Thailand National Discussion Paper Benefit Sharing Options for Hydropower on Mekong Tributaries

Mekong River Commission Secretariat MRC Initiative for Sustainable Hydropower

Thailand National Mekong Committee Secretariat (TNMCS)

National Discussion Paper Activity ISH13

“Benefit sharing options for hydropower on Mekong Tributaries evaluated by 2013

Supported by the MRC Initiative on Sustainable Hydropower (ISH) August 2013

สรุปผลรายงาน

กิจกรรมการประเมินทางเลือกการแบงปนผลประโยชนของโรงไฟฟาพลังน้ําของ ลําน้ําสาขาแมน้ําโขง ไดกําหนดไวในยุทธศาสตรการพัฒนาลุมน้ําของคณะกรรมาธิการแมน้ําโขง และรับรองโดยคณะมนตรีแมน้ําโขง ในเดือนมกราคม 2554

โครงการ ISH13 เปนการทํางานอยางมีขั้นตอน และเปนการทํางานรวมกันของคณะกรรมาธิการแมน้ําโขงระดับชาติ 4 ชาติ และไดรับการสนับสนุนจากโครงการความคิดริเริ่มไฟฟาพลังน้ําอยางยั่งยืน (ISH)

โครงการ ISH13 เปนสวนหนึ่งของกลุมกิจกรรมโปรแกรมและความคิดริเริ่มของคณะกรรมาธิการแม น้ําโขง ผลการศึกษาจะนํามาสนับสนุนการประชุมหารืออยางตอเนื่องภายใตกรอบคณะกร รมาธิการแมน้ําโขงเพื่อดําเนินตามยุทธศาสตรการพัฒนาลุมน้ํา (BDS) และนําไปใชตามขอตกลงแมน้ําโขงป 2554

ความเปนมา

การแบงปนผลประโยชนเกี่ยวกับการผลิตไฟฟาพลังน้ําและการจัดการอยางยั่งยืน ของทรัพยากรน้ํา ไดมีการอภิปราย ถกเถียงระดับนานาชาติและระดับชาติมานานหลายทศวรรษ ทุกวันนี้ การแบงปนผลประโยชน เปนเครื่องมือที่มีประสิทธิภาพ และมีวิธีการปฏิบัติที่เหมาะสม เพื่อกระจายผลประโยชนจากการใชทรัพยากร ทั้งเศรษฐกิจ การกระตุนการเจริญเติบโตในวงกวาง และสนับสนุนนโยบายความเทาเทียมทางสังคม

ศักยภาพการแบงปนผลประโยชนไดนํามาใชเพื่อความยั่งยืนของการพัฒนาไฟฟา พลังน้ําอยางและการจัดการ และเพื่อชวยดําเนินการใหเปนไปตามขอตกลงแมน้ําโขงป 2538 เปนที่ยอมรับอยางชัดเจนในชุดโครงการของคณะกรรมาธิการแมน้ําโขง และกลยุทธการพัฒนาลุมน้ําของคณะกรรมาธิการแมน้ําโขง

กลไกการแบงปนผลประโยชน (BSM) มีรูปแบบการแบงปนผลประโยชนระดับชาติไปสูระดับทองถิ่น ประกอบดวยกลุมของมาตรการที่ใชอยางเปนระบบ แนนอน และโปรงใส สําหรับโรงไฟฟาพลังน้ําที่มีอยูแลว และโรงไฟฟาที่อยูระหวางการขออนุญาต โดยมีจุดประสงคเพื่อ:

a (i) แบงปนผลประโยชนในรูปตัวเงินจากโรงไฟฟาพลังน้ําอยางเทาเทียมกัน และอยางมีเหตุมีผล ทั้งระดับชาติ ระดับจังหวัด ระดับทองถิ่นและระดับชุมชน;

(ii) เพิ่มประสิทธิภาพผลประโยชนที่ไมใชรูปตัวเงิน โดยเฉพาะอยางยิ่งการเขาถึงทรัพยากรธรรมชาติของคนที่อาศัยอยูในพื้ นที่โครงการ และชุมชนในลุมน้ําสาขา เพื่อการชดเชยการเปลี่ยนแปลงทรัพยากรเนื่องจากโรงไฟฟาพลังน้ํา;

(iii) ใหเขาถึงการบริการไฟฟาอยางเปนธรรมในพื้นที่ลุมน้ําสาขา ซึ่งโครงการไฟฟาพลังน้ําที่ตั้งอยู; และ

(iv) เสริมสรางและเพิ่มประสิทธิภาพของสิทธิประโยชนเพิ่มเติมตางๆ ที่อาจจะมาจากการลงทุนผลิตไฟฟาพลังน้ํา และการลงทุนโครงสรางพื้นฐานที่เกี่ยวของของประชาชนในลุมน้ํา

ประเทศไทยมีลําน้ําสาขาสามระบบที่ไหลลงสูแมน้ําโขง (ลําน้ําเคี่ยม ลําน้ําก่ํา และลําน้ํามูล) มีโครงการไฟฟาพลังน้ํา 7 โครงการ สามารถทําการผลิตไดรวม 700 เมกะวัตต โดยโครงการสูบน้ําลําตะคองอยูดานบนแมน้ํามูลมีความสามารถผลิต 500 เมกะวัตต ไปจนถึง โครงการเขื่อนหวยน้ําก่ํามีความสามารถการผลิต 1.2 เมกะวัตตในลําน้ําสาขาของแมน้ําพรหม

การดําเนินกิจกรรมของ ISH13

สําหรับ ป 2556 โครงการ ISH13 ดําเนินกิจกรรมเพื่อตอบสนองตอการคําขอของประเทศสมาชิกคณะกรรมาธิการแ มน้ําโขง เพื่อการศึกษาหัวขอ "ทางเลือกการแบงปนผลประโยชน สําหรับโรงไฟฟาพลังน้ําของลําน้ําสาขาโดยวิธีการประเมินและจัดทํารายงาน" โดยมีวัตถุประสงค:

§ การปรับปรุงการรับรู และความเขาใจ ทางเลือกและกลยุทธของการแบงปนผลประโยชน ระดับชาติสูระดับทองถิ่น และศึกษาบทเรียนจากประสบการณระหวางประเทศ; และ

§ ทําใหประเทศสมาชิกเตรียมความพรอมสําหรับการอภิปรายเกี่ยวกับการแบ งปนผลประโยชนที่ไดมีการพิจารณา ตามกรอบคณะกรรมาธิการแมน้ําโขง ตามที่กําหนดไวในยุทธศาสตรการพัฒนาลุมน้ํา

b ภายใตโครงการ ISH13 ประกอบดวย 3 กิจกรรมหลัก/ความคาดหวังผลลัพย คือ (1) การเตรียมเอกสารเกี่ยวกับทางเลือกการแบงปนผลประโยชนระดับชาติสําหรับระบ บลําน้ําสาขาของแมโขง คณะกรรมการแมโขงระดับชาติเปนผูดําเนินการหลัก (2) จัดการประชุมเชิงปฏิบัติการในแตละประเทศ ระยะเวลา 2 วัน เพื่อไดรับขอเสนอแนะจากผูมีสวนไดเสีย สําหรับรางรายงานทางเลือกการแบงปนผลประโยชนระดับชาติ และ (3) การเตรียมรายงานสังเคราะหระดับภูมิภาค จากการสังเคราะหจากผลรายงานทั้ง 4 ประเทศ ดําเนินการโดยคณะกรรมาธิการแมน้ําโขง

รางรายงานจะสงไปยังผูมีสวนไดสวนเสียที่เขารวมประชุมเชิงปฏิบัติการ หลังจากนั้นรางรายงานดังกลาวจะทําการปรับปรุง โดยการใชขอคิดเห็นตางๆ และการอภิปรายจากที่ประชุม รางรายงานดังกลาวมีการเสนอวิธีการประเมินเบื้องตนแบบหลายเกณฑ (multi- criteria analysis) เพื่อแสดงสถานการณของนโยบายทางเลือกของโครงการโรงไฟฟาพลังน้ําในลุม น้ําสาขาแมโขงในประเทศไทย ทั้งนี้ไมไดพิจารณากลไกเฉพาะเจาะจงของโครงการผลิตไฟฟาพลังน้ําที่ใดที่หนี่ง

แนวทางการประเมินผลทางเลือก

การประเมินผลเบื้องตน แสดงใหเห็นวา ขอบเขตในการพิจารณาทางเลือกตางๆสําหรับกลไกการแบงปนผลประโยชน โรงไฟฟาไฟฟาพลังน้ําลําน้ําสาขาของแมโขงในระเทศไทย ประกอบดวย:

ประเภทระดับชาติไปสูระดับทองถิ่น (NTL):

• รูปแบบ ที่ 1: แบงปนผลประโยชนรูปตัวเงิน- ประเมิน 7 ทางเลือก • รูปแบบ ที่ 2: อํานวยความสะดวกในผลประโยชนที่ไมใชตัวเงิน- ประเมิน 8 ทางเลือก • รูปแบบ ที่ 3: การเขาถึงการใหบริการโครงการอยางเปนธรรม– ประเมิน 7 ทางเลือก • รูปแบบ ที่ 4: การเพิ่มประสิทธิภาพและประโยชนทางออมเพิ่มเติม – ประเมิน 7 ทางเลือก

คณะทํางานของคณะกรรมการแมโขงประเทศไทย ตัดสินใจไมทําการประเมิน ทางเลือกการแบงปนผลประโยชนประเภทขามพรมแดน (Transboundary dimension: TB) ตามแนวทางคูมือ หรือการพิจารณาแบบตัดตรง (cross-cutting considerations)

c ผลรวมตัวเลือกนโยบายรวม 29 ตัวเลือก ไดทําการใหคะแนนเชิงเปรียบเทียบดานคุณภาพและทําการจัดอันดับ โดย คณะทํางาน โดยพิจารณาคะแนน 2 มิติ คือ คะแนนมูลคา (Value) และคะแนนความพึงพอใจ (Preference) และไดใชเกณฑยอยที่อธิบายไวในรายงานฉบับนี้

§ มิติมูลคา มี 5 เกณฑยอย ที่เกี่ยวของกับความอยางยั่งยืน (สิ่งแวดลอม เศรษฐกิจ สังคม การปรับตัวอยูตลอดเวลา และการปฏิบัติไดจริง)

§ มิติความพึงพอใจ วัดจากความพึงพอใจของผูมีสวนไดสวนเสียจากองคกรตางๆ (เชน องคกรภาคสิ่งแวดลอม องคกรภาคพลังงาน หนวยงานลุมน้ํา ตัวแทนภาคประชาสังคม ตัวแทนภาคเอกชน และอื่น ๆ)

หลังจากเสร็จสิ้นการใหคะแนน และจัดอันดับของตัวเลือกแตละตัวเลือก ทางเลือกนโยบายทั้งหมดที่ไดรับคะแนนระดับปานกลางถึงคะแนนสูง จะถูกจัดกลุมเปน สอง ประเภท คือ (i) ตัวเลือกที่แนะนําสําหรับนโยบายการแบงปนผลประโยชน และ (ii) ตัวเลือกที่จะตองทําการศึกษาเพิ่มเติม เพื่อตัดสินใจวาจะตองพิจารณาการปรับปรุงนโยบายในอนาคต

ผลการศึกษาทั่วไปของการประเมินนโยบายทางเลือกของ ISH13

บทที่ 4 นําเสนอความเห็น เกี่ยวกับผลการศึกษาหลักของการประเมินผลเบื้องตนของกลไกการแบงปนผลประ โยชน ภาคผนวกแสดงรายละเอียดของการใหคะแนนของแตละนโยบายทางเลือก (ภาคผนวกที่ 3) รวมทั้งขอมูลอื่น ๆ และดูเพิ่มเติมภาคผนวก 2 สําหรับคําอธิบายสรุปของตัวเลือกแตละประเภท

ผลการศึกษา ทําใหทราบวาทางเลือกการแบงปนผลประโยชนไมสามารถกําหนดใชนโยบายทา งเลือกเดียว แตเปนกลุมนโยบาย หรือกลุมมาตรการ ที่สนับสนุนและสงเสริมกันและกัน - หรือ "ชุด (package)" ของมาตรการ เพื่อนําไปใชอยางเปนระบบสําหรับการจัดการอยางยั่งยืน ในพื้นที่โครงการและลุมน้ําสาขาของแมน้ําโขง

ประเทศไทยมีกลไกทางกฎหมายเพื่อการแบงปนผลประโยชนทางรูปตัวเงิน จากโครงการผลิตไฟฟาในประเทศในรูปแบบของ กองทุนพัฒนาไฟฟา (Power Development Fund: PDF)

d ซึ่งกําหนดโดยพระราชบัญญัติการประกอบกิจการพลังงาน (พ.ศ. 2550) และระเบียบกองทุนพัฒนาไฟฟา (ออกในปพ.ศ. 2553) ไดกําหนดใหทุกโรงไฟฟาที่มีอยู และโรงไฟฟาที่จะเปดดําเนินการ ตองจัดตั้งโครงการพัฒนาชุมชนอยางถาวร "เพื่อการพัฒนา หรือฟนฟูทองถิ่นไดรับผลกระทบจากการดําเนินงานของโรงไฟฟา" กองทุนพัฒนาไฟฟา เปนกองทุนไดรับการสนับสนุนจากรายไดของโรงไฟฟา ขอกําหนดนี้ใชกับโรงไฟฟาทุกประเภทในประเทศไทย รวมทั้งโครงการโรงไฟฟาจากความรอน (เชนกาซธรรมชาติ ถานหิน และน้ํามันเชื้อเพลิง) และโรงไฟฟาจากแหลงพลังงานหมุนเวียน เชน พลังงานน้ํา และพลังงานลม และพลังงานแสงอาทิตย

กองทุนพัฒนาไฟฟา หรือ โครงการกองทุนพัฒนาไฟฟาระดับชุมชน (มักจะเรียกวา กองทุนพัฒนาทองถิ่นในประเทศอื่น ๆ) จัดการโดยคณะกรรมการพัฒนาชุมชน คณะกรรมการไดรับอํานาจ และไดรับงบประมาณจากสํานักงานภูมิภาคของคณะกรรมการกํากับดูแลการไฟฟ า (OERC) การใชจาย กองทุนพัฒนาไฟฟาเปนไปตามระเบียบ การใชจายงบประมาณ

ระเบียบกองทุนพัฒนาไฟฟา ป พ.ศ. 2550 กําหนดสิทธิการไดรับเงินทุนจากกองทุนพัฒนาไฟฟา คือ "พื้นที่ประกาศ" ซึ่งเปนพื้นที่รอบโรงไฟฟา ในรัศมีทั้ง 5 กม. 3 กม. หรือ 1 กม. จากโรงไฟฟา และขึ้นอยูกับ ขนาดการผลิตไฟฟา (กิกะวัตตชั่วโมงตอป)

§ ปจจุบันอัตราการเก็บเงินเขากองทุนพัฒนาไฟฟา (โครงการชุมชนใน "พื้นที่ประกาศ") เทากับ 2.0 สตางค ตอ หนวยกิโลวัตตชั่วโมง สําหรับโรงไฟฟาความรอน และโรงไฟฟาพลังน้ํา โดยไมคํานึงถึงขนาดของโรงไฟฟา

§ อัตราการเก็บเงินเทากับประมาณ รอยละ 1.0 ของธรรมเนียมการผลิตไฟฟาของประเทศไทย หรือประมาณรอยละ 0.7 ของคาธรรมเนียมผูบริโภค ทั้งนี้ เมื่อเร็ว ๆ นี้ไดมีการเพิ่มคาไฟฟา เทากับ 3.02 บาทตอกิโลวัตตชั่วโมง (หรือ เทากับ 9.7 เซนตตอกิโลวัตตชั่วโมง)

§ ตามอัตรานี้กองทุนพัฒนาไฟฟาจะไดรับงบประมาณ 18 ลานบาทตอป (600,000 ดอลลารตอป) สําหรับโครงการพัฒนาชุมชนรอบโรงไฟฟา สําหรับ 7 โรงไฟฟาพลังน้ําในลําน้ําสาขาแมโขง

§ ดังที่ระบุไวในบทที่ 5 จํานวนเงินสําหรับกองทุนพัฒนาไฟฟาที่ไดรับแตละโรงไฟฟาแตกตางกัน เชน

e ไดรับจากโรงไฟฟาลําตะคอง เทากับ 8,01 ลานบาทตอป (258,400 ดอลลารตอป) ซึ่งผลิตไฟฟาได 500 เมกะวัตต จากโครงการผลิตไฟฟาแบบสูบกลับ สําหรับ โรงไฟฟาพลังน้ําหวยกุม จัดเก็บเงินเขากองทุนพัฒนาไฟฟา เทากับ 0.04 ลานบาท ตอ ป (1,300 ดอลลารตอป) จากการผลิต 1.2 เมกะวัตต

การดําเนินการของโครงการพัฒนาชุมชน ดวยกองทุนพัฒนาไฟฟา ยังอยูระหวางการดําเนินการของบประมาณ เนื่องจาก ขั้นตอนของกองทุนพัฒนาไฟฟายังใหม ทั้งนี้ ตนแบบของกองทุนพัฒนาไฟฟา คือ กองทุนพัฒนาชุมชน (CDFs) ซึ่งไดมีการดําเนินการ สําหรับโรงไฟฟาพลังงานความรอนตั้งแตป พ.ศ. 2550

