Oct. 28--The State Enterprise Policy Office wants state enterprises in the energy, transport and water sectors to establish their own infrastructure funds to help raise money for new investment.

Kulit Sombatsiri, a deputy director-general for the office, said each fund should be at least 5 billion baht in size to comply with new Securities and Exchange Commission regulations.

The SEC approved the new fund classification earlier this year. A fund may invest in projects set up under public-private partnerships or existing assets of state enterprises. Regulations limit maximum shareholdings for any single investor and hold foreign ownership to a minority stake.

Mr Kulit said the SEPO would propose to Finance Minister Korn Chatikavanij that state enterprises in key sectors establish funds to help finance infrastructure investment. The proposal would ultimately need cabinet approval.

He said the approach would be a similar concept to the asset securitisation done by Dhanarak Asset Development to finance construction of the government civil service complex on Chaeng Watthana Road. Dhanarak raised 24 billion baht by issuing 30-year bonds backed by future rentals paid by the government.

In a similar fashion, investors in an infrastructure fund would receive interest and principal payments through future cash flows generated by a roadway, irrigation system or power plant.

Mr Kulit said that while asset securitisation generally cost more than an outright government bond issue, the advantage is that such a structure does not result in any increase in public debt.

In a related development, Mr Kulit said the Council of State had advised that eight contracts signed by state enterprises with the private sector had been amended without compliance with the 1992 joint public-private act.

The law requires concessions and contracts exceeding 1 billion baht to undergo a comprehensive review and screening to ensure transparency and compliance with national development strategies.

Agencies with contracts that may breach the law include TOT, the State Railway of Thailand, MCOT Plc and Airports of Thailand.

He said the Office would determine why the state enterprises did not review the concessions to ensure compliance.

-----

To see more of the Bangkok Post, or to subscribe to the newspaper, go to http://www.bangkokpost.com.

Copyright (c) 2009, Bangkok Post, Thailand

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

A service of YellowBrix, Inc.