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Chinese firm eyes work on new train systems
Bangkok Post (5 Aug 2004)

THAILAND: Citic International Engineering Contracting Inc, a unit of China's largest overseas investment conglomerate, is banking on new opportunities arising from the Thai government's planned multi-billion baht mass transit systems.

Senior executives of the company met on Tuesday with Transport Minister Suriya Jungrungreangkit and other officials to express their interest in the project to create a 248-kilometre network covering seven lines at a cost of up to 518 billion baht.

Most of the route will consist of elevated trains including an express train system linking Bangkok and new Suvarnabhumi airport, except for some sections in the inner city that would go underground.

Citic (China International Trust and Investment Corporation) is being represented in Thailand by veteran investor Dr Boon Vanasin, the chairman of Thonburi Hospital Co and Ratchathani Housing and Real Estate Co. He said Citic was set to compete in future bids, given its financial strength and experience in an electric train project in Iran.

Dr Boon quoted Citic executives as saying that the company was also committed to providing long-term financing of up to 12 years to the project, in association with affiliates Citic Industrial Bank and Citic Trust & Investment Co.

According to Dr Boon, who is also a prospective local lead partner of Citic, the Chinese company is seeking a modest 12% for internal rate of return (IRR) on the project, relatively lower than 14% on the current subway project.

Citic has also offered an interest rate for project financing at 0.75 above Libor (London Interbank Offered Rate).

''Given the size of the megaprojects that will involve an investments of over 500 billion baht, Citic is ready to invest around 40% of the total project or 200 billion baht,'' he said.

According to Dr Boon, once the government opens bids, Citic would form a consortium in which local partners led by Dr Boon himself would hold 15-20% with the remainder to be held by Citic.

Citic, established in 1979, was initiated by Deng Xiaoping, chief architect of China's sweeping economic reforms. Today it is a huge transnational conglomerate with 44 subsidiaries in locations including Hong Kong, the United States, Canada, Australia and New Zealand. It has representative offices in Tokyo, New York and Frankfurt.

Citic's core businesses are in the finance, industrial investment and service industries. At the end of 2003, its total assets stood at 596.63 billion yuan (approximately three trillion baht) with an after-tax profit of 1.6 billion yuan.

Specifically, the elevated express train linking Bangkok with the new airport, which is scheduled to open in September next year, is estimated to cost 30 billion baht. The line will stretch 28 kilometres from Phya Thai via Makkasan and Asok and be elevated the whole way.

Of the 30-billion-baht estimated cost, 25.9 billion is for the actual rail system and 4.1 billion baht is for Airports of Thailand Plc to cover its contract with the ITO Joint Venture to build a rail tunnel at the airport.

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