กองทุนพัฒนาไฟฟาในประเทศไทย เปน กลไกการแบงปนผลประโยชน ประเภทที่ 1 คือ ระดับชาติถึงระดับทองถิ่น จากการประเมินผลของ ISH13 พบวา มีความเกี่ยวของกับ นโยบายทางเลือกจาก กลไกการแบงปนผลประโยชน ประเภทที่ 2 3 และ 4 ในการดําเนินการของโรงไฟฟาในลุมน้ําสาขาแมโขง (ดู บทที่ 4) ซึ่งตัวอยางรวมถึง:

§ เพิ่มการระดับเขาถึงและการใหบริการไฟฟา (ที่นาเชื่อถือ) ในพื้นที่ประกาศ โดยเฉพาะครัวเรือนมีรายไดนอย โดยมีมาตรการสนับสนุนตาง ๆ ทั้งดานความปลอดภัย การมีประสิทธิภาพ และประสิทธิผล

§ เพิ่มประสิทธิภาพการเขาถึงทรัพยากรธรรมชาติในพื้นที่โครงการ และพื้นที่ริมแมน้ําที่ไดรับผลกระทบ เมื่อมีโอกาสและมีความพึงพอใจของทองถิ่น

§ เพื่อใหมั่นใจวาผลประโยชนทางเศรษฐกิจทองถิ่นเพิ่มขึ้นจากโครงการ และมีการกระจายสูชาวบานในพื้นที่ประกาศอยางเปนธรรมตามเกณฑที่มีก ารตกลงกัน

คณะกรรมการพัฒนาชุมชน ของ กองทุนพัฒนาไฟฟา สามารถตัดสินใจหลักเกณฑ และจัดลําดับความสําคัญมาตรการดังกลาวทั้งหมด โดยความเห็นชอบจาก สํานักงานภูมิภาคของคณะกรรมการกํากับดูแลการไฟฟา

คาประเมินตัวเลือกตาง ๆ ของกลไลการแบงปนผลประโยชนที่ไดคาคะแนนสูง ทั้งคะแนนมูลคาและคะแนนความพึงพอใจ ชึ้ใหเห็นวา ควรมีการศึกษาเพิ่มเติม เมื่อประเทศไทยตองการปรับปรุงนโยบายของกองทุนพัฒนาไฟฟาในอนาคต ตัวอยางเชน

f § การเพิ่มอัตราการเก็บคาธรรมเนียมเขากองทุนพัฒนาไฟฟาในอนาคต (อัตรา สตางค / กิโลวัตตชั่วโมง), อาจมีการพิจารณากําหนดใหกองทุนฯ แบงรายไดใหกับ คณะกรรมการลุมน้ํา (RBC) หรือองคกรลุมน้ํา (RBO) สําหรับพื้นที่ซึ่งลุมน้ําที่มีโครงการโรงไฟฟาพลังน้ําดําเนินการอยู โดยพิจารณาจากขนาดการผลิต และบางเกณฑที่มีอิทธิพลตอสถานะภาพของทรัพยากรน้ําในลําน้ําสาขา

§ เทศบาลอาจพิจารณาการเก็บภาษีที่ดินที่ใชสําหรับโรงไฟฟาพลังน้ํา และพื้นที่อางเก็บน้ํา ซึ่งเปนเปนกลไกในการแบงปนผลประโยชนในรูปตัวเงินแกทองถิ่น นอกเหนือจาก "พื้นที่ประกาศ" ซึ่งการเก็บภาษีทองถิ่นดังกลาวเปนการชดเชยรายไดจากการเปลี่ยนแปลง พื้นที่จาก การเกษตร การอุตสาหกรรม หรือการใชประโยชนอยางอื่น ไปเปนพื้นที่การผลิตไฟฟาแกผูบริโภคในประเทศไทยนอกพื้นที่การผลิตไฟ ฟา

§ ทํานองเดียวกัน อาจจะพิจารณากําหนดจํานวนเงินสวนแบงรายไดแกจังหวัดที่มีโรงไฟฟาพ ลังน้ําขนาดใหญตั้งอยู

สิ่งสําคัญอื่น ๆ ที่ควรคํานึง

เนื่องจากประเทศไทยไมมีแผนในการสรางโรงไฟฟาพลังน้ําแหงใหม ในลําน้ําสาขาของแมน้ําโขง โครงการ ISH13 ทําการประเมินผลทางเลือกสําหรับประเทศไทยเฉพาะโรงไฟฟา 7 โรง ที่ไดสรางโดยมีอายุสัมประทานระหวาง 12 ถึง 50 ป ยกเวนโครงการลําตะคอง ที่มีโครงการจะขยายการผลิตเพิ่มขึ้นอีก 500 เมกกะวัตต (โครงการโรงไฟฟาพลังนํ้าแบบสูบกลับไมเกี่ยวของกับการสรางเขื่อนใหม) ซึ่งตัวแทนการไฟฟาฝายผลิต (กฟผ). กลาววาอยูระหวางการพิจารณา (ตามที่รายงานในการประชุมเชิงปฏิบัติการ the Rapid Basin Wide Hydropower Sustainability Assessment Tool (RSAT) เปนเจาภาพโดย คณะกรรมการเลขาธิการแมน้ําโขงประเทศไทย ในจังหวัดสกลนคร ระหวางวันที่ 11-12 ตุลาคม 2555). 1

สรุปโดยรวมจากการประเมินครั้งนี้รวมกับขอเสนอแนะในการอภิปรายของ RSAT ในเดือนตุลาคม 2555

1 Thai members of the MRC ISH Technical Review Group in December 2011 recommended the Lam Ta Khong in the Pak Mun sub basin and the Keiwkoma in the Wang sub-basin as the two priority basins for application of the RSAT.

g ทําใหมีความเปนไปไดสําหรับการสนับสนุนจากคณะกรรมาธิการแมน้ําโขงแกประ เทศไทยในการจัดทําโครงการตนแบบเพื่อทดสอบการปรับการดําเนินนโยบายขอ งกองทุนพัฒนาไฟฟา ของโรงไฟฟาพลังน้ําในลําน้ําสาขาแมน้ําโขง

จุดมุงหมายอาจทําเพื่อ (i) การพัฒนากรณีศึกษา เพื่อแบงปนขอมูลระหวางประเทศสมาชิกของคณะกรรมาธิการแมน้ําโขง เกี่ยวกับกลไกการแบงสวนรายไดในทองถิ่น และ (ii) การเตรียมรางแนวทางการดําเนินการของกองทุนพัฒนาไฟฟาสําหรับโรงไฟฟาพ ลังน้ํา อยางมีประสิทธิภาพ เชน การปรับปรุงขอบเขต “พื้นที่ประกาศ" ตามเกณฑลักษณะของโรงไฟฟาพลังน้ํา เนื่องจากเกณฑที่กําหนดขึ้นในปจจุบัน ออกแบบสําหรับโครงการโรงไฟฟาพลังงานความรอน และมีพื้นที่ประกาศ ใชรัศมีพื้นที่ เทากับ 1-3 กิโลเมตรจากโรงไฟฟา สําหรับการกําหนดพื้นที่เพื่อรับการสนับสนุนจากกองทุนพัฒนาไฟฟา อยางไรก็ตามยังมี ขอยกเวน ที่บัญญัติในกฎระเบียบ กองทุนพัฒนาไฟฟา ระบุวา "พื้นที่ประกาศ อาจรวมถึงพื้นซึ่งแตกตางกันที่กําหนดไวได ดังนั้นถามี การวิจัยทางวิชาการเกี่ยวกับผลกระทบของโรงไฟฟาและมีการรองเรียนจากประช าชนที่ไดรับผลกระทบ"

ทายที่สุด ขณะที่คณะทํางานประเมิน ตัดสินใจประเมินเพียงทางเลือกกลไกการแบงปนผลประโยชน ระดับชาติสูระดับทองถิ่นในพื้นที่ลําน้ําสาขาเพียงประการเดียว สําหรับภาคผนวกของรายงานนี้ ไดนําเสนอตัวเลือก กลไกการแบงปนผลประโยชนสําหรับ มิติแบงปนผลประโยชนขามแดนพรมแดนระหวางชาติ (Transboundary dimension) ของโรงไฟฟาพลังน้ํา และการพิจารณาตัดขาม (cross cutting consideration) จากชุดแนวทางของ ISH13 ที่ชวยใหผูอานทราบแนวทางของคณะกรรมาธิการแมโขงที่ไดนําเสนอตอประเทศ สมาชิกทั้งหมด

นอกจากนี้ ไดมีการจัดการประชุมเชิงปฏิบัติการเกี่ยวกับการแบงปนผลประโยชนของลุมน้ําสา ขาในประเทศไทย เปนเวลา 2 วัน ที่โรงแรมเซ็นทารา แกรนด จังหวัดอุบลราชธานี ดําเนินการโดย คณะกรรมาธิการแมโขงประเทศไทย พบวา มีผูเขารวมประชุม 54 คน ไดมีการแสดงความคิดเห็นเกี่ยวกับผลการประเมินเบื้องตนของกลไกการแบงปนผ ลประโยชนของลุมน้ําสาขาในประเทศไทย ผลการประชุม แสดงวาผูเขารวมประชุมเห็นดวยกับทางเลือกการประเมินกลไกการแบงปนผลประ

h โยชน แตมีความกังวลเกี่ยวกับพื้นที่การแบงปนผลประโยชน ซึ่งไดแก พื้นที่ตนน้ําและพื้นที่ปลายน้ําของโรงไฟฟาฟาพลังน้ํา

ขั้นตอนตอไป

การพิจารณาขั้นตอนตอไป คือ การสนับสนุนการแบงปนขอมูลรวมกันระหวางผูมีสวนไดเสียของคณะกรรมการแม โขงประเทศไทย ทั้งภาครัฐ ภาคเอกชน และภาคประชาสังคม เกี่ยวกับการแบงปนผลประโยชน

• ซึ่งรวมถึงแบงปนขอมูลรวมกันระหวางประเทศสมาชิกอื่น ๆ ที่นําเสนอรายงานระดับประเทศ ในการประชุมเชิงปฏิบัติการระดับภูมิภาค เชนเดียวกับ ผูมีสวนไดสวนเสียของคณะกรรมาธิการแมน้ําโขง และผูรวมการพัฒนา และโดยเฉพาะอยางยิ่งผูปฏิบัติงานระดับนานาชาติ เกี่ยวกับการแบงปนผลประโยชน ผูซึ่งแบงปนความคิดเห็น เกี่ยวกับบทเรียนตางๆ และประสบการณทีไดพบเห็น

สําหรับการสนับสนุนตามปกติของ ISH (2556-2558) ภายใตผลลัพยขอ 4.1c:

• พัฒนาโครงการนํารอง ของการแบงปนผลประโยชนซึ่งทํางานพรอมกับกระบวนการ RSAT และรวมถึงหัวขอ การแบงปนผลประโยชน ในการประเมินของ RSAT (RSAT ดําเนินการชวงกลางป 2012) • การหาความเปนไปไดในการสนับสนุนทางการเงินสําหรับโครงการนํารองจ ากกองทุนการพัฒนาไฟฟา • การพัฒนาแผนงานจากการประชุมเชิงปฏิบัติการขอมูล / การศึกษา เชน การทบทวนนโยบายการสนับสนุน หนวยงานที่สําคัญ เกี่ยวกับการสรางความตระหนักเรื่องการแบงปนผลประโยชนระดับชาติสูระ ดับทองถิ่น • การสนับสนุนอื่น ๆ ของ ISH ในแผนการดําเนินงาน 5 ป (เชนการศึกษาดูงานของการแบงปนผลประโยชน ทั้งแมน้ําโขงและ นานาชาติ การเขาชมเว็บไซตความรูพื้นฐานและอื่น ๆ )

สําหรับการสนับสนุนของคณะกรรมาธิการแมน้ําโขง (2556-2558) ภายใตกระบวนการแปลงแผนการพัฒนาลุมน้ําสูยุทธศาสตรการพัฒนาลุมน้ํา (BDP-led BDS):

i • มีความจําเปนที่จะประเมินการแบงปนผลประโยชน ภายใตยุทธศาสตรการพัฒนาลุมน้ํา (BDS) เกี่ยวกับเขื่อนในแมน้ําโขง และเขื่อนในแมน้ําสาขาแมน้ําโขงที่สําคัญ ที่มีผลตอกิจกรรมอื่นๆ ไมเพียงเฉพาะโรงไฟฟาพลังน้ํา (เชน การเดินเรือ การนําประมง การชลประทาน ที่อานไดใน แผนพัฒนาลุมน้ํา) • ขอกําหนดของผูวาจาง ไดสงไปยังชาติสมาชิกคณะกรรมาธิการแมน้ําโขง โดยคณะกรรมาธิการแมน้ําโขง เพื่อกําหนดขอบเขตการสนับสนุนสําหรับการแบงปนผลประโยชน ของหนวยงานระดับภูมิภาค ที่ไดระบุระดับความสําคัญของแผนกลยุทธในแผนยุทธศาสตรการพัฒนาลุ มน้ํา • แนวทางการสนับสนุนของคณะกรรมมาธิการแมน้ําโขง I. แนวทางสําหรับการพัฒนาและการจัดการที่ยั่งยืนของโรงไฟฟาพลัง น้ําในแมน้ําโขงและแมน้ําสาขา, และ II. แนวทางการสรางกลไกของคณะกรรมาธิการแมน้ําโขง เพื่อการตรวจสอบ และการประเมินผลการดําเนินงานบนสายน้ําหลักและสายน้ําสาขาใน พื้นที่ตนน้ํา

ผูอานควรทราบวา การจัดทํางานรายงานนี้ไมมีผลผูกพันกับประเทศสมาชิกของคณะกรรมาธิการ แมน้ําโขง หรือองคกรระดับภูมิภาคระหวางรัฐบาล หนวยงาน และ องคกรลุมน้ํา รายงานนี้ไมไดสะทอนมุมมองของคณะกรรมาธิการแมโขงประเทศไทย

วัตถุประสงคของรายงานโครงการ ISH13 เพื่อใหทราบการดําเนินการอยางตอเนื่องของนโยบายระดับชาติ เกี่ยวกับโรงไฟฟาพลังน้ําอยางยั่งยืน และการพัฒนาโรงไฟฟาพลังน้ําอยางยั่งยืนของลําน้ําสาขาของแมน้ําโขงและ ผลการหารือภายใตกรอบการดําเนินการ และการดําเนินงานของคณะกรรมาธิการแมน้ําโขงดานยุทธศาสตรการพัฒนา ลุมน้ําระดับภูมิภาค

k Summary The task of evaluating benefit sharing options for hydropower on tributaries of the Mekong River is identified in MRC Basin Development Strategy endorsed at the MRC Council in January 2011. ISH13 is being undertaken in a step-wise, collaborative manner by the four NMCS. It is supported by the MRC Initiative on Sustainable Hydropower (ISH) under its outcome structure. ISH13 is part of a group of activities that all MRC Programmes and initiatives were assigned to support as input to on-going discussions under the MRC Framework to implement the Basin Devel- opment Strategy (BDS) and to implement the 1995 Mekong Agreement, more generally.

The Background Benefit sharing has been a recurrent theme in international and national debates about hydropower and sustainable management of water resources for decades. Today benefit sharing is increasingly seen to be a powerful, practical way to spread resource utilization benefits across the economy, catalyse broader-based growth and support social equity policies. The potential for benefit sharing to foster sustainable forms of hydropower development and management and to help implement the 1995 Mekong Agreement is explicitly recognized in MRC Programme work and the MRC BDS.

National-to-local forms of benefit sharing mechanisms (BSM) consist of a group of measures applied in a systematic, consistent, and transparent manner to existing and proposed hydropower aiming: (i) To equitably and reasonably share a portion of the monetary benefits of hydropower from national, to provincial, to local levels and riverine communities. (ii) To optimize non-monetary benefits, especially natural resource access for people living in the project area and river communities in the tributary basin, in part to offset the resource transformations of hydropower. (iii) To provide equitable access to electricity services in the project area and tributary basin where hydropower projects are located. (iv) To enhance and optimize various additional benefits that may be derived from hydropower investment and the related public infrastructure investment in the basin.

The three tributary systems of Thailand that flow into the Mekong mainstream (Nam Nhiam, Kam and Mun) have seven existing hydropower projects. Together they account for 700 MW installed capacity ranging from the 500 MW Lam Ta Khong pumped storage project in the tributary head- waters of the Mun River to the 1.2 MW Huai Kum project on a tributary of the Nam Phrom River.

The ISH13 Tasks ISH13, “Benefit-sharing options for hydropower on tributaries evaluated and reported” by 2013 responds to MRC Member Country requests for MRC support: § To improve awareness and understanding of national-to-local BSM options and strategies and draw lessons from international experience; and § To enable Member Countries to prepare for the type of discussions on benefit sharing envisaged under the MRC framework as set out in the BDS. The three main activities/outputs under ISH13 are: (1) preparation of national papers on BSM options for Mekong tributary systems in NMCS-led processes; (2) holding two-day national BSM op-

i tions workshops in each country to provide multi-stakeholder comment on draft versions of the National Discussion Papers; and (3) preparation of a Regional Synthesis Paper by MRCS on BSM Options for Mekong Tributaries that brings together the work in the four Member Country Nation- al Discussion Papers. This National Discussion Paper (draft) is circulated to TNMC stakeholders participating in a national-level workshop, after which, the Paper will be finalized by incorporating the workshop discussion and outcomes. This Discussion Paper provides a preliminary multi-criterion evaluation of policy options using the existing hydropower on Thai Mekong tributaries to illustrate the situation. It does not discuss mechanisms on specific hydropower projects.

