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

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Kingdom of Thailand: Improvement of Railway Passenger Services (Financed by the Government of France) Technical Assistance Report Project Number: 46095 Capacity Development Technical Assistance (CDTA) October 2012 Kingdom of Thailand: 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. 1 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 Malaysia 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 Bangkok (located in the central region), and serves the four outlying regions of the country: northern line (975 km), northeastern line (1,143 km), eastern line (621 km), and southern line (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 transport in Thailand, 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. 2 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). 3 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
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