October 3, 2019 / 8:05 AM / 14 days ago

Thailand gives CP Group October 15 deadline to sign $7 billion rail deal

BANGKOK (Reuters) - Thailand has given the agro-industrial conglomerate Charoen Pokphand Group (CP) until Oct. 15 to sign an investment agreement for the 225 billion baht ($7.36 billion) high-speed train project, a senior official said.

Deputy Prime Minister Anutin Charnvirakul announced the deadline on Thursday, adding that CP’s bid for the project was 60 billion baht (nearly $2 billion) lower than competitors.

CP Group and 12 other companies won the bid for the project in May, beating out a consortium led by mass transit operator, BTS Group Holdings Pcl (BTS.BK).

Since then, the company has been negotiating with the State Railway of Thailand on terms of the agreement including land ownership.

“On Oct. 15, CP Group should sign the contract because if they don’t, they will be blacklisted by the government,” Anutin said.

He said failure to sign would mean other companies in the CP bidding group - including Bangkok Metro Expressway and Metro Pcl (BEM.BK), Italian Thai Development Pcl (ITD.BK), CH Karnchang Pcl (CK.BK) and China Railway Construction (601186.SS) - could also be affected in future government projects.

The high-speed train project, a private-public partnership, will connect Thailand’s main international airport Suvarnabhumi to low-cost carrier airport Don Muang and U-Tapao airport in eastern Thailand.

“I think there will not be a problem in signing,” acting governor of State Rail of Thailand, Worawut Mala, told Reuters.

There were land transfer concerns because of utility infrastructure that involved other agencies, but after meetings there are no problems, he said, adding that the government is ready to support the project.

CP Group, owned by Thai billionaire Dhanin Chearavanont, has businesses in agriculture through CP Foods Pcl (CPF.BK), telecommunications in China-mobile backed True Corporation Pcl (TRUE.BK) and Ping An Insurance Group (601318.SS).

Reporting by Panarat Thepgumpanat and Chayut Setboonsarng; editing by Jason Neely

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