The Approach to the Options Evaluation The preliminary evaluation shows there is scope to consider various BSM options for Thailand’s Mekong tributary hydropower, namely: National-To-Local Types (NTL): § NTL Type- 1: Sharing of monetary benefits - 7 options evaluated § NTL Type- 2: Facilitating non-monetary benefits - 8 options evaluated § NTL Type- 3: Equitable access to electricity services – 7 options evaluated § NTL Type- 4: Optimizing indirect and additional benefits – 7 options evaluated

The TNMC Working Group decided not to evaluate the transboundary dimension (TB) types in the ISH13 Guidelines or the cross-cutting considerations. In total 29 BSM options were qualitatively scored and ranked by the Working Group for two main dimensions value and preference, using the sub-criteria explained in this National Discussion Paper and in the Regional Synthesis Paper`s Annex Volume (Annex 1).

§ The value dimension has five sub-criteria centred on sustainability (environmental, economic, social, flexibility to adapt over time and practicality). § The preference dimension measures the preference according to different stakeholder interests (including environmental sector organizations, power sector organizations, river basin entities, civil society representatives, private sector representatives and others).

After completing the multi-criteria scoring and ranking of each option, all the options that showed moderate to high scores were placed in one of two categories, namely: (i) options recommended for consideration in a comprehensive BSM approach, and (ii) options to consider in future policy updates.

General Results of the ISH13 Options Evaluation Section 4 offers comment on the main results of this preliminary BSM options evaluation. The An- nex Volume of the Thailand National Discussion Paper shows the detailed multi-criteria scores for each option (Annex 3), as well as other information. Annex 2 of the Regional Synthesis Paper An- nex Volume provides for a bullet-point summary description of each option type.

Results suggest that benefit sharing is not a single option, but rather a group, or family of measures that complement and reinforce each other – or a “package” of measures to systematically apply in relation to sustainable management in the project locality and tributary basin.

ii Thailand already has a legal mechanism to share monetary benefits of power generation projects locally in the form of the Power Development Fund (PDF) that was introduced in the Energy Indus- try Act (2007). The subsequent PDF Regulation (issued in 2010) requires that all existing and proposed electricity generation projects set up a permanent Community Project, “to develop or rehabilitate the localities affected by the operation of power plants”. The PDF is financed by revenue from projects. This requirement applies to all forms of power generation in Thailand, including conventional thermal power projects (e.g. natural gas, coal and oil-fired) and generation projects based on renewable energy sources like hydropower, as well as intermittent wind and solar sources. The PDF or the PDF Community Project (often called a local area development fund in other countries) is to be managed by a Community Development Committee. The committee is to seek au- thorisation from regional Offices of the Electricity Regulatory Commission (OERC) for annual expenditures, but is otherwise free to decide on PDF spending within the parameters of regulations. The 2010 PDF regulations stipulate the types of local development spending that is eligible for PDF financing in what are called the “notified area”, which is a circular area either 5 km, 3 km or 1 km distance from the power project, depending on the project’s size (annual GWh). § The current rate for funding the PDF (Community Projects in “notified areas”) is 0.02 Baht/kWh for conventional thermal and hydropower projects, regardless of project size. § This is roughly equivalent to 1.0 percent of Thailand’s bulk generation tariff, or about 0.7% of the average consumer tariff, which recently rose to 3.02 baht/kWh (or $US 9.7 cents /kWh). § At this rate, the PDF will raise about Baht 18 million ($US 600,000) annually for Community Pro- jects around the 7 existing hydropower projects in Thailand’s Mekong tributaries. § As noted in Section 5, the amount of money for the PDF on each project varies from 8.01 million Baht/yr ($US 258,400 /yr) for the 500 MW Lam Ta Khong pumped storage project to 0.04 million Baht/yr ($US 1,300 /yr) for the 1.2 MW Huai Kum hydropower project.

As yet no PDF has been set up on a hydropower project in Thailand, partly because the PDF procedure is new. However, PDFs and the forerunner of the PDF called Community Development Funds (CDFs) have been in operation on the large thermal power stations since 2008.

Thailand’s PDF is a Type- 1 national-to-local BSM. In addition, the ISH13 evaluation shows that there is scope to enhance the other three generic forms of national-to-local BSM in implementing the PDF on Mekong tributary hydropower in Thailand (see Section 4). This includes, for example: § Enhancing electricity access and electricity service (reliability) levels in notified areas, in particular by targeting low income households with various support measures regarding safe, efficient and productive electricity use. § Enhancing natural resources access in the project areas and affected riverine area, when there is an opportunity and local preference to do so. § Ensuring that local economic benefits arising from the project are equitably distributed to residents in the notified area, according to agreed criteria. The Community Development Committee for the PDF can decide the criteria and prioritize all such measures, subject to approval of the regional office of the ERC.

Some of the following BSM options evaluated in ISH13 that show high value/preference scores are recommended for further study when Thailand considers a future policy update of the PDF.

iii § If the PDF rate is increased in future (Satang/kWh rate), consideration may be given to extend revenue sharing funding to RBCs or RBOs in the tributary basin where hydropower projects operate. This is possibly for projects over a certain MW size, or some criteria for the degree of influence of the project on the tributary water resource status. § Municipalities may consider taxing land used by hydropower facilities and reservoirs as a mechanism to share monetary benefits locally, beyond the defined “notification area”. This recognizes that the local municipality forgoes tax revenue it would otherwise have received if the area had remained under agricultural, industrial or other uses, instead of generating electricity to supply consumers on Thailand’s national power grid. § Similarly, consideration may be given to some amount of revenue sharing with the provinces that have tributaries where larger hydropower projects are located.

Other Important Things to Note Because Thailand is not planning any new hydropower projects on Mekong tributaries, the ISH13 options evaluation for Thailand refers mainly to the seven existing projects that were commissioned between 12 and 50 years ago. The one exception may be the 500 MW Lam Ta Khong expansion project (a pumped storage project not involving a new dam). EGAT representatives said that is under consideration (as reported in the workshop on the Rapid Sustainability Assessment Tool (RSAT) hosted by the TNMC Secretariat in Sakon Nakhon October 11-12, 2012).1 An overall conclusion based on this evaluation, which also reflects discussion in the RSAT exercise in October 2012, is the possibility for MRC to support Thailand with a pilot trial of the PDF’s first implementation on a hydropower project in a Mekong tributary. The aims may be to (i) develop a case study to share information with other MRC Member Coun- tries on the implementation of a local revenue sharing mechanism, and (ii) potentially, assist in preparing draft guidelines to effectively implement the PDF on hydropower projects, such as to adjust the “notified area” based on hydropower criteria. This recognizes that the PDF was largely designed for thermal power projects, and has a 1-3 km area in which to apply the PDF. It would seek for example, to apply the provision in the existing PDF regulation that states, “the area under the notice may include sub-districts on the different criteria provided (i.e. a 3, 2 or 1 km circle area) if there is academic research on the impact of the power plant which has had a hearing from the people”. Finally, while the TNMC Working Group decided to evaluate only national-to-local BSM options for its tributary hydropower, the Annex Volume of the Thailand National Discussion Paper presents the generic BSM options for transboundary dimensions of tributary hydropower and cross-cutting considerations from the ISH13 Guidance Package. That enables readers to see the guidance MRC offered to all Member Countries. In addition, the two-day ISH13 National BSM Workshop on Thailand’s tributary hydropower was conducted by TNMC at Centara Grand Hotel in Udon Thani province. It was attended by 54 participants to comment on the preliminary evaluation of BSM options for Thailand’s Mekong tributary hydropower. The results show that the participants basically agreed with the results of BSM op-

1 Thai members of the MRC ISH Technical Review Group in December 2011 recommended Lam Ta Khong in the Pak Mun sub basin and Keiwkoma in the Wang sub-basin as the two priority basins for application of the RSAT.

iv tions assessment. There is concern about the benefit sharing in particular areas since the affected stakeholders from hydropower projects can be people located upstream and downstream.

The Next Steps An underlying consideration in the next steps is support for on-going information sharing among TNMC stakeholders in the government, private and civil sectors on the BSM theme. This includes information sharing with other Member Countries who present their National Discus- sion Papers at the Regional Workshop, as well as MRC Stakeholders and Development Partners, and in particular international practitioners of BSM who will share comments based on their lessons and experience.

For regular ISH support (2013-2015) under Output 4.1c: § Develop a BSM pilot project working along with the RSAT process and include BSM topics in the MRC RSAT assessment (RSAT work in mid 2012). § Examine the possibility of having financial support for the pilot project from the PDF fund. § Formulate a development plan for information workshop/studies e.g., a policy review to offer support for key agencies on NTL BSM awareness raising. § Other ISH support in the ISH 5-year work plan (e.g. Mekong and International BSM study and site visits and an update of the Knowledge Base amongst others).

For MRC support (2013-2015) under the BDP-led Basin Development Strategy (BDS) process: § There is need to evaluate benefit sharing under the BDS on Mekong mainstream dams as well as those dams on significant tributaries of the Mekong. This should cover benefit sharing in multiple sectors and not only hydropower (such as, navigation, fisheries and irrigation as out- lined in the full BDP). § The TOR has been circulated to NMCS by the BDP to scope out MRC support for multi-sector regional benefit sharing as a strategic priority under the BDS. § MRC support for the following guidelines: i. Guidelines for the sustainable development and management of hydropower on the Me- kong mainstream and tributaries. ii. Guidelines to establish a MRC mechanism for the monitoring and evaluation of operations on the Mekong mainstream and tributaries in upstream areas.

Readers should note that nothing in this Discussion Paper is binding on the MRCS Member Countries, or the MRCS as a regional intergovernmental-river basin organization. The purpose of the ISH13 Papers is to inform on-going national policy dialogue on sustainable hydropower and sustainable development of Mekong tributaries, and the relevant on-going discussions under the MRC Framework around implementation of the MRC’s Regional Basin Development Strategy.

v Acknowledgements The author of this Paper appreciates the assistance and financial support of the ISH Team in MRCS and also the ISH Development Partners of the MRC (donors) that include the Governments of Fin- land, Germany and Belgium. Particular thanks are due to TNMC especially Ms. Pakawan Chufmanee, the National ISH Coordina- tor, and the 6 Members of the TNMC National Working Group Mr. Apinan Wathanarat, Mr. Chatch- om Chompradit, Mr. Phitsanu Voranard, Mr. Vicha Poopradit, Mr. Nipon Munmuangsean, and Mr. Nirat Phuriphanphinyo, without which most of the data and analysis in the Paper would not have been possible. Many thanks are extended to the ISH Team consisting Mr. Voradeth Phonekeo, ISH Task Leader and Mr. Simon Krohn, ISH ITA who together guided the ISH13 work overall; to Mr. Piseth Chea, ISH Programme Officer, and Ms. Souphinethong Keobandavong, ISH Secretary, who provided support throughout the ISH13 effort. Also thanks to Dr. Anoulak Kittikhoun, MRC BDP Coordinator. This Paper was prepared under the technical guidance of Mr. Lawrence J.M. Haas, ISH Policy and Strategy Consultant and Mr. Simon Krohn. Special thanks to Mr. Haas who developed the Knowledge Base on Benefit Sharing for the ISH, the ISH13 tasks and Guidance Package and provided numerous reviews to help draw lessons from regional and international experience. Finally, the author wishes to acknowledge the support of the three colleagues from riparian countries, Mr. Try Thoun, Mr. Vipaka Halsacda, and Dr. Nguyen Duy BINH for their cooperation and being friends throughout the ISH13 process.

vi Table of Contents

Summary in Thai a Summary i Acknowledgements vi Table of Contents vii List of Acronyms viii List of Figures ix List of Tables ix Section 1: Introduction and Background 1 1.1 Background to Benefit Sharing 1 1.2 Objectives of the ISH13 National Discussion Paper 2 1.3 The 12 steps to implement ISH13 3 1.4 Implementation of ISH13 Step 8 and Step 9 4 1.5 Information sources to support the ISH13 work 4

Section 2: Existing Tributary Situation in Thailand 6 2.1 Mekong tributary systems 6 2.2 Characterization of Mekong tributary systems in Thailand 8 2.3 National policy and experience related to Hydropower BSM Thailand 9 2.4 Other Considerations 14

Section 3: Identification of BSM Options for Thailand Tributaries 16 3.1 General considerations 16 3.2 Objectives assumed for BSM on Tributary Hydropower 16 3.3 Options for national-to-local forms of BSM on tributary hydropower 18

Section 4: Preliminary Evaluation of BSM Options 20 4.1 Multi-criterion evaluation framework 20 4.2 Result of the Preliminary evaluation 22 4.2.1 Preliminary evaluation of national-to-local options 22 4.3 Supplemental evaluation of selected options 37

Section 5: Conclusions, Recommendations and Next Steps 39 5.1 General Observations on the Preliminary Scoring and Ranking of Options 39 5.2 Other summary conclusions 41 5.3 Next step 41 5.4 Pilot Project Area Selection 42

Thailand Annex Volume 43

vii List of Acronyms

BDS MRC Basin Development Strategy BSM Benefit sharing mechanisms CC Cross-cutting considerations CDF Community Development Fund CDC Community Development Committee CSO Civil society (and social organizations) EGAT Electricity Generation Authority of Thailand ERC Electricity Regulatory Commission of Thailand GWH Gigawatt-hour = 1000 MWH ISH MRC Initiative on Sustainable Hydropower IWRM Integrated Water Resources Management KB Knowledge Base (referring to the MRCS knowledge base on benefit sharing assembled by the ISH) MRCS Mekong River Commission Secretariat NGO Non-government organizations NMCS National Mekong Committee Secretariat NTL-BSM National-to-Local benefit sharing mechanisms NWRS National Water Resources Strategy PDF Power Development Fund PDMP Power Development Master Plan PES Payments for forest ecological services RBO River Basin Organization TB-BSM Trans-boundary benefit sharing mechanisms TNMCS Thailand National Mekong Committee Secretariat WG Working Group WWF World Wildlife Fund

viii List of Figures Figure 2.1 Lower Mekong hydropower projects: sub-catchments 17 Figure 2.2 Procedure how to systematically raise awareness about benefit sharing with local communities adversely affected by hydropower projects in area 18 Figure 2-3 Illustrates the institutional arrangements for implementing the PDF on power projects in Thailand. 20 Figure 3.1 Procedure to analyse options for implementation of BSM. 21

List of Tables

Table 2.1 Mekong Tributary Systems in Thailand 16 Table 2.2 Hydropower Projects on Thailand’s Mekong tributaries 16 Table 4.1 Estimation of the Revenue generated for the PDF by Thailand’s Seven Mekong tributary hydropower projects 36 Table 4.1 Estimation of the Revenue generated for the PDF by Thailand’s Seven Mekong tributary hydropower projects 36 Table 4.2 Percentage PDG represents of consumer tariffs in Thailand 37

ix Section 1: Introduction and Background

1.1 Background to Benefit Sharing

As part of efforts to implement the Basin Development Strategy (BDS), the MRC assigned ISH the responsibility to lead the Activity called ISH13, “Benefit-sharing options for hydropower on tributaries evaluated and reported” by 2013. This work includes the consideration of national-to-local (NTL) forms of benefit sharing, as well benefit sharing mechanism (BSM) that may address the transboundary dimensions of tributary hydropower in the Mekong context. ISH13 includes three main tasks: § Preparing four National Discussion Papers on BSM options for Mekong tributaries; § Holding National BSM options workshops in each Member Country (multi-stakeholder); and § Preparing a regional synthesis paper on BSM options for Mekong tributaries.

Benefit sharing has been a recurrent theme in international and national debates about hydropower and sustainable management of water resources for decades. Today benefit sharing is increasingly acknowledged to be a powerful, practical way to spread resource utilization benefits across the economy, catalyse broader-based growth and support social equity policies. International experience shows it is important to formulate BSM in a collaborative way involving the key stakeholders and interested parties. This includes the intended beneficiary groups and the media. The role of the media is important to help the public understand and support BSM measures, especially when measures such as revenue sharing are ultimately factored into consumer electricity tariffs. 2 In broader terms, benefit sharing is an important tool (or set of measures) to equitably share the benefits of sustainable development in the Mekong River basin, not only in the hydropower sector, but also in other sectors such as mining, forestry, tourism and large-scale agriculture.1 The potential for benefit sharing to foster sustainable forms of hydropower and to help implement the 1995 Mekong Agreement is recognized in MRC Programme work and the MRC BDS. Benefit sharing is explicit in the seven strategic priorities in the Mekong BDS, namely:3 § Strategic Priority 3: Improve the sustainability of (Mekong) hydropower development, and § Strategic Priority 5: Seek options for sharing the potential benefits and risks of development opportunities.

