Public-Private Partnership Act aims to fund 20 percent of new infrastructure

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Public-Private Partnership Act aims to fund 20 percent of new infrastructure

At the end of July, the National Council for Peace and Order (NCPO) approved a 2.4 trillion baht budget allocation for infrastructure development. The money will be spent over the eight years between the beginning of 2015 and the end of 2022.

Included in the massive infrastructure project will be a highway network designed to link Thailand with its major land-based trading partners Myanmar, Malaysia, Laos, Cambodia, and Vietnam. There will be major improvements to water, rail and air transport, all designed to keep Thailand competitive and attractive in relation to its ASEAN neighbours.

In order to find the necessary funds to complete all the projects envisioned, the previous government passed the Public-Private Partnership Act (PPP Act) in 2013. The military government has basically revived this piece of legislation, but it seems that there will be some serious checks and balances applied to how the funds for the infrastructure projects are obtained and dispersed. The lack of apparent transparency in the previous government’s plans led to some serious parliamentary and external opposition. This time, it seems the projects have the general support of the populace at large.

The director-general of the State Enterprise Policy Office (Sepo) has said the private sector will be able to join with the public sector in helping to provide the funds required for the eight-year series of projects by way of the articles outlined in the PPP Act.

The Sepo believes the private sector and retail investors will account for about 20 percent of the funding for the projects by way of the PPP Act.

The legislation requires all projects valued at one billion baht or more to carry out a feasibility study.

Overseeing this entire development will be a national PPP committee. The PPP Act requires the committee to be chaired by the prime minister, with the finance minister as vice-chairman and the Sepo forming the secretariat.

This committee is responsible for mapping out the investment plans and approving projects valued at one billion baht or more. It will also approve projects valued at less than this amount if it deems it necessary.

All projects are subject to a time limit regarding the undertaking of a feasibility study. The Sepo must then perform its due diligence and forward recommendations to the ministers concerned with 45 days. The ministers are then tasked with forwarding their draft to Cabinet within 30 days for final approval.

The Sepo said some state enterprises would raise money from the public by offering infrastructure funds. The Electricity Generating Authority of Thailand (EGAT) has already said it intends to raise 16 billion baht by this method. The proceeds will be used to finance power plant construction.