NESDB points out main risks of NGV

The National Economic and Social Development Board has pointed to four risks associated with the Transport Ministry's natural-gas bus project, which was approved by the Cabinet yesterday.

"The early-retirement programme will be a key factor in reducing the headcount and introducing an electronic ticketing system. The programme must attract 7,009 staff as targeted," the national think-tank said in a report submitted to the Cabinet earlier this month.

The second risk involves the Bangkok Mass Transit Authority's readiness in building a station of its own to accommodate PTT's supply of natural gas. Land must be available for the construction of a PTT pipeline at least one year before the NGV buses are delivered.

The NESDB also pointed to the risk of the increased number of air-conditioned buses. Of the current 3,517 buses, only 1,858 or 53 per cent are air-conditioned. However, with all 4,000 new buses being air-conditioned, the question is how would the BMTA compete with private operators and maintain a viable number of passengers.

In addition, there is the risk of adjusted bus fares following the government policy of floating the price of natural gas.

"Though the BMTA's estimated return on investment is acceptable at the net present value of Bt7.77 billion, success depends mainly on the government's budget of Bt6.14 billion for the early-retirement programme. This would revise down the return to Bt1.63 billion.

"Moreover, the return does not take into account the request for government help in restructuring BMTA staff debts worth Bt2 billion into a savings cooperative," the NESDB said.

The BMTA has been urged to shed workers as targeted and adjust fares in line with the price of gas. Meanwhile, the government also needs to address the BMTA's accumulated debts of Bt62.5 billion. Without government help, the agency would incur a loss of Bt24.8 billion throughout the 10-year period, which would translate into losses of Bt4.19 billion per annum.

In the report, the think-tank backed leasing as opposed to purchasing the buses outright, because leasing would cut down operational risks since the vehicles would be ready at all times and the BMTA's financial and debt burden would be lowered.

In addition, the purchase of the vehicles would have other limitations such as procuring low-rate financing, the BMTA's debts and operational flexibility.

The NESDB also suggested that the Cabinet endorse a transparent and open procurement method. The terms of reference should be drafted to ensure the participation of bidders that are experienced in different areas, such as assembly, maintenance and e-ticketing. All bids must also be kept separate for maximum benefit to the country.

The Transport Ministry and the BMTA should also appoint representatives from related agencies - such as the Budget Bureau, the Finance Ministry and professional organisations - to the panel in charge of fixing the median prices as well as bidding terms.

To ensure effective operation of the project, the government is urged to decide how to handle the BMTA's debts to ensure long-term results in the agency's financial restructuring. Meanwhile, if the government plans to maintain bus fares, it should come up with a clear subsidy plan.

Apart from the leasing or purchasing scheme, the think-tank also offered a new option. It said the government could award concessions for all 155 bus routes, which would have the lowest risks.

However, under this option, the BMTA would have to transform itself from a service provider to a regulator. It would need to ensure the safety and service standards of all buses under the concession system.

Meanwhile, the Cabinet could also introduce an e-ticketing system in buses currently in operation, while the BMTA introduces the early-retirement programme, which should immediately cut down its expenses on personnel.