2 This establishes, for example, revenue sharing as a sharing arrangement (benefits and costs) between the main consumers of electricity services in towns, cities and industry who benefit from electricity generation and riverine communities where hydropower projects are located and the development opportunities and risks the hydropower creates are greatest. 3 The BDS posted on the MRC website identifies the 7 strategic priorities for the development of the Mekong Basin as: (1) address opportunities and consequences of ongoing developments including in the Lancang-Upper Mekong Basin, (2) expand and intensify irrigated agriculture for food security and poverty alleviation, (3) improve the sustainability of hydropower development, (4) acquire essential knowledge to address uncertainty and minimise risk of the identified development opportunities, (5) seek options for sharing the potential benefits and risks of development opportunities, (6) adapt to climate change, and (7) Integrate basin development planning considerations into national systems.

1 This National Discussion Paper and the discussions on the draft version at the national workshop will be the basis to finalize the National Paper for ISH13. This National Discussion Paper along with the other National Papers will be the basis for the ISH13 Regional Synthesis Paper.

1.2 Objectives of the ISH13 National Discussion Paper

The objectives of this Paper derive from the objectives set for “Benefit Sharing Options on Mekong Tributaries evaluated” by 2013 in the MRC Basin Development Strategy and the strategy for the MRC Initiative on Sustainable Hydropower developed by Member Counties through national and regional level consultation processes from 2008.

In this context, the objectives of the ISH13 National Papers are broadly: i. To highlight information arising from the initial review of existing national policies and practices relevant to benefit-sharing on hydropower in MRC Member Countries; ii. To highlight the range of options to considered in developing a systematic and comprehensive approach to benefit sharing, both (i) responding to expectations of NMCS Stakeholders, (ii) reflecting Member Country policies on the benefit sharing and sustainable development of hydropower and river basins (either existing policies or formative policies), and (iii) the MRC Basin Development Strategy; iii. To provide a preliminary qualitative evaluation on selected benefit sharing options for tributary hydropower using multi-criteria techniques for discussion; iv. To present the preliminary identification and evaluation of BSM options to a wider group of NMCS stakeholders in a 2-day national-level BSM workshop; and v. To subsequently finalize the National Paper under NMCS direction with technical support from MRCS incorporating the national-level workshop discussions outcome.

Broader aims of the Discussion Paper and consultative ISH13 process to prepare it include: § Improving awareness and understanding of national-to-local BSM options, the value they add to sustainable development of Mekong tributaries with existing or planned hydropower, § Provide access to strategies and lessons from international experience available to inform national policy dialogue and policy implementation processes underway now, § Facilitate the sharing of information and experience among Member Counties on benefit sharing policies, legislation and implementation, and § Enable Member Countries to better prepare for the conversations envisaged under the MRC framework on benefit sharing as set out in the MRC BDS – recognizing the focus of ISH13 is on BSM related to existing and proposed tributary hydropower.

Lastly, the following considerations should be taken into account in proceeding to the next steps of ISH13 implementation: § The final National Paper on BSM Options for Tributary Hydropower in each Member Country will be based on this draft Discussion Paper after the outcome of the National BSM workshop have been incorporate. § The expectation is the National Papers will be presented in a regional workshop (facilitated by the MRCS) where MRC Stakeholders and international practitioners and policy makers with

2 experience in this field from other regions of the world can offer observations on the National Papers based on their own experience.

1.3 The 12 steps to implement ISH13

The ISH also prepared a Guidance Package for the national BSM Consultants and NMCS to implement these steps in a consistent way and share information on work in progress.

The 12-steps extracted from ISH13 Guidance Note 1 are as follows: Step 1: Review key materials in the Guidance Package. Ask the ISH Team and/or NMCS questions, if needed, to clarify any aspect of the Guidance. Step 2: Prepare concise profiles of Tributary systems in the country (using templates) and reconfirm the objectives of BSM for tributary hydropower. Step 3: Assemble an initial list of BSM options for each generic type of BSM. Prepare a summary matrix describing the options selected to evaluate in ISH13 (adapting and using templates). Step 4: Adapt spreadsheet templates to provide a multi-criteria scoring & ranking of the BSM options identified in Step 3 (adapting and using templates). Step 5: Group the options ranked in Step 4 informed by the multi-criterion ranking and plotting of results (adapting and using templates). Step 6: Facilitate a 2-3 day seminar of a multi-stakeholder national Working Group (WG) for ISH13, appointed by MRCS / NMCS (for WG Tasks in ISH13 Guidance Notes 1 and 3). Step 7: Write-up the WG Seminar and prepare additional analysis of selected BSM options based on the advice of the ISH13 Working Group, NMCS and the Guidance Notes. Step 8: Prepare a National Discussion Paper for ISH13 based on the WG Seminar outcome and provisional Table of Contents (Annex 1 of Guidance Note 1 – i.e. this Paper). Step 9: Support NMCS with presentations at the 2-day national BSM Options Workshop and help facilitate breakout session discussions. Prepare concise minutes of the National BSM Workshop (ISH13 Guidance Note 2). Step 10: Turn the Discussion Paper into the draft version of the ISH13 National Review Pa- per based on the national workshop discussion and outcomes. After incorporating comment on the draft, submit the final version for NMCS endorsement. Step 11: Present the National Papers to Mekong stakeholders and international BSM policy-makers / practitioners at a Regional BSM Workshop sponsored by MRCS and Development Partners (Q4 2012). Step 12: Comment on the MRCS Regional Synthesis paper draft based on the four Nation- al Papers and the Regional BSM Workshop outcome.

3 1.4 Implementation of ISH13 Step 8 and Step 9

To implement ISH13, MRCS engaged national consultants to help NMCS prepare the material in a systematic way. A small Working Group was formed by NMCS to provide a preliminary identification and evaluation of the BSM options presented in the Discussion Paper. Then, a national workshop was held in Thailand in order to comply with the objectives of BSM. The varous groups of stakeholders had the chance to comment on the preliminary evaluation of BSM for Thailand’s Mekong tributary hydropower options, which were developed by the working group. The national BSM workshop on Thailand’s tributary hydropower was held by TNMC at Cen- tara Grand Hotel in Udon Thani province between 28 and 29 January 2013. During the national workshop, key preliminary findings, scoring and ranking of the three types of benefits sharing were discussed and presented. Key sections such as tributary profile, guideline for scoring and ranking template, selected key policies and pilot project for Thailand were discussed (see Annex 7 for detailed information).

1.5 Information sources to support the ISH13 work

In order to undertake ISH13 tasks efficiently, it is important to look at Thailand’s laws, regulations, experience as well as the existing MRC Programme work that is relevant to the benefit sharing theme and Mekong hydropower issues.

In particular these works include: § Reports on the BDP Scenario Analysis (2010) and Basin Development Strategy (2011). § The Tributary Significance Studies the MRC is preparing on ecosystem functions and services (including fisheries), hydropower, navigation, hydrology and sediment. § The various documents in the ISH Knowledge Base on benefit sharing theory, practice and regulation from the Mekong Region and around the world assembled by the ISH in 2011.4 § MRC Initiative on Sustainable Hydropower (ISH), Report Of Thailand RSAT National Planning Workshop, 11-12 October 2012,SakonNakhon on the on the Lam Ta Khong and Pak Mun sub- basin. § MRC Initiative on Sustainable Hydropower (ISH): Draft report of Thailand RSAT national planning workshop during 11-12 October 2012, Sakon Nakhon, Thailand. § Energy Industry Act B.E. 2550 (2007) § Regulation of the Energy Regulatory Commission on the Power Development Fund, B.E. 2553 (2010) § Notification of the Energy Regulatory Commission on an Electricity Generation Licensee’s Sending of Contributions to the Power Development Fund, B.E. 2553 (2010)

4 As a first step to implement ISH Output 4.1c, “Benefit-Sharing Mechanisms Elaborated at Regional, National and Community Levels”, the Mekong River Commission (MRC) Initiative on Sustainable Hydropower (ISH) in mid-2011 compiled that set of documents in BSM Knowledge Base (KB). A primary aim of the KB is to foster a common understanding of evolving experience with benefit sharing and enable Member Countries to cooperate in drawing lessons from experiences today, not only from the Mekong and wider Asian Region, but also from the growing pool of world- wide experience. This KB was distributed in 5 volumes which include over 120 documents on topics that range from the theory and practice of benefit sharing to case studies and examples of national legislation and regulation

4 § Regulation of the Energy Regulatory Commission on the Power Development Fund for Devel- opment or Rehabilitation of the Localities Affected by the Operation of a Power Plant, B.E. 2553 (2010) § Notification of the Energy Regulatory Commission on the Screening of the Community Devel- opment Committee in the Surrounding Area of a Power Plant, B.E. 2554 (2011) § Notification of the Energy Regulatory Commission on the Screening of the Community Devel- opment Committee in the Surrounding Area of a Sub-district Power Plant, B.E. 2554 (2011) § Notification of the Energy Regulatory Commission on the Procedures and Process in the Screening of the Community Development Committee in the Surrounding Area of a Power Plant and the Community Development Committee in the Surrounding Area of a Sub-district Power Plant, B.E. 2554 (2011)

ISH also prepared a Guidance Package for NMCS and BSM national consultants to share information and help to implement ISH13 in a consistent way. The ISH13 Guidance Package consists of: • Presentations: o A Power Point Presentation on the ISH13 Guidance Package including the 12 Steps • Three Guidance Notes: o Guidance Note 1: NC Team support to NMCS to Implement ISH13 o Guidance Note 2: National BSM Workshop – Preparation and Programme o Guidance Note 3: National Working Groups for Benefit Sharing • Templates: o Template 1: Mekong Tributary Profile Sheet o Template 1b: Worked example using Template 1 (Nam Ou Tributary) o Template 1c Worked example using Template 1 (Lower Srepok) o Template 2: Generic Categories of BSM Options o Template 3a: Summary Matrix on NTL Options o Template 3b: Summary Matrix on Transboundary Dimension Options o Template 3c: Other crosscutting considerations for BSM options o Template 4: A series of BSM scoring, ranking and plotting spreadsheets (8 templates, one for each generic NTL and TB type with examples) o Template 4b: Worked Example for Template 4 (illustrative) o Template 5: Revenue sharing calculation sheet

• Other key resource documents: o A selection of key MRC Reports relevant to ISH13 including MRC IWRM Basin De- velopment Strategy, MRC Significant Tributary Studies (hydropower, navigation, and ecological significance); o Reports on the first four BSM National Workshops in 2011 (NMCS and ISH implemented). o The BSM Knowledge Base (120 documents) assembled in 2011 including presentations, case studies, reports, and examples of BSM legislation and regulation from around the world.

5 Section 2: Existing Tributary Situation in Thailand

This Section provides an overview of Mekong Tributaries systems and those in Thailand. It then reviews the generic types of BSM options for tributary hydropower.

2.1 Mekong tributary systems

The lower Mekong river basin reportedly consists of one hundred and four tributary catchments (104). The ecosystem significance report prepared for the MRC Tributary Significance Studies di- vides these into three general groups: § 27 large tributaries (with catchments over 5000 sq km), § 50 medium tributaries (with catchments between 1000 – 5000 sq km), and § 27 small tributaries (with catchments under 1000 sq km).

The hydropower significance report in the Tributary Significance report series provide indicators for hydropower significance and shows 26 of the 104 Mekong tributaries have hydropower sites above 20 MW. This is based on existing and potential sites now listed in the MRC Hydropower database that the MRC maintains based on information provided by Member Countries. As noted, all hydropower projects in Mekong tributaries with a significant amount of seasonal storage in principle will have a transboundary dimension (+ve and –ve) either upstream or downstream of the tributary confluence with the Mekong mainstream. The extent of these linkages is both complex and tributary specific. Overall each Member Country is different in terms of the number of Mekong tributaries it has (i) wholly within the country and (ii) share with other countries. Figure 2-1 shows the main Mekong tributaries with hydropower potential. Six of the 26 Mekong hydropower tributaries span more than one Mekong riparian country.5

5 Data are extracted from tables in the draft MRC Hydropower Tributary Significance Study, prepared by Dr. Terence C. Muir, September, 2010.

6 Figure 2.1 Lower Mekong hydropower projects: sub-catchments

7 2.2 Characterization of Mekong tributary systems in Thailand

Thailand has three main tributary systems on the Mekong mainstream namely the Nam Nhiam, Nam Kam and Nam Mun. As noted in Table 2-1 the Mun River is by far the largest.

Table 2-1: Mekong Tributary Systems in Thailand

Mekong Area Mekong Countries No. Tributary Bank (km2) the tributary flows through

11 Nam Right 1,990 Thailand & Lao PDR Nhiam 19 Nam Kam Right 3,495 Thailand 22 Nam Mun Right 119,707 Thailand & Cambodia (very small portion) Source: MRC Tributary Significance Studies

The Annex Volume of this Paper (Annex 1) provides a description of these tributary systems in terms of area, demographics and other socio-economic and environment characteristics. The profiles were prepared using the ISH13 templates. They provide information to calculate the potential amount of revenue sharing based on power generation and to provide a quick overview of the situation to understand the types of BSM measures that may be appropriate for the development circumstances of those basins and the socio-economic conditions and population. Thailand has six (6) hydropower projects in the MRC database. These have been in operation for a number of years. Table 2-2 below illustrates capacity and energy of these projects.

Table 2-2: Hydropower Projects on Thailand’s Mekong tributaries

The largest hydropower project, the 500 MW Lam Tamkong pumped storage on the Takhong tributary of the Mun river is based on an irrigation storage dam and reservoir that was originally constructed in 1973. In 2004 the 2x250 MW pumped storage scheme was added, where water is pumped from the irrigation reservoir to a head pond to nearby hills and release back into the reservoir to generate power for a few hours at peak. The impacts of the scheme on the river system are thus the impacts of the orginal irrigation dam itself.

8 The last Power Development Plan 2010-2030 for Thailand [EGAT, 2010] does not foresee any major hydropower developments on Thailand tributary systems in the Mekong river basin. It notes efforts are being made to implement a “small hydropower” programme.6 However, there is possible consideration of a 2x250 MW expansion of the Lam Ta Kong pumped storage as noted by EGAT representatives in the workshop on the Rapid Basin Wide Hydropower Sustainability Assessment Tool (RSAT), hosted by the Thailand National Mekong Committee (TNMC) Secretariat in Sakon Nakhon, 11-12 October 2012.

2.3 National policy and experience related to Hydropower BSM Thai- land

Thailand moved toward revenue sharing in 2007 by introducing a Power Development Fund (PDF) as part of the Energy Industry Act, B.E. 2550 (2007) that established the Thailand Electricity Regula- tory Commission (ERC). The regulations concerning the PDF were issued in 2010.7 Annex 5 and 6 of this Paper provide the text of the regulation establishing the PDP and its operation. The PDF establishes a requirement to have a local area development fund, called a Community Project, for all existing and proposed new power generation projects in Thailand, including hydropower, conventional thermal (e.g., gas, coal and oil) and other new renewable energy sources. The PDF is thus a permanent mechanism to share monetary benefits of hydropower with local communities. The PDF project is to be managed by a Community Development Committee that seeks authorization for annual spending from the Office of the Electricity Regulatory Commission (OERC). Due to the need for time to establish the ERC, a Cabinet Resolution June 19, 2007 called for a Community Development Fund as an interim step. The resolution created 3-tiered Community Development Fund system, with the aim to raise capital to “improve the quality of life of people and the environment in the vicinity of power plants”; including EGAT and IPP power generation projects. § The CDFs were to be financed by revenue from electricity generated by the projects. Though pending the establishment of the mechanism the Cabinet resolution stipulated that EGAT would be responsible for paying into the Funds, and later recover the costs from revenue. § In 2010 the CDFs were changed to Power Development Funds by the Energy Regulatory Com- mission of Thailand (ERC). § Media reports in 2011 indicated that the ERC planed to collect 2.1 billion THB per year for the Power Development Fund, which will be applicable to power plants with the production capacity of over 6 MW. § The largest portion of that would be allocated to local funds to “develop and rehabilitate a community that is affected by the power plant operation”.8

6 Many of the envisaged small hydropower projects involve retro-fitting of expansion of power plants in existing dams. EGAT [2009] specifically mentions six such projects with installed capacities ranging from 6.7 MW to 30 MW. The Power Development Plan 2010-2030 [EGAT, 2010] includes a table prepared by the Department of Alternative Energy and Effi- ciency (DEDE), Ministry of Energy, which foresees implementation of 109 MW small hydropower in the period 2008-2010, 116 MW in 2012-2016 and a further 43 MW in 2017-2022. The locations of the projects are not indicated in EGAT [2010] or on the DEDE website, www.dede.go.th 7 Regulation of the Energy Regulatory Commission on the Power Development Fund for Development or Rehabilitation of the Localities Affected by the Operation of a Power Plant, B.E. 2553 (2010) 8 http://thaifinancialpost.com/2011/01/18/erc-targets-collection-of-2-1-bn-thbyr-in-power-development-fund/

9 Some background on the CDFs is noted as follows: § The strategy document prepared by Thailand’s Energy Policy and Planning Office (EPPO) of the Ministry of Energy in 2007 indicated that EGAT would be responsible to implement CDFs and the money to capitalize CDFs was to come from levies on power plants greater than 1.0 MW installed capacity.9 10 § The framework for authorization of expenditures was divided into 3 categories, or levels, namely: • Category Part 1: For overall development of quality of life and the environment, the authorization is under the Community Development Fund Committee (at the national level); • Category Part 2: For the development of quality of life and the environment of the people in the provinces where power plants are located, the authorization (expenditure) is trusted to the respective Provincial Committees; and • Category Part 3: For the development of quality of life and the environment of the people in the localities where power plants are located, the authorization (expenditure) is trusted to the respective Community Committees.

