable SRT organization needed to carry out a financially sustainable strategy detailing the potential scenario for 2020 in terms of revenues, expenditures, and associated optimal fares; and (b) what specific improvements and/or upgrades with regard to stations, locomotives, and service rolling stock would be required. (ii) Based on broad traffic demand forecasts, make an assessment regarding specific commercial opportunities for improved, increased, and/or new passenger services. (iii) Summarize the related components (e.g., infrastructure, stations, rolling stock), and costs associated with implementing each specific

6 Each of the three detailed reconnaissance studies should be limited to 3–4 days at each site; and senior SRT counterpart staff should accompany the consultant staff during these visits. 7 Hua Lamphong Grand Central Railway Station, also known as the Bangkok Grand Central Terminal Railway Station, is the main railway station in Bangkok. It is located in the city center and operated by SRT. Hua Lamphong serves over 130 trains and approximately 130,000 passengers each day. The station is connected by underground passage to the mass rapid transit system, which, in turn, has connections to the Bangkok Transit System and the newly opened Train Link. It is the main terminal to SRT’s northern, northeastern, eastern, and southern lines; and is also a primary terminus of the Eastern & Oriental Express, a luxury train service between Malaysia, Singapore, and Thailand. 8 Chiang Mai station serviced by about 14 daily trains, including two Eastern & Oriental Express trains per week. The station serves about 1 million passengers per year.

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commercial opportunity identified; together with associated financial analyses of each identified opportunity; prepare relevant maps as required. (iv) Summarize all information, assessments, and analyses into a brief road map, realistic implementation plan, and a strategy framework for developing and/or upgrading of SRT passenger service. (v) Prepare an analysis of the type and most effective use of public-private partnership to finance some of the (station) upgrading and development, including outlines of typical private sector concession agreement that should be considered for use by SRT.

C. Technical Assistance Phasing and Reports

6. The TA will be completed within 5 months of receipt of the notice to proceed, in accordance with the following phasing and reporting requirements: (i) Inception phase. The inception report will be completed, and submitted within 1 month. It should be brief, not more than about 10 pages, and summarize the following: the initial review of significant findings for components 1 and 2; a detailed schedule of work assignments for the remaining 4 months of services; and a summary of the on-the-job training to be carried out. (ii) Interim phase. The interim report will be completed and submitted within 3 months. It should be brief, not more than about 10 pages. It should stress the updating of schedules for the final 2 months of the TA, and identify any specific problems or potential issues that will affect timely completion of the TA. The consultants will organize a workshop with relevant government agencies to discuss the outcome of the interim phase. (iii) Draft final report. The draft final report will be completed and submitted within 5 months of the receipt of the notice to proceed. It will contain a summary of all work undertaken. A short, 3-page executive summary will be translated into the . The consultants will organize a workshop with relevant government agencies to discuss the outcomes of the draft final phase. (iv) Final report. The final report will be a maximum of 50 pages and submitted within 15 days after the receipt of SRT and the Asian Development Bank (ADB) comments on the draft final report. SRT and ADB will be given a maximum of 30 days to finalize and submit their comments to the TA consultant. The final report will be translated into the Thai language to facilitate communication. (v) Report copies. Ten copies of all reports will be submitted in English: five each to SRT and ADB. A soft copy will also be submitted. SRT will submit copies to the MOT and other government entities as may be required.

D. Consultant

7. An international consulting firm, or an international firm in association with a national consultant, will be recruited to execute the TA. The TA consultant will be contracted on a quality- and cost-based selection basis9 in accordance with ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time).

8. The TA will require the services of international consultants (8 person-months) and national consultants (11 person-months) (Table A3).

9 Selection will be based on a 90% technical and 10% cost basis. Appendix 3 11

Table A3: Proposed Staff Positions

Staff Position Minimum Experience Person-Months International Staff Team leader, railway specialist 15 years in railways; previous team leader 4.0 experience

Railway operations specialist 10 years in railway operations and/or planning 1.5

Railway institutional specialist 10 years in railways 1.5

Transport economist 10 years on transport sector projects 1.0

National Staff Railway specialist 10 years in railways 5.0

Institutional specialist 10 years in transport sector 2.5

GIS specialist 5 years in Thailand as GIS specialist 1.0

Financial analyst 5 years on transport sector projects 1.5

Legal specialist Expertise in Thai PPP legal guidelines 1.0 GIS = geographic information system, PPP = public–private partnership. Source: Asian Development Bank.

E. Implementation Arrangements

9. MOT will be the executing agency; and SRT the implementing agency. SRT will appoint a project director for the TA. The consultants will administer the workshops, seminars, conferences, and surveys.

F. Facilities and Counterpart Staff

10. SRT will arrange and provide for office space for the project office of the TA consultant at the SRT main office in Bangkok. SRT will be responsible for providing all offices and utility services, including telephone service, as necessary.

11. SRT will provide three counterpart staff: a railway passenger operations specialist, a financial specialist, and an institutional specialist. The counterpart staff will be assigned full time to assist the TA consultants, and to receive on-the-job-training from TA staff.