Bangkok Elevated Road and Train System

cancelled

In 1990, Hopewell Holdings' subsidiary Hopewell (Thailand) Ltd signed a 30-year Build, Operate, and Transfer (BOT) contract with the national government of Thailand headed by Chatichai Choonhavan. The contract was for a joint rail and road system, with a 6-lane expressway constructed above a railway and commuter train circuit. It was planned as a one-off project, that gives Hopewell exclusive rights to the route and neighboring land. Of the 60km route, 53km follows the route of the old state railway. Government ownership of this section reduced land acquisition problems. At the time of signing, projected investment required in the project was over US$ 3 billion. Hopewell pledged to give the government US$11.7 million upon signing the agreement, US$ 148.4 million during the first eight years, US$ 544.7 million during the next 15 years, and US$ 1,408 million for the remaining 7 years. Hopewell envisaged property construction on neighboring land as providing a significant part of the projects' revenue. Political problems, including frequent changes of government, and currency turmoil slowed down the project before its first year ended. Hopewell tried to negotiate tariff increases to cover currency inflation and the downturn in the local property market, but did not receive government consent. In October 1997 the Thai Government cancelled the project, citing the financing problems and continual delays. Hopewell confirmed that construction had been suspended and indicated that it was making a US$647 million provision in its accounts to cover expected losses from the project. A new Prime Minster came into power in late 1997. The cancellation was reviewed, but the new Thai Government reaffirmed the decision of the previous administration to cancel the project. In February 1998, the Thai Minister of Transport and Communications sent a letter to Hopewell, reaffirming the cancellation of the project. Shortly after cancellation, both parties publicly threatened legal action. Hopewell made a public statement indicating its intention to recover injected equity to the tune of US$640 million through arbitration. However, the Government stated that no arbitration was required, the project was not completed as contracted, and announced that the project would be re-bid. None None