The graphic extracted from the EPPO Strategy Document in the KB-CD Volume 2 illustrates the 3- tiered system. § EGAT documents from 2008 reported that from July 2007, EGAT’s power plants, as well as domestic IPPs with agreements to sell 6 MW of electricity, or greater paid into the Fund at rates varying according to fuels used (as set at that time): • 2.0 Satang/kWh for coal, lignite, and hydropower, • 1.5 Satang/ kWh for fuel oil and diesel oil, • 1.0 Satang/kWh for natural gas, biomass, agricultural residual and municipal waste, and • 1.0 Satang/kWh for wind turbine and solar energy power plants.11 § In 2008 EGAT documents reported a total of 102 power plants located in 39 provinces, including 26 power plants of EGAT would pay into the CDF. • Management of the project area CDF was to stress public participation. • Each fund was to be managed by a Community Development Fund Man- agement Committee with more than half of the total members being selected from the public sector. • Other members of the committee were to represent the government sector, the power plant and qualified experts. Figure 2-2 CDF 3 Tiers

9 Entitled Energy For Thailand’s Competitiveness www.eppo.go.th/doc/strategy2546/strategy.doc 10 It was noted the rates will be 1.30 Satang/Kwh (1 Satang = 0.30 US cents, therefore .39 Usc/Kwh) for lignite and coal- fired power plants, and 1.00 Satang/Kwh for other types of power plants. http://www.eppo.go.th/doc/strategy2546/strategy.doc 11 pr.egat.co.th/all_work/annual2007/eng/E8.pdf

10 § EGAT noted that beneficiaries of the local CDF were communities living in a 5-km radius surrounding a power plant and other nearby areas, as may be prescribed by the local fund management committee. • Proceeds will be allocated to the communities for purposes of development of livelihood and quality of life, supporting activities related to education, religion, culture, sports and music, • As well as public health and environmental activities, renewable energy development, immediate aid to alleviate damage resulting from any impact caused by the power plant, and others as prescribed by the committee. § Among the top five CDFs reportedly established in 2008 (by capitalization) included: • Lampang Province Community Development Fund (328 million baht/yr) • Mab Ta Phut Industrial Estate Community Development Fund (261 million baht/yr) • Ratchaburi Electricity Generating Company Community Development Fund (280 million baht/yr) • Gulf Cogeneration & Gulf Power Generation Community Development Fund (99 million baht/yr) • Bang Pakong Power Plant Community Development Fund (97 million baht/yr) § In 2009, Thai media articles suggested that experience with CDFs was growing. For example, the Nation reported Dec 2009 on the first two years of Ratchaburi Power Project CDF as follows:12 • “The two-year-old Community Development Fund (CDF) for areas surrounding power plants has proved successful, although to what degree is yet to be measured. The CDF of Ratchaburi Power Project (is reportedly the second largest in Thailand) and has Bt280 million per year” or about $US 8 million/yr (allocated to revenue sharing from this project). • Ratchaburi is Thailand’s largest thermal power complex (3,625 MW) located southwest of Bangkok. It consists of two power plants; one a conventional dual fuel (oil and gas) thermal plant (2,125 MW) commissioned in 2002, and, the second a 1,400 MW combined cycle plant (two units) commissioned in 2008. It is understood from OERC staff that the PDF (or Community Project) for one hydropower project in the country of 14 hydropower power projects nation wide has been prepared by a Community Committee and is awaiting approval by OERC. Other community projects have yet to submit project proposals to use PDF money allocated to them. Potentially there is scope for the MRC / TNMC to cooperate in a partnership to prepare guidelines for applying the PDF to Mekong tributary hydropower projects consistent with IWRM principles, or to do a case study to draw lessons to share with other MRC Member counties. That may be something to consider at least for the larger hydropower projects like Lam Ta Khong. As noted in Section 5 of this Paper, the amount of funding for PDF (Community Projects) on the 7 Mekong tributary hydropower projects in Thailand varies from 8.01 million Baht / yr ($US 258,400 /

12THE NATION, December 11, 2009, “The two-year-old Community Development Fund (CDF) for areas surrounding power plants has proved successful, although to what degree is yet to be measured“. The CDF of Ratchaburi Power Project is reportedly the second largest in Thailand and has a contribution of Bt280 million per year. The media reports note that Thailand’s Energy Policy and Planning Office (EPPO) of the Ministry of Energy is responsible for drafting regulations on the future status and operation of such funds. http://www.nationmultimedia.com/home/2009/12/11/business/Community-development-fund-seen-as-a-success- 30118305.html and http://pr.egat.co.th/all_work/annual2007/eng/E4.pdf

11 yr) for the 500 MW Lam Ta Khong Pumped Storage project on a tributary of the Mun River to 0.04 million Baht/yr ($US 1,300 / yr) for the 1.2 MW Huai Kum hydropower project. Further discussion of the PDF is provided in Section 3.2 under Objectives assumed for BSM on Tributary Hydropower. The actual Act is in Annex 5 and the PDF regulation is in Annex 6.

Figure 2-3 illustrates the institutional arrangements for implementing the PDF on power projects in Thailand.

In Figure 2-3 the following apply: § “Area under the notice” means an area that the OERC identifies as an area that is entitled to support from the Power Development Fund under Section 97 (3); § “Power plant” means a building and/or a premise that is used for generating electricity that has obtained an electricity generation license in accordance with regulations issued by the ERC; § “ERC” means the Energy Regulatory Commission; § “OERC” means the Office of the Energy Regulatory Commission; § “CDC-PP” means a Community Development Committee in the Surrounding Area of a Power Plant; § “CDC-SPP” means a Community Development Committee in the Surrounding Area of a Sub- district Power Plant; § “Village” means a village under the law on local administration or a community established in accordance with the law;

12 § “Sub-district” means a sub-district under the law on local administration or a ‘kwang’ under the law on Bangkok Metropolitan administration or an administrative area named otherwise according to the law governing the administration of such area, and includes a group communities in adjacent areas as prescribed by the OERC; § “Community project” means a project which applies for funding from the Power Develop- ment Fund for activities under Section 97 (3); § “Expense budget” means the maximum amount of money that is allowed to be paid or indebted for the prescribed objective and time limit.

Depending on the amount of funds the CDC-PP or the CDC-SPP would be involved in approving the project. Based on the data updated on April 22, 2013, it was found that PDF-Bangkok released the money about $US 45,003,321.79 (1,350,099,653.75 Baht) to 46 local PDF. However, it was found that PDF of Chulabhon and Ubonrat dams received the money covering only regional office management. That means that the PDF are functioning now. Also, the communication with the regional offices on May 3, 2013, revealed that the money from Type-B PDFs were transferred to regional offices (Table 2-3) and are ready for use; project development is in progress. Type-C PDFs in the areas are still in the process of commitee formation.

Table 2-3: Money transfer to Regional office for community projects Power Development Fund Annual Revenue (aver- Project Name PDF-Type age) Remark $US 000's Million (Baht) Survey the need of Chulabhorn B 185.48 5.75 people Survey the need of Sirindhorn B 125.16 3.88 people Survey the need of UbolRatana B 119.03 3.69 people Lam Ta Khong Survey the need of B 145.16 4.50 Pumped Storage people On process of CDC-PP HuaiKum C - - and CDC-SPP formation On process of CDC-PP Nam Pung C - - and CDC-SPP formation On process of CDC-PP Pak Mun C - - and CDC-SPP formation Note: Com Date = the commercial operation date, Exchange rate 1US$ = 31.0 Baht

It takes more than 2 years (between 2010 to 2013) before the money for community projects can be released from the PDF-Bangkok. It should be noted that the former CDF, which was set up by a cabinet resolution, has to be coverted to the new PDF as part of the Energy Industry Act, B.E. 2550 (2007). Before the PDF is being implemented, the law provides different steps to follow:

13 § To comply of the ACT B.E. 2550, every rules and regulations have to be revised and developed (see detail in Annex 5) and then, the regulations have to go through the participation process and be approved by local community. § The 13 Regional Offices are set up to control and facilitate the community project. § The 159 PDF of power plants have to be set up. § After that, the committees of CDC-PP and CDC-SPP are selected. § Once all community projects from all PDFs around power plants have been proposed by the local committees and approved by the national level (see Figure 2-3), the project money from PDF-Bangkok will be released to the regional offices.

It should be recommened that: § Community projects, which are developed by each fiscal year, should be considered over the long term (5-10 years) for each PDF to benefit the communities. § Awareness raising of PDF should be conducted to ultimately benefit local communities and foster community development.

2.4 Other Considerations

The Workshop on “Exploring Benefit Sharing Mechanisms for Mekong hydropower supported by the MRC Initiative on Sustainable Hydropower” on Monday 5th September to Tuesday 6th Sept, 2011 at Pathumwan Princess Hotel, Bangkok, Thailand indicates Task 3 under next steps is noted "to prepare criteria to select a pilot project". Now a year or so later this BSM Option Review for NTL options recommends again the Lam Ta Kong project and its basin for a pilot project or case study - which is consistent with the RSAT basin selection and work a few months back etc. The workshop report is showed as following:

First BSM Workshop Outcomes in 2011 The TNMC Chairperson for the Workshop noted that, broadly, the BSM Workshop was very successful in meeting the initial objectives set for it. In this respect also:

§ The Workshop provided a first opportunity for many participants to collectively hear about BSM experience with hydropower in the Mekong and in other regions, and openly discuss its relevance to the Thailand and wider MRC situation. There were different views articulated. § Because BSM is a complex issue, more workshops would be needed over time. Workshops at the local-area level and for nascent river basin organizations (RBOs) were especially seen by TNMC as important to have. § A BSM pilot project in Thailand would help to facilitate understanding of the mechanisms required for successful implement benefit sharing at local, or project levels. § There was also a general understanding of the distinction between transboundary benefit sharing approaches (called for n the MRC facilitated discussions under the BDS) and national- to-local benefit forms of BSM, where national policies / laws / regulation are needed – as discussed more in-depth in the workshop. § The need to provide background information and awareness on transboundary forms of benefit sharing, as called for by the MRC basin development strategy activities was acknowledged. § It was also understood that the tasks to implement ISH13 (Benefit-sharing options for hydropower on tributaries evaluated and reported), which fed the BDS process needed to receive priority in the ISH 2012 work plan for Output 4.1c.

Among the immediate priorities that TNMC requested the MRC to also consider were:

1. Support for some initial local area workshops in Thailand on benefit sharing, and in particular, to focus on awareness raising and the role of RBC/RBOs, 2. Support for the development of a BSM pilot project for Thailand, and 3. Support for further translation of key documents on BSM to Thai language including a simplification of the concepts to support TNMC discussion with its stakeholders at the local level, including NGO and CSO groups.

It was noted that tasks for the National BSM consultant set out in the draft TOR as Annex 1 of the KB (Volume 1) were appropriate, but could be expanded. Additional tasks for the National Con- sultant may be to: § Facilitate discussion of criteria for selection of a pilot project for BSM in Thailand, and § Facilitate discussions with the TNMC and the Thailand national stakeholders on (i) local area workshops, and (ii) formulation of pilot project.

TNMC expressed the view that MRCS budgets could be used for a BSM Pilot Project. MRCS representatives noted that require discussion later. The practical concern was to implement BSM pilots on hydropower projects in all four countries in a comprehensive way. There was not sufficient money in the current MRC budgets (ISH or otherwise) to do that. One way forward therefore was to explore the opportunity to leverage existing funds that currently available within Member Countries for benefit sharing related activities, as well as the possibility of obtaining additional funding from MRC Development Partners active in the Member Coun- tries. The example of ADB co-financing RSAT trials in Lao PDR as part of an existing project to support the Nam Ngum RBO was cited.

Follow-Up and Immediate Next Steps For facilitating ongoing cooperation among TNMC, Thailand national line agencies and MRCS the worshop in 6 Sept 2011 noted:

1. ISH would prepare a short report on the TNMC-led BSM Workshop outcomes. 2. MRCS together with TNMC would engage Thailand’s BSM national consultant to undertake the tasks included in the National Consultant Terms of Reference. 3. As part of that, the ISH Team and National BSM Consultant would propose criteria for the selection of a pilot project. The National BSM Consultant would also be tasked to scope out the required materials and logistics to hold a local area BSM workshop - likely to be associated with the design of a pilot project in a selected sub-basin. 4. Obtain TNMC reaction to proposed tasks to implement ISH13 in 2012, which is covered by a separate document and activity plan ISH is circulating to NMCS. 5. ISH would advise TNMC and all NMCS on outcomes of the four national BSM workshops when they are completed (Sept and October). 6. Subject to NMCS agreement, a further step would be to hold the Technical Review Group meeting. The TRG Meeting would: • Enable the NMCS to discuss together the roadmap and outline for the multi-year plan for MRCS support on BSM matters (structured under ISH Output 4.1c), and • Exchange views on the implementation of specific tasks in the ISH Work Plan like the regional BSM workshop and study tour, and potentially pilot projects.

15 Section 3: Identification of BSM Options for Thailand Tributaries

The purpose of this section is to provide the reader with an overview of the BSM options selected to evaluate in the ISH13 process. Readers are advised to consult the Annex B where the summary description of each option type is provided (i.e., in Template 3a, 3b and 3c).

3.1 General considerations

ISH13 aims to identify a sufficiently comprehensive range of BSM options to evaluate in national processes, which then feeds into the MRC Basin Development Strategy process. Figure 3-1 illustrates the areas of analysis that ISH13 tasks involve to do this. Figure 3-1 also shows: Figure 3.1 Procedure to analyse op- § It is important to clarify the desired outcomes tions for implementation of BSM. upfront. This enables peopled to identify options that respond to agreed objectives. And Areas of Analysis it recognizes the objectives (desired out- Linking the Objectives to Options

comes) shape the selection of the options to Desired Outcome

evaluate. Clarification of Value-Added of BS -Social advancement § It also shows the evaluation of BSM options in -Environmetnal protection -Economic development an iterative process. -Multi-generational aspects -Adaptation capacity § Part of which involves clarifying the basic Options for characteristics of the tributaries again focus- Implementation of Benefit-Sharing Mechanisms BSM -Generic types of BSM ing on characteristics that influence what options: Assessment of BSM Options -Options at different BSM options may be practical, e.g., -Compilation of suitable BSM scales and levels -Qualitative Asssessment of options -Alternatives within Project design, based on Value and preference • The size of the tributary, the population management and -Compilation of National Review operation Papers -Steps at different and socio-economic status, stages of planning and the project cycle • The number, age and types of existing

hydropower, and Exogenous Conditions • The existence (or not) of functional riv- Assessment of National Framework er basin authorities, and the number of Conditions -Identification of tributary Provinces sharing the tributary, and so -Assessment of development -National regulatory framework forth. Readers may look in the ISH13 Guidance Note for more details.

3.2 Objectives assumed for BSM on Tributary Hydropower

The Thai regulation 2010 says the PDF objective is broadly to develop or rehabilitate the localities affected by the operation of power plants. The regulation stipulates that the money from the PDF be used by a Community Project to: 1. Promote and support community projects by the community for the community, with an emphasis on the community participation in order to improve the quality of life and to de-

16 velop the community’s potentials in accordance with the Principle of Sufficiency Economy, and to build a good welfare system for the people and the community for their better livings; 2. Promote and support cooperation and knowledge sharing among communities within the area under the notice in order to create networks and integration of works with various sectors such as local administrative organizations, government agencies, community organizations, schools and religious places, etc.; 3. Promote and support networks of information, education, management, monitoring, public relations, development of information system among the Power Development Funds in all levels of the area under the notice to achieve sustainable development; 4. Provide compensation to remedy those who are directly affected by the operation of a power plant in terms of health, occupation and environment; and 5. Promote and support rehabilitation of nature and environment, social surveillance and environmental wellbeing.

It is helpful to note the Thailand PDF was developed mainly with thermal power projects in mind (e.g. natural gas, coal and oil-fired), because most of the electricity in Thailand is generated from these sources. Consisting with thinking about thermal projects, the regulation identifies that communities will be considered as eligible for the PDF support within a certain distance from the power plant, called the "area under notice", namely: i. 5 kilometres for a power plant generating more than five billion kWh of electricity per year; ii. 3 kilometres for a power plant generating more than 100 million kWh of electricity per year but not exceeding five billion kWh per year; and iii. 1 kilometre for a power plant generating no more than 100 million kWh of electricity per year.

The regulation provides that these criteria for the “area under notice” may be modified with OERC approval by the community committee:

“The area under the notice may include sub-districts on the different criteria provided above if there is academic research on the impact of the power plant which has had a hearing from the people in the area, or is a residential area or a workplace developed by a government agency or the power plant operator to support the people who have to relocate their residence or workplaces due to the construction or the operation of the power plant.”

This suggests for hydropower projects, which have a different pattern of community impacts than thermal power stations, there is potential scope to adjust the criteria (area under notice) if the community agrees and Guidelines may be helpful for this aspect.

