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AOT likely to fill in for King Power

BackApr 10, 2007

Many board execs favour this option

Airports of Thailand is likely to run the commercial area at Suvarnabhumi airport itself after terminating its contracts with King Power International Group.

King Power stands accused of hiding over a billion baht worth of investments at the airport to avoid state scrutiny of the contracts.

Many members of the AoT board are in favour of this option. The final decision will be made today, an AoT source said.

The AoT late last month took no other action after nullifying its contracts with King Power, which was given the right to run duty-free shops and other commercial space at the new airport.

The AoT is now being accused of receiving kickbacks in return for dragging its feet in the case, said the source.

It is under a lot of pressure to wrap up the affair and prevent its image from being marred, the source said.

The board is required to carefully consider the option because its decision could affect food outlets and retailers who had sub-leased the commercial space from King Power.

The giant retailer signed sub-contracts with around 200 shop operators and food suppliers after it was authorised by AoT to run two separate projects, commercial area and duty-free shop management, for 10 years until 2015.

Its contracts were terminated after the Council of State informed the AoT that King Power had intentionally kept its investment costs below one billion baht in both contracts so that the deals would not be scrutinised as required by the Public-Private Joint Venture Act.

The act says that all projects, worth more than one billion baht, are needed to be approved by state agencies and relevant ministries and the cabinet must be informed of it to prevent corruption and collusion.

The Council of State has found that each of the two King Power projects were worth more than one billion baht.

The government's legal adviser has also questioned King Power why it included depreciation costs in its investments.

Such calculations helped keep its investments low.

The contract for the duty-free shops was set at 813.8 million baht, while the one on the use of commercial area was set at 846.6 million baht.

King Power's executives call the findings ''unfair'' and deny any law violations.

''Calling new contract bids should be the best way out,'' said another AoT source.

''Under the Public-Private Joint Venture Act, the AoT needs to call new biddings. King Power could compete with other investors for the contracts again,'' the source said.

He said the AoT was also required to adjust the commercial zone area after the contracts were terminated. So far, the location of some shops have hindered the sight of fire and emergency exits, downgrading the safety measures at the airport.

Transport Minister Theera Haocharoen said yesterday that he had already assigned former attorney-general Khampee Kaewcharoen, an AoT board member, to find out what other legal steps were needed to make the contract termination complete.

''A legal expert is required to look into the case to make sure the board decisions haven't violating the law,'' he said.

The AoT board is also consulting the Office of the Attorney-General on the next steps it should take. The minister yesterday denied a report that the AoT is planning to cut power to the shops at the airport.

However, acting AoT managing director Kalaya Pakakong said yesterday that the agency had recently told King Power to delay paying its rent and electricity bills until the AoT concludes its talks with the OAG.

She has assured shopkeepers that they could still continue their operations during the process until an appropriate solution is found.

King Power has no plan to ask for special protection from the Administrative Court.


Source: Bangkok Post by Amornrat Mahitthirook
Tuesday April 10, 2007