For the purposes of the ISH13 evaluation only, additional objectives for benefit sharing on Mekong tributary hydropower consistent with MRC Programmes work is assumed to also include: i. To advance sustainable forms of hydropower management (the existing hydropower). ii. To provide stable, long-term mechanisms to maximize the socio-economic contribution of hydropower for the benefit of riverine communities in line with national policy for IWRM river basin management.

17 iii. To ensure the protection of State interests and the rights and benefits of relevant organizations and individuals and the ecological environment in rural areas; vi. To promote equitable electricity access to people living in remote and areas affected by hydropower development, including a large portion of ethnic peoples; and vii. To enhance entitlements for natural resource access and ensure local communities have financial support to take advantage of local development and entrepreneurial opportunities that hydropower projects offer. The TNMC Working Group decided to identify and evaluate options that come under the four generic forms of national-to-local benefit sharing, reflecting the PDF regulations (for sharing of monetary benefits) and reflecting the basin situation and Thailand`s practices generally.

The Working Group decided not to evaluate transboundary dimension (TB) options of tributary hydropower or cross-cutting considerations (CC). The templates from ISH13 Guidance for these types are nonetheless included in Annex 2. And it is important to note again ISH13 focuses on Me- kong tributary hydropower, not proposed LMB mainstream hydropower projects.

3.3 Options for national-to-local forms of BSM on tributary hydropower

The generic forms of national-to-local (NTL) BSM options are summarized in the ISH Guidance ate shown in Table 3.1.

Table 3.1 Generic types of NTL BSM options to be evaluated for Mekong tributaries. General description of options Generic Types of BSM Options (Measures to spread resource utilization benefits across econ- To evaluate for Mekong Tribu- omies catalyze broader-based growth and support social equi- taries ty policies) Sharing a portion of the economic / financial gains of hydro- NTL- 1: Sharing of monetary power typically accruing at the national level (sharing “eco- benefits nomic rent”) NTL- 2: Facilitating non- Enhancing local natural resource access to help local and river- monetary benefits ine communities offset access loss to due to hydropower Ensuring all households have access to electricity and/or water NTL- 3: Equitable access to pro- services in the project and surrounding areas and are not the ject services last to benefit from services the project provides. Additional benefits arising from project-relate investments (e.g., jobs, roads and other local /sub-regional public infra- NTL- 4: Optimizing indirect and structure). Indirect benefits arising from investments leveraged additional benefits by projects, that otherwise may not be available (e.g. investments for public infrastructure investment in the Province or tributary)

Details of the options are provided in Annex 2 in Template 3a.

18 Thailand does not have plans for new hydropower plants as the devloment of hydropower went through processes as well as the people movement for a long time. EGAT is in charge of the development and community issues around the power plants. During the national workshop, the information from EGAT`s representative referred to the report of electricity in Thailand, 2011, which showed that 97.4% of the in villages and 87.7% of the households already have access to electricity (NTL Type- 3: Equitable access to project services). In the north-east area of the Mekong basin, the data showed that 93.8% of the villages and 89.6% of households had access to electricity and in the upper north-east area 96.5% of the villages and 90.7% of households respectively.

19 Section 4: Preliminary Evaluation of BSM Options

This section summarizes the method and results of the preliminary evaluation of BSM options for Thailand’s existing Mekong tributary hydropower. The Annex Volume has more information on the scoring of options by the sub-criteria.

4.1 Multi-criterion evaluation framework

For ISH13 a simple qualitative approach was needed, but one that was robust, reflected MRC’s IWRM-based thinking and stakeholders were comfortable to use.

i. To achieve this, the evaluation was done along two main dimensions: 1. Value Added – a qualitative indication of the potential contribution of the option, as part of an “options mix” or package of measures to advance sustainable development of the tributary /sub-basin and Mekong River basin overall, and 2. Stakeholder Preference – a qualitative indication of the views that different stakeholder interests have of the option, in terms of relative preference. ii. Sub-criteria and the scoring system for each dimension give details on how Value and Preference are defined. And here it was important to use all the sub-criteria that stakeholders wanted to use to evaluate Value and Preference. iii. Sub-criteria could be weighted to reflect what people consider to be the most significant criterion, or all sub-criteria could be given equal weight. iv. Each option was qualitatively scored against the sub-criteria using a simple high, low, medium score. For example, to measure Value a 0,1,2 or 3 score was used, where 0 means the stakeholder felt the option offers no value and 3 means the option offers high value for the particular sub-criterion like social advancement or environment protection. v. Similarly, the Preference indicator was based on weighted averages of views of the government representatives at different levels (in unofficial capacities), and of representatives of RBO/RBCs, civil society, hydropower developers / operators, etc.; vi. The qualitative “scores” for each option was then plotted on a chart in the form of a Value & Preference matrix that is easy to understand visually. Options scoring highest in Value and Preference appeared in the upper right of the Result Plot. The TNMC Working Group for ISH13 decided to use the criteria offered in the ISH13 Guidance Note 1 and apply equal weigh to these criteria. This meant the following criteria were used:

For the Value Dimension: This means VALUE of the option in terms of its potential contribution to sustainable development of the tributary system and wider Mekong River Basin, as well as sustainable hydropower development and management. From the legal definition of sustainable development, value needs to consider the harmonious advancement of the economic, social, environmental aspects, as well as poverty reduction and intergenerational equity.

20 Five sub-criteria were scored for all options to evaluate Value, namely: 1. Social Advancement: contribution to poverty reduction & social advancement in the sub- basin (consistency govt policies) – 20% weight 2. Environmental Protection: contribution to environment protection aims in the sub-basin (consistency govt policies) – 20% weight 3. Economic stimulus: help to economic stimulus of sub-basin and local areas (consistency govt policies) – 20% weight 4. Intergenerational equity/flexibility: Potential to build in flexibility to adapt / modify the measure overtime as priorities and development conditions change – 20% weight 5. Practicality & Capacity to implement – 20% weight

For the Preference Dimension This means the relative Preference for the options expressed by different stakeholder interests. This includes stakeholders at different levels of government (i.e. national, provincial and local levels), river basin organizations, and representatives of civil society and private sectors with an interest in hydropower and local development. Five sub-criteria were used to score all options to evaluate Preference, namely: 1. National Level Government Line Agencies, a non representative sample – 20% weight 2. Provincial Level Government, a non representative sample – 20% weight 3. River Basin Organization – 20% weight 4. Civil Society, a non representative sample – 20% weight 5. Hydropower Developers / Operators, a non representative sample – 20% weight

The following tables indicated the scoring system.

Scoring of each Value Added sub-criterion 0 - Does not add value – This option definitely does not add value for this sub-criteria in terms of potential contribution to sustainable development in the Tributary and wider Me- kong River Basin situation. 1 - Potentially adds value - This option may add some value for this sub-criterion; however, more information is needed to assess the potential contribution of the measure to sustainable development in the Tributary and cooperation on sustainable development of the wider Mekong River Basin. 2 - Does add some value – This option does add some value for this sub-criterion and may be part of the “options mix” in a comprehensive approach to sustainable development in the Tributary and cooperation on sustainable development of the wider Mekong River Basin. 3 - Definitely adds measurable value - This option will add measurable value for this sub- criterion as part of the “options mix” in a comprehensive approach to sustainable development in the Tributary and cooperation on sustainable development of the wider Me- kong River Basin.

Scoring of each stakeholder Preference Sub-criterion 0 - Not relevant and not preferred – from the perspective of this evaluator (stakeholder interest) this option is not needed in the country policy framework, or is not appropriate in the Mekong situation at this time. 1 - Likely relevant – This option and some generic measures of this type may be appropriate for Mekong tributary hydropower in the country. However, more information on the option is needed to properly evaluate the relative preference. 2 - Moderately relevant – This option (and measures of this generic type) are appropriate for Mekong tributary hydropower in the country. This option and related measures can be part of a comprehensive approach to BSM and examples need to be shown to NMCS stakeholders. 3 - Definitely relevant and preferred - This option (and measures of this generic type) is definitely appropriate for Mekong tributary hydropower in the country. It is a preferred option in a comprehensive approach to benefit sharing.

4.2 Result of the Preliminary evaluation

The results are presented for option under the generic NTL Types in a two page format, where: § Page 1 shows the result plot showing the value and preference of various options under each generic type (starting with options for sharing monetary benefits). This is followed by a table describing each option and providing the preliminary evaluation scores for Value and Prefer- ence. § Page 2 has a bullet point observation / comment on the result and a table that puts the options into one of two categories (i) options recommended to be considered in a comprehensive BSM approach, and (ii) options recommended for further study to decide whether to keep or drop them from further consideration. § Lowest scoring options are eliminated.

4.2.1 Preliminary evaluation of national-to-local options

The TNMC Working Group adapted the options identified in the ISH13 templates for their evaluation to reflect the Thailand situation and broader international practice in BSM. From the National Workshop the following should be noted:

§ In Day 1 and 2 the NCs led discussions on the Paper with Q&A with participants moderated by the Chair person. § TNMC decided to have only plenary sessions for discussion of NTL BSM for the 2-day workshop (i.e., no breakout group sessions to discuss options or the scoring and evaluation). § The participants were basically supportive of the evaluation criteria and methods and agreed with the preliminary evaluation done by the National Working Group. While there were some differences, consensus agreed on the basic thrust of the evaluation presented. However, the scoring results in the National Discussion Paper will not change. The details of each option will be discussed again in the first step of the pilot project by the participants.

22 § Participants suggested they could update of the ISH13 evaluation in later workshops. And it would help if the Annex Volume of the paper were translated.

NTL Generic Type- 1: Sharing Monetary Benefits of Hydropower

Score Option Value Preference Prioritize implementation of Power Development Fund of 1-1 hydropower project: Introduce local revenue sharing using 2.5 2.5 local Development Fund mechanisms in area of project. Contribute to local development budgets: Introduce local 1-2 revenue sharing by increasing existing development budgets 2.1 2.8 of local authorities of existing/new projects. New provincial development fund: Introduce revenue shar- 1-3 1.4 2.8 ing fund for provinces with projects Contribute to provincial development budget: Introduce 1-4 revenue sharing for Provinces with projects by increasing ex- 1.0 2.8 isting Provincial Development budgets. Increase budget or create special fund of RBO: Introduce 1-5 revenue sharing at the tributary scale using the River Basin 1.2 3.0 entity (RBC/RBO)

23 Municipal/provincial authorities collect or receive taxes, 1-6 1.6 2.8 fees, etc., for land or water used by hydropower projects

Set and finance targets for local income improvement for 1-7 2.0 2.5 people living in the area of projects

24 Observations / Comments on the results:

§ The options form a group of similar (moderate to high) Value and high Preference. § The most preferred option was to prioritize implementation of the exising Power Develop- ment Fund for hydropower projects in Mekong tributaries (Option 1-1). § Option 1-7, “Set and finance targets for local income improvement for people living in the area of projects” received a high score. It showed that this option should be considered as the recommendation to the PDF activity. § Other options suggested for research or further study that showed high Preference are noted in the Table below. Among them are the highest Preference option of involving RBC/RBOs in basin level revenue sharing (Option 1-5), and consideration of a provincial share (Option 1-4). § Option 1-6, “Municipal/provincial authorities collect or receive taxes, fees, etc., for land or water used by hydropower projects” received a moderate Value score but high Preference score. It showed that this option and reasonable measures may be exploited to raise revenue for local benefit sharing.

Options recommended for a comprehensive BSM approach Remarks (On the basis of Relative Value and Preference) No PDF for hydropower Prioritize implementation of Power Development Fund project has been imple- of hydropower project: Introduce local revenue sharing 1-1 mented in Mekong Tribu- using local Development Fund mechanisms in area of pro- taries – these are under ject. process. Possible if Community Set and finance targets for local income improvement for Committee for the pro- 1-7 people living in the area of projects ject-level PDF wants to do this Do further Study (To decide whether to consider in future update of policy)

Contribute to local development budgets: Introduce local Provinces already have 1-2 revenue sharing by increasing existing development budg- some budget for local ets of local authorities of existing/new projects. development Assess if municipalities can tax hydropower & Municipal/provincial authorities collect or receive taxes, reservoir area? (based on 1-6 fees, etc., for land or water used by hydropower projects land take – as they normally get tax for other uses) If PDF rates (2.0 Satang) New provincial development fund: Introduce revenue were to increase should 1-3 sharing fund (mechanisms) for provinces with hydropower provinces get a share of projects that money? Contribute to provincial development budget: Introduce 1-4 (hydropower) revenue sharing for Provinces with projects by Same as above increasing existing Provincial Development budgets.

25 If PDF rates (2.0 Satang) were to increase should Increase budget or create special fund of RBO: Introduce provinces get a share of 1-5 revenue sharing at the tributary scale using the River Basin that money? Or this needs entity (RBC/RBO) a new process led by De- partment of Water Re- sources?

26 NTL Generic Type- 2: Optimizing Non-Monetary Benefits (including facilitating local resource access)

2 2

Score Options Value Preference Introduce procedures/requirements to evaluate opportunities to optimize local resource access and non-monetary 2-1 2.5 2.9 benefits around existing projects, engaging with local communities. Introduce procedures / requirements to identify opportuni- 2-2 ties to optimize local resource access in project studies for 2.6 2.9 proposed projects engaging with local communities. Identify legal and implementation obstacles to enhance 2-3 local resource access (forestry, land or water) at national, pro- 2.5 2.9 vincial or local levels and address them. Involve river basin entities in assessing opportunities to 2-4 enhance local resource access in the tributary on the devel- 2.5 2.9 opment opportunities and risks of hydropower Guidelines to combine long-term financial support from 2-5 hydropower revenue sharing with measures to improve local 2.6 2.9 resource access.

27 Vocational training for new livelihoods, job skills, and income 2-6 diversification based on natural resource access changes due 2.8 2.9 to hydropower. Ensure training for women, youth, vulnerable groups and 2-7 2.8 2.9 ethnic groups regarding local resource access. Ensure the local people have the priority to access the re- 2-8 2.8 2.9 source

28 Observations / Comments on the results:

§ Currently there are some forms of non-monetary benefit sharing around existing hydropower in the Thailand’s Mekong Tributaries.13 § Vocational training for new livelihoods, job skills, and income diversification based on natural resource access changes due to hydropower (Option 2-6) and ensure training for women, youth, vulnerable groups and ethnic groups regarding local resource access (Option 2-7). En- sure the local people have the priority to access the resource (Option 2-8). These options provide a high positive impact to all aspects including social advancement, environmental protection, economic stimulus, intergenerational equity, practical and capacity to implement. § Training options may be considered to be high priority for the local community and should be integrated into NTL Type- 1 for consideration of the proposed project. § The option 2-8 is considered as high priority (local resource access). However, as these existing dams range from 58 years to over 12 years for the Lam Ta Khong that may not be a big issue. Thus it is suggested a field survey may be done to make sure the local resource access is not creating problems and if it is take appropriate steps. § The remaining options have moderate to high Value and high Preference. This suggests that a “package” of measures may be appropriate with a systematic way to ensure all options are explored by the local communities.

Options recommended for a comprehensive BSM approach Remarks (On the basis of Relative Value and Preference) Vocational training for new livelihoods, job skills, and income PDF identifies training as 2-6 diversification based on natural resource access changes due and important option to hydropower. Ensure training for women, youth, vulnerable groups and This aspect is Thailand 2-7 ethnic groups regarding local resource access. policy generally Verify if this is a concern Ensure the local people have the priority to access the re- 2-8 to people in notified source area

Do further Study (To decide whether to consider in future update of policy)

Introduce procedures/requirements to evaluate opportuni- Can be part of discus- ties to optimize local resource access and non-monetary bene- 2-1 sion by the Community fits around existing projects, engaging with local communi- Committee ties. Introduce procedures/requirements to identify opportuni- Verify if this is a concern 2-2 ties to optimize local resource access in project studies for to people in notified proposed projects engaging with local communities. area Identify legal and implementation obstacles to enhance Provincial responsibility 2-3 local resource access (forestry, land or water) at national, pro- mainly vincial or local levels and address them.

13 These include issuing permits, permissions consistent with applicable law and removing barriers such as for community forest access, access to land for aquaculture, permits to fish in reservoirs, etc.,

29 Involve river basin entities in assessing opportunities to Possibly in discussions 2-4 enhance local resource access in the tributary on the develop- with RBC / RBO Board ment opportunities and risks of hydropower bring NGO voice Guidelines to combine long-term financial support from hy- Link use of PDF money 2-5 dropower revenue sharing with measures to improve local to improving local natu- resource access. ral resource use

30 NTL Generic Type- 3: Ensuring Equitable Access to Electricity Services

Score Option Value Preference Introduce a requirement to electrify all resettled households 3-1 2.9 2.8 in new/proposed tributary hydropower. Introduce a requirement for connection, refurbishment and 3-2 strengthening of electrical supply for resettlement host 2.9 3.0 community of existing tributary hydropower. Prioritize extending/improving electricity supply to com- 3-3 munities in the area of tributary hydropower projects within 2.9 1.8 existing rural electrification programmes.

Provide targeted assistance for electrification of the poorest 3-4 2.9 2.2 households living in the project vicinity. Establish a requirement to assess off-grid supply in areas 3-5 too costly to connect to the grid as part of project prepara- 2.7 2.3 tion studies. Provide tariff subsidy for communities in the area of hydro- 3-6 2.2 2.3 power projects for a given period of time.

31 Provided financial incentives (e.g. investment capital, loan interest and preferential tax support) for individuals / organ- 3-7 2.9 2.6 izations seeking to invest in alternative electrical supply in rural locales where grid connection is costly.

32 Observations / Comments on the results:

§ Most options for ensuring equitable access to electricity services showed high Value and Pref- erence and may be considered during PDF implementation. § While it is important to note the electrification ratio (% of households connected to the power grid) is actually high (e.g. above 97%), the PDF makes provision for this kind of support if Community Committees consider it important. § The lowest ranked option in Value (3-6) was the “Provide tariff subsidy for communities in the area of hydropower projects for a given period of time”. Since the Thai tributary projects were built from 12 to 50 years ago, it suggests Thailand has passed the point where household electricity affordability at low consumption levels is a problem in the notified areas. § The other options suggest the PDF may be used to support measures if there is any unfairness for power consumers in the notified area and it is proven so. § This suggests considering a “package of measures” with a systematic way to ensure that all options are explored by local communities using the PDF mechanism.

Options recommended for a comprehensive BSM approach Remarks (On the basis of Relative Value and Preference)

Existing projects. This Introduce a requirement to electrify all resettled households in was EGAT policy before. 3-1 new/proposed tributary hydropower. It should not be a problem now. Introduce a requirement for connection, refurbishment and A survey may check if 3-2 strengthening of electrical supply for resettlement host com- this is an issue for host munity of existing tributary hydropower. community – if needed. May consider power Prioritize extending/improving electricity supply to communi- supply reliability or 3-3 ties in the area of tributary hydropower projects within existing service improvement or rural electrification programmes. via EGAT rural electrification directly Can be checked if this is Provide targeted assistance for electrification of the poorest 3-4 an issue to be ad- households living in the project vicinity. dressed with the PDF EGAT has Rural Electrifi- cation policy. Can be Establish a requirement to assess off-grid supply in areas too checked if PDF is rele- 3-5 costly to connect to the grid as part of project preparation vant for this. studies. PDF may covers alternative power Can be assessed by the Provide tariff subsidy for communities in the area of hydro- 3-6 PDF Community Com- power projects for a given period of time. mittee if needed EGAT has a Rural Electri- Provided financial incentives (e.g. investment capital, loan in- fication policy. There terest and preferential tax support) for individuals / organiza- 3-7 are VSVP, VVSP pro- tions seeking to invest in alternative electrical supply in rural grammes, etc., or the locales where grid connection is costly. PDF Do further Study (To decide whether to consider in future update of policy)

33 NTL Generic Type- 4: Optimizing Additional and Indirect Benefits

Score Option Value Preference Introduce guidance to optimize local use and socio- economic benefit from project access roads (e.g. in 4-1 2.9 2.7 selecting road alignments and road surfacing, road construction standards). Introduce guidance to maximize local / sub-regional 4-2 employment opportunities during construction of 2.5 2.6 tributary hydropower projects. Introduce guidance to maximize local / sub-regional 4-3 employment benefits during the operation of tribu- 2.5 2.6 tary hydropower projects. Introduce guidance for local training and job skills 4-4 enhancement to optimize local /provincial employ- 2.6 2.7 ment during construction and operation. Provide additional budget allocations (e.g. from national budget or project capital) for public infrastruc- 4-5 2.3 1.9 ture construction in Provinces with tributary hydropower. Provide additional budget allocations (e.g. from national budget or project capital) for public infrastruc- 4-6 2.3 1.9 ture operation and maintenance in the Province / tributary with hydropower. 4-7 Provide programmes to deal with boom-bust cycles 2.3 2.2

34 after hydropower construction on tributaries.

35 Observations / Comments on the results:

§ All measures to improve and enhance additional and indirect benefits showed a similar pattern of high Value and Preference (see the cluster in Plot 4). § The single highest rank measure by Value and Preference was Option 4-1, “Introduce guidance to optimize local use and socio-economic benefit from project access roads (e.g. in selecting road alignments and road surfacing, road construction standards).” § This suggests that a comprehensive approach to benefit sharing would ensure that all practical and reasonable measures are exploited fully during project construction and operation § In the case of the existing tributary dams completed from 12-50 years ago these additional benefits will already be part of the local economy. Any additional benefits on top would now come from the PDF and related measures. § The reader is referred to Template 3a in the Appendices for summary information on options.

Options recommended for a comprehensive BSM approach Remarks (On the basis of Relative Value and Preference) Introduce guidance to optimize local use and socio- Already part of local economic benefit from project access roads (e.g. in select- 4-1 economy functioning road alignments and road surfacing, road construction ing standards). Introduce guidance to maximize local / sub-regional em- mainly operation 4-2 ployment opportunities during construction of tributary jobs that are limited hydropower projects. Introduce guidance to maximize local / sub-regional em- 4-3 ployment benefits during the operation of tributary hydro- Possible power projects. Introduce guidance for local training and job skills en- Possible measure 4-4 hancement to optimize local /provincial employment during under PDF construction and operation. Provide additional budget allocations (e.g. from national Less likely as these 4-5 budget or project capital) for public infrastructure construc- are existing projects tion in Provinces with tributary hydropower. Provide additional budget allocations (e.g. from national budget or project capital) for public infrastructure opera- PDF is expected to 4-6 tion and maintenance in the Province / tributary with hydro- be the main source power. Provide programmes to deal with boom-bust cycles after Effect is finished 4-7 hydropower construction on tributaries. because these are existing projects Do further Study (To decide whether to consider in future update of policy)

36 4.3 Supplemental evaluation of selected options

The following provides supplemental evaluation of revenue sharing, focusing on the money that will come from the PDF on existing hydropower projects in Thailand Mekong Tributaries. According to Regulation of the Energy Regulatory Commission on the Power Development Fund, B.E. 2553 (2010), a licensee shall send contributions to the Fund (Article 5) during the electricity generation from the starting date of the commercial operation date (COD), and the contributions shall be sent monthly to PDF. They shall be calculated based on the total electricity generated for distribution. The contributions shall be calculated based on the types of fuel sources, the hydropower is charged at the rate of 2.0 Satang / Monthly Unit Generated. Then, the potential amount of money of revenue sharing can be calculated (Table 4-1).

Table 4-1: Estimation of the Revenue generated for the PDF by Thailand’s Seven Me- kong tributary hydropower projects

Power Development Fund Mean Com Install Annual Revenue Annual CODE Project Name Date capacity (average) Energy (Year) (MW) (GWh) $US 000's Million (Baht)

T001 Chulabhorn 1972 40 59 38.1 1.18

T002 HuaiKum 1982 1.2 2 1.3 0.04

T003 Nam Pung 1965 6.3 17 11 0.34

T004 Pak Mun 1994 136 280 180.9 5.61

T005 Sirindhorn 1971 36 90 58.1 1.8

T006 UbolRatana 1966 25.2 56 36.2 1.12 Lam Ta Khong T007 Pumped Stor- 2001 500 400 258.4 8.01 age Total 744.7 904 600 18.1

Note: Com Date = the commercial operation date, Exchange rate 1US$ = 31.0 Baht

It is important to note the money for the PDF is collected from the end-user, or consumer at 2 Sa- tang per unit (kWh) via the Metropolitan Electricity Authority (MEA) and Provincial Electricity Au- thority (PEA). The calculation shows consumers contribute about 0.66 % of the consumer electricity tariff for the PDF. If the PDF unit rate of (2.0 Satang) is calculated as a percent of the bulk power supply rate that EGAT pays to electricity generators (e.g. PPAs for conventional power projects) this percentage may be closer to 1.0 percent. The MRC BSM Knowledge Base notes that revenue sharing is normally quoted as a percentage of bulk electricity supply tariff.

37 The unit value of the PDF payment (2.0 satang) did not increase in step with recent increases in electricity tariffs. The rate is decided separately by ERC. Table 4-2 illustrates the payment of 2.0 Satang in relation to consumer tariffs at the end of 2012.

Table 4-2 Percentage PDF represents of consumer tariffs in Thailand Unit use(1) Electricity Price (Baht) 1 - 15 1.8632 16 - 25 2.5026 26 - 35 2.7549 36 - 100 3.1381 101 - 150 3.2315 151 - 400 3.7361 > 401 3.9361 3.0232 Average price per unit (9.75 us cents / kwh) Payment to PDF (Baht/Unit) 0.02

Payment to PDF (%) 0.66

Remark: (1) Characteristics for use in residential homes, temples and churches of different religious are applied. The power unit is connected through a single meter. This excludes Ft (fuel charge) and basic monthly fees.

The 1% rate for hydropower revenue sharing locally is compares to international practice closer to around 2%, but it does apply to all types of generation. The PDF unit rate (2.0 Satang) was not factored into recent electricity tariff increases, like it is automatically in some countries. For example, Thai media suggests that ERC reports businesses and households may face an increase in the cost of electricity in the region of 38 satang per kilowatt-hour in September-December 2012.14, 15

14 http://www.thaivisa.com/forum/topic/590939-electricity-tariff-hike/ 15 http://www.nationmultimedia.com/business/ERC-approves-rise-in-cost-of-electricity-30189917.html

38 Section 5: Conclusions, Recommendations and Next Steps

5.1 General Observations on the Preliminary Scoring and Ranking of Options

This ISH13 BSM options evaluation offers, firstly, ideas on implementing the existing PDF Regula- tion on Mekong tributary hydropower projects in Thailand, and secondly, ideas to consider for possible future updates of benefit sharing policy in Thailand with regard to hydropower.16

The evaluation shows benefit sharing is not a single option, but rather a group or a family of measures that complement and reinforce each other – or a “package” of measures that come in to play in hydropower management and placing hydropower in a river basin perspective.

Again it is important that a systematic and comprehensive approach is considered to take advantage of all the available opportunities to achieve sustainable forms of hydropower management, and in the present context, to maximize the spread of natural resource utilization benefits across the economy, catalyse broader-based growth and support social equity policies. An overall comment is that Thailand’s PDF was primarily developed for thermal power projects. For that reason the Regulation uses the criteria of 5 km, 3 km and 1 km from the power station to define the “notified area”, which in turn determines people and communities eligible to participate in the PDF. However, the pattern for local development risks and opportunities of a hydropower project are different than a thermal power project. Hydropower involves river resource transformations.

Therefore, the part of the PDF Regulation (2010) to modify the area under notice is very important when implementing the PDF on hydropower projects:

For that reason, it is recommended to conduct a case study of PDF implementation on a hydropower project, or even a pilot project to help establish guidance to implement the PDF on a hydropower project on Mekong tributaries be considered.

16 Thailand’s PDF Regulation 2010 recognizes the importance of sharing monetary benefits of hydropower with local communities. As this evaluation suggests the other generic forms of BSM can be enhance in the implementation of the PDF. The mechanism of the Community Committee is there to decide and prioritize the sort of actions appropriate for the development situation of each project locality.

39 The Lam Ta Khong project would be a logical choice for several reasons, including (i) it’s large size and so the amount of the PDF Fund is significant, (ii) the potential for an 500 MW extension project and indicated by EGAT officials, and (iii) the positive outcome of the TNMC / MRCS RSAT evaluation of the Lam Ta Khong tributary in terms of the views of EGAT representatives on benefit sharing (Topic 6 in RSAT) and similar positive views of the Lam Ta Khong Tributary RBC and the Mun River RBO representative.17

It is quite interesting that the participants from civil society appeared to come mainly from Loei Province and the Loei River sub-basin in north-east Thailand. The participants from Loei were very active to discuss on the problems from hydropower.

The Loei sub-basin has a small hydropower namely, Nam Man hydropower which have the 5,000 Watt installation. The annual production is 21 million units. There is Nam Man PDF was set up as Type-C category. The calculated money collected from the power plant to the PDF fund is approximately $US 13, 860 /year (429,660 Baht/year). Then, the Loei sub-basin should be qualified as the pilot project area selecting process.

Other summary conclusions: In relation to the questions in the ISH13 Guidance, this evaluation of BSM options for existing hydropower on Thailand’s tributaries of the Mekong suggests: 1. What does the evaluation say about strength and weaknesses of the current national policy and legal framework concerning BSM? § The PDF is an important step and example for the Mekong Region to start sharing monetary benefits of hydropower locally (NTL Type- 1 Sharing Monetary Benefits); § The example can be presented to other MRC Member Countries to draw lessons; § Thailand’s PDF can help implement other types of NTL BSM, based on priorities of the Commu- nity Development Committee for the PDF and the local situation. These include. - NTL Type- 2: Facilitating non-monetary benefits (mainly access to natural resources) - NTL Type- 3: Equitable access to project services (electricity access and improvements) - NTL Type- 4: Optimizing indirect and additional benefits 2. Is the preliminary evaluation of BSM options more or less aligned with the current policy, or emerging policy directions of MRC? § This evaluation shows Thailand’s direction aligns well with international trends and MRC guidance on good practice regarding local area revenue sharing. § And as noted, the PDF offers a good opportunity for information sharing on NTL BSM among MRC Member countries. 3. What does the preliminary evaluation of BSM options for tributary hydropower reveal about the gaps between policy and implementation, and the opportunities to pursue? § It is noted the rate for the Thailand PDF of 2.0 satang/kwh for hydropower is not tied to regular increases in the electricity tariffs. This may be a consideration in future updates of regulation.

17 The Thai members of the MRC ISH Technical Review Group in December 2011 recommended the Lam Ta Khong in the Pak Mun sub basin and the Keiwkoma in the Wang sub-basin as the two priority basins for application of the RSAT.

40 § The rate of revenue sharing at about 1% of the bulk power supply rate in Thailand tends to be on the lower end of hydropower revenue sharing in international practice, however it is also recognized that the PDF is applied to all types of power generation. § The criteria for “notified area” or the area that defines who will participate in the PDF can be developed further for the hydropower situation on the basis of the 2010 Regulation that indicates “The area under the notice may include sub-districts on the different criteria provided above if there is academic research on the impact of the power plant which has had a hearing from the people in the area …”. 4. What does it say about MRC Programme work and how it can be adjusted or fine tuned? § Depending on the TNMC view, there may be opportunities for MRC Programmes to cooperate and support TNMC either with a case study, or an exercise to develop detailed guidance in implementing the PDF on a hydropower project. 5. What does it suggest about MRC support to Member Counties going forward, either in regard to national processes, or sharing experience in the Mekong and drawing from international experience? § Consideration of international experience is important to draw lessons. § The case study approach, as mentioned, would offer other MRC Member Countries with Thai- land’s experience implementing revenue sharing measures. 6. What does it say about priorities going forward in national processes? § NTL BSM are an important starting point for benefit sharing in the Mekong situation. § There can be procedures to review and update regulations to reflect experience with implementation. § Guidance is helpful for Community Committees who are established for this role and also models or examples they can draw on.

5.2 Other summary conclusions

Three recommendations are offered: § It is important for workshop participants to focus on the Discussion Paper before the national workshop. § Before coming to the workshop check with your organization about their preferences and selection of options and you may be prepared to talk about that. § Ask for any additional information you may need before the Workshop such as and Volume 1 of the BSM Knowledge Base.

5.3 Next step

§ TBD (Refer to ISH13 Guidance Notes 2 and 3).

41 5.4 Pilot Project Area Selection

Five Initial criteria to select a Pilot Project may include: 1. Relevance and suitability – as a model for BSM on existing hydropower projects in Thailand + other Member Countries 2. Ability to attract money - to do a pilot 3. Local capacity and interest: to implement the pilot 4. RSAT Assessment? What RSAT shows – consensus? 5. Scale: large or small enough? Potential Pilot Project Funding – Partnership approach: • MRC Programme Funds? - technical / guidance support • PDF money? – for measures in Law to implement • Donor support? - MRC Donor Partners?

Thailand Annex Volume

Annex 1: Thailand Tributary System Description and Basin Profiles ` Annex 2: Summary Matrix Description of BSM Options Evaluated in ISH13 Annex 3: Plots and Scoring Sheets for the Working Group Evaluation Annex 4: Key Messages on BSM – ISH/MRC Annex 5: Legislation and Regulation Annex 6: Workshop Report of the National Multi-Stakeholder Workshop in September 2001 Annex 7: National Workshop Report of the National Multi-Stakeholder Workshop in January 2013

43 Thailand National Mekong Committee Secretariat (TNMC)

ANNEX VOLUME Activity ISH13

Annex to the: National Discussion Paper “Benefit sharing options for hydropower on Mekong Tributaries evaluated by 2013”

Thailand National Mekong Committee Secretariat (TNMC)

ANNEX VOLUME

Note: This is the Annex Volume to the main TNMC National Discussion Paper: “Benefit sharing options for hydropower on Mekong Tributaries evaluated by 2013”. It needs to be read in conjunction with the main paper. For an overview of all MRC Member Countries, please read the main Regional Synthesis Paper including an Executive Summary.

LIST OF ANNEXES

Annex 1: Thailand Tributary System Description and Basin Profiles 3 Annex 1-A: Mekong Tributary – NamKam 3 Annex 1-B: Mekong Tributary: Nam Mun 7 Annex 1-C: Mekong Tributary: Nam Chi 10

Annex 2: Summary Matrix Description of BSM Options Evaluated in ISH13 13 Annex 3: Plots and Scoring Sheets for the Working Group Evaluation 57 Annex 4: Key Messages on BSM – ISH/MRC 65 Annex 5: Legislation and Regulation 72 Annex 6: Workshop Report of the National Multi-Stakeholder Workshop in September 2001 139 Annex 7: National Workshop Report of the National Multi-Stakeholder Workshop in January 2013 147

2 Annex 1: Thailand Tributary System De- scription and Basin Profiles

Annex 1-A: Mekong Tributary – NamKam

Tributary System Profile - Relevant to BSM Options (template to be filled for each tributary system)

Nam Kam is the sub-watershed of Khong watershed, the north watershed in northeast Thailand. Two main rivers in Nam Kam catchment are found including Nam Pung and Nam Kam. The Nam Pung river flows 125.42 km from Nam Pung dam, Sakon Nakhon province and joins the Nam Kam river system from Nong Han Reservoir at Nakhon Phan- om province. Finally, it enters the Mekong mainstream at Nam Kam district, Nakhon Phanom province. Mekong Tributary: NamKam § The total length of riversi s 203.21 km covering the Nam Pung and Nam Kam rivers. § The catchment area is approximately 3,495 km2.

§ Annual discharge of is 1.4 bmc. § The land use of the area are paddy rice, orchard, dry season crop such as tomato, tobacco. § Proportion of land in the catchment for major categories (e.g., agriculturei, forest cover, urban areas) § Major land use in Nakhon Phanom province is Agriculture land.

Country and Riparian Status The tributary catchment is wholly within Thailand.

Riparian Counties upstream of Nam Kam confluence with Mekong mainstream is the tributary Mekong Conflu- § About 250 km from Lao border, Vientiane. ence § About 460 km from Vietnam border, Hanoi.

Riparian Counties downstream Nam Kam confluence with Mekong mainstream is of the tributary Mekong Conflu- § About 590 km from Cambodia border, Phnom Penh. ence § About 700 km from Vietnam border, Ho Chi Minh city. Sub-national situation Population? § Nam Pung and Nam Kam rivers flow through 2 Provinces in the tributary 1,834,809 Provinces in Thailand, namely: Sakon Nakhon catchment and Nakhon Phanom. § The Nam Kam catchment covers two provinces 12 Amphoes and 646 villages including Na- khon Phanom and Sakon Nakhon provinces. § The 17 Amphoes includes Huai Phung, Na Khu, Counties / Municipalities in the Somdet, Dong Luang, Muang Nakhon Phanom, 632,017 tributary catchment Nakae, Pla Pak, Renu Nakhon, That Phanom, Wang Yang, Kok Si Suphan, Kusuman, Kutbak, Muang Sakon Nakhon, Phon Na Kaeo, Phu Phan, Tao Ngoi. § The population of riverine communities in the Riverine Population in the tribu- Tributary system are 297 villages (5 km) The 182, 290 tary catchment population of the villages were counted and

3 Tributary System Profile - Relevant to BSM Options (template to be filled for each tributary system)

calculated from Ministry of Interior. The population around power plant involved with 35,474 the PDF Fund (4 sub-districts) Provincial Government and

River basin entity

§ Average population income is 38,688 Baht. It is classified as the 15 of northeast and the 62 of the country level. § The relative poverty levels of Nakorn Phanom’s poverty line value was 1,069 Baht per head per month while that of Thailand was 1,242 per head per month. Socio-economic conditions in § Agriculture remains the largest single sector (26-34% of GPP), followed by the tributary catchment wholesale and retail trades (17-20% of GPP), education (12-15% of GPP) and the public sector (7-8%). § Agriculture is dominated by paddy rice farming, which occupies 1,328,253 rai of land (221,160 hectares). Rubber tree planting has been increasing rap- idly, having increased by 39.0% from 2008 (133,056 rai or 21,289 hectares) to 2009 (185,580 rai or 29,693 hectares)

§ Rural electrification levels: What are they in the catchment as a % of provincial or national electrification average? Is there a variation in remote loca- Other factors in the tributary tions of dams in the watershed? catchment? § Are other resources sectors in the catchment considering the introduction of BSM measures (e.g. mining, forestry, ecotourism) where there may be synergy with measures in the hydropower sector? No of Hydro- Hydropower Situation (dams Total Installed Total Av Annual Total Storage power Projects in the Tributary system) Capacity (MW) Energy (GWh) million m3 Dams Existing Dams 1 6 17 165 Under Construction Planned Potential Total of above 1 6 17 165 § PDF Fund from Nam Phung Hydropower was calculated.. § Estimated potentially for revenue sharing for PDF Fund was approximately Other Relevant factors 323,419.90 Baht per year or $0.01043 USD Million. § EGAT was charged by the PDF about $US 23,345.18 between 2007 July to 2008 October. ($US 1 = 30.37 Baht)

What bullet points on the following topics are helpful to thinking about BSM Tributary Significance Indica- options for the tributary system (such as information from BDP studies, Me- tors kong Tributary Significance Studies or relevant MRC Programme work) e.g.

§ There was lots of fishing activity where the slightly less muddy waters of the Nam Kam meet the darker waters of the Mekong south of That Phnom; Fisheries some were using hand lift nets, others used gill nets with bottle float and still others were using basket fish traps anchored with bamboo poles stuck into the muddy bottom; Nakhon Phanom Province, Thailand.

§ Sediment is calculated by the formula of QS = 132.85A0.7448 when QS = the average annual of suspended sediment (tons per year), A = area (km2). Sediment § The average annual of suspended sediment of Nam Kam river is approximately 57,878 tons per year.

Navigation na

4 Tributary System Profile - Relevant to BSM Options (template to be filled for each tributary system)

Basin Development project in Nam Kam is done under the King initiative project. The project covers three task including: § To contract 7 irrigation gates to storage the water and to protect the area Irrigation from flooding. § To construct 16 water delivery systems for 165,000 rai (264 km2). § To construct 15 catchments for collecting the water for flooding protection during considerations Flood mitiga- § The King initiative project tion / management

Ecological Diversity / Ecosystem na services

Are there other factors to highlight concerning the Tributary of a water re- Other significant factors source or bio-physical nature that may be relevant to the consideration of BSM options? Other MRC work in the Tribu- Bullet points helpful to indicate stakeholder views of BSM generally and BSM tary relevant to BSM options for the specific tributary system e.g. § RSAT Programmme: Provincial stakeholders and national agencies § Outputs and outcomes: § Provincial capacity building for basin wide hydropower and irrigation sustainability. § To create Dialogue among the various agencies § Who has used the RSAT in Thailand? § National Department of Water Resources § Office of Natural Resources, Environmental Policy and Planning – Udon Thani Rajabhat University § Sakon Nakhon, Nakhon Phanom, Loei, Nong Khai, Ubonrajathani Pro- vincial Stakeholders § Electricity Generating Authority of Thailand (EGAT) • Nam Phung Pow- er Station • Ubonrat Dam Khonkan Province § MRC Programme studies Provincial Department of Fisheries § Alternative Energy, Development and Efficiency Dept § Department of Water Resources § Udon Thani province § Water user groups and NGO’s § Recommendations from Thailand: A mechanism to assess future and existing projects; To assess the risk to assist in decision making for project development; RSAT is a tool for learning among participants who come from different areas; RSAT can be applied in various organisations for planning purposes; RSAT could be a prototype of assessment of projects that impact on communities; Government sector should use RSAT for large projects; RSAT can be used for decision making and participation, it is important for the basin plan development; and RSAT can be used to have a private organization and government authority work together and also have the centre organisation assess the project.

National or INGO Studies na

Hydropower Developer or EGAT Operator § Nam Kam is the sub-watershed of Khong watershed, the north watershed in Summary Comment northeast Thailand. Two main rivers in Nam Kam catchment are found including Nam Pung and Nam Kam. on the potential role of BSM on § Nam Pung Hydropower Plant is located at Sakon Nakhon province. The hydropower in contributing to production is 17 GWh of Total Av Annual Energy. sustainable development in the § The BSM is set up as PDF Fund for local people around the power plant tributary covering 4 sub-districts and 35,474 person. However, the process § Approximately $0.01043 USD Million equivalent / year potentially for reve-

5 Tributary System Profile - Relevant to BSM Options (template to be filled for each tributary system)

nue sharing is collected by the PDF Fund.

6 Annex 1-B: Mekong Tributary: Nam Mun

Tributary System Profile - Relevant to BSM Options (template to be filled for each tributary system)

Mun River rises in the San Kamphaeng Range northeast of Bangkok and flows east for 750 km, receiving the Chi River. The main tributary enters the Mekong River at Ubon Ratchathani province. § Mekong Tributary: The total length of rivers are 726 km. § The catchment area is approximately 71,060 km2. Nam Mun § It carries approximately 21,000 cubic kilometres

of water per year.Discharge for Mekong River,

Ubon Ratchathani: average is 725 m3/s (25,603 cu ft/s) and max 10,015 m3/s (353,676 cu ft/s). § Proportion of land in the catchment for major categories: Paddy rice 52.939%, vegetable 0.001, upland crop 13.227%, orchard-Perennial 0.098% and forest 24.258%.

Country and Riparian Sta- The tributary catchment is wholly within Thailand. tus Riparian Counties upstream of Nam Mun confluence with Mekong mainstream is about 362 km from Lao the tributary Mekong Conflu- border, Vientiane. ence Riparian Counties downstream Nam Mun confluence with Mekong mainstream is about 510 km from Cambo- of the tributary Mekong Conflu- dia border, Phnom Penh. ence Sub-national situation Population? • Total population are Nam Mun rivers flow through 10 Provinces in 10.692 million person. Thailand including Nakhon Rathasima, Buri- Provinces in the tributary • population density in the rum, Surin, Si Sa Ket, Ubon Ratchathani, Amnat catchment tributary 143person/m2 Charoen, Yasothon, Khon Kaen, Maha Sarak- urban/rural split ham, Roiet, • 1.141/9.278 million

The Nam Mun catchment covers 10 provinces, Counties / Municipalities in the 150 Amphoes (District) and 1,229 Tambon tributary catchment (Sub-districts) and 15,300 villages.

§ The population of riverine communities in the Tributary system are 1,742,471 person, 1,742,471 covering 7 provinces, 38 districts and 206

Sub-districts.

§ The population of the villages were count- Riverine Population in the tribu- ed and calculated from Ministry of Interior. tary catchment (5 Km from the river) § There are 3 hydropower plants in this tributary including Lam Ta Khong, Pak Mun and Sirindhorn hydropower plants . 95,932 § The population around power plant involved with the PDF Fund (9 sub-districts)

Provincial Government and

River basin entity

7 Tributary System Profile - Relevant to BSM Options (template to be filled for each tributary system)

§ Average poverty line in are 1021 baht/person/month, the poverty line in rural area is 995 and the poverty line in the urban area is1136 baht/person/month (4) Socio-economic conditions in § Agriculture is dominated by paddy rice farming, which occupies 28,536,945 the tributary catchment rai of land (81.05%). Upland crop plantation occupies 5,018,326 rai of land (14.25%) and orchard plantation is 1,641,735 rai (4.66%). § In addition, the 114,968,588 families are in the animal husbandry sector, the 37,515 family involve in fishery and the 24,040 family are in fish culture. § Rural electrification levels: What are they in the catchment as a % of provincial or national electrification average? Is there a variation in remote loca- Other factors in the tributary tions of dams in the watershed? catchment? § Are other resources sectors in the catchment considering the introduction of BSM measures (e.g. mining, forestry, ecotourism) where there may be synergy with measures in the hydropower sector?

Hydropower Situation(dams No of Hydropower Total Installed Total Av Annual Total Storage in the Tributary system) Projects Dams Capacity (MW) Energy (GWh) million m3 Existing Dams 3 672 770 770 Under Construction Planned Potential Total of above 3 672 770 770 § Three PDF Funds were calculated including Lam Ta Khong, Pak Mun and Sirindhorn Hydropower Plants. Other Relevant factors § Estimated potentially for revenue sharing for PDF Fund was approximately 17.1 Million Baht per year or $ 0.6 USD Million.

Tributary Significance What bullet points on the following topics are helpful to thinking about BSM options for the tributary system (such as information from BDP studies, Mekong Tributary Signifi- Indicators cance Studies or relevant MRC Programme work) e.g. § The World Commission on Dams found that of 265 fish species previously found in the Mun river, at least 50 had disappeared and numbers of others had declined significantly. The fish catch declined by 60-80%. However, it is uncertain what proportion of this decrease is attributable to the dam, and what proportion to other factors. There have since been reports that some of these species have started to re-establish themselves. (1) § Before the Pak Mun Dam was built, the Mun River was one of Thailand’s richest rivers, supplying the entire northeastern region of Thailand with plentiful natural resources. The Mun River, the largest tributary of the Me- kong, originally provided habitat for 265 different kinds of fish species. It hosted a complex riverine ecosystem that consisted of rapids, islands, chan- nels,underwater caves, eddies, rises, pools, seasonally flooded riverine forest, wetland forest and tributaries. (2) § The construction of the dam impeded fish in the Mekong River from migrat- Fisheries ing upstream to the Mun River to spawn. As a result, fish diversity and fish

populations in the Mun River drastically decreased. When the Dam was built, villagers found that only 45 out of 265 fish species indigenous to the Mun and Mekong rivers remain in the Mun river in Pak Mun area. (2) § A study of 45 communities for 4 months after the opening of the dam gates resulted in the following important findings. (2) § 6,915 out of 7,286 households in total returned to fishing in the Mun River (94.9%). § 1,587 households depend solely on fishing for their income (21.5%). § 4,772 households depend on both fishing and rice farming for their livelihood (65.5%). § 586 households rely on fishing in the Mun River and have other occupations (8.0%). § 296 households depend on farming as their main source of livelihood (4.1%).

8 Tributary System Profile - Relevant to BSM Options (template to be filled for each tributary system)

§ 1.0% of households have other occupations (e.g. trading, labouring, working as government officials) besides fishing.

mately 545,571 tons per year.

Navigation na

The 2910 project of water resources and irrigation projects were completed in Irrigation Nam Mun River Basin. It covers the areas of about 3.73 million rai or (5,968 km2).

considerations Flood mitiga- na tion / management

Ecological Diversity / Ecosystem na services

§ Mun River rises in the San Kamphaeng Range northeast of Bangkok and Summary Comment flows east for 750 km, receiving the Chi River, its main tributary, and enter- ing the Mekong River at Ubon Ratchathani. The catchment area is approxi- on the potential role of BSM on mately 71,060 km2.It carries approximately 21,000 cubic kilometres of water hydropower in contributing to per year. sustainable development in the § Three PDF Funds were calculated including Lam Ta Khong, Pak Mun and tributary Sirindhorn Hydropower Plants. Estimated potentially for revenue sharing for PDF Fund was approximately 17.1 Million Baht per year or $ 0.6 USD Million.

Additional Data as Endnotes:

(1) http://www.economicexpert.com/a/Pak:Mun:dam.htm (2) Southeast Asia Rivers Network (SEARIN). 2004. The Return of Fish, River Ecology and Local Livelihoods of the Mun River: A Thai Baan (Villagers’) Research. (3) www.haii.or.th (4) Jtsochon, S., 2004. A framework for revised official poverty lines for Thailand. Paper presented to UNDP and NESDB on Review of Thailand’s official poverty line project.

9 Annex 1-C: Mekong Tributary: Nam Chi

Tributary System Profile - Relevant to BSM Options (template to be filled for each tributary system)

Mekong Tributary: The Chi River is the longest river in Thailand; it ex- Chi River tends 765 km, but carries less water than the second longest river, the Mun. In wet seasons there are concerns about flash floods in the floodplain of the Chi River basin.

The river rises in the Phetchabun mountains, then runs east through the central Isan provinces of Chaiyaphum, Khon Kaen and Maha Sarakham, then turns south in Roi Et, runs through Yasothon and joins the Mun in Kanthararom district of Sisaket Province. The river carries approximately 9,300 cubic kilometres of water per annum. Key physiographic characteristics. § Length 765 km (km) - § Catchment Area 49,480 km2 (km2 ) - § Annual discharge (bcm) – § Average 290 m3/s (10,241 cu ft/s) § max 3,960 m3/s (139,846 cu ft/s)

Land use covers Agriculture 40.86%, vegetable 0.11%, upland crop 21.01%, perennial-orchard crop 3.74%, other agriculture 0.55%, forest 20.48% and other 13.24%)

Country and Riparian Sta- tus The tributary catchment is wholly within Thailand.

Riparian Counties upstream of Nam Chi confluence with Mekong mainstream is about 195 km from Lao bor- the tributary Mekong Conflu- ence der, Vientiane.

Riparian Counties downstream Nam Chi confluence with Mekong mainstream is about 670 km from Cambo- of the tributary Mekong Conflu- dia border, Phnom Penh. ence

Sub-national situation Population?

Nam Chi rivers flow through 14 Provinces in Thai- land including Chaiyaphum, Khon Kaen, Nongbua Provinces in the tributary Lamphu Udon Thani, Maha Sarakham, Nakhon catchment Ratchasima, Loei, Phetchabun, Kalasin, Roi Et, Ubon Ratchathani, Sisaket, and Mukdahan.

The Nam Chi catchment covers 150 Amphoes Counties / Municipalities in the 6,542,858 (District), 1,229 Tambon (Sub-districts) and 15,300 tributary catchment villages.

§ The population of riverine communities in the Tributary system are 2,097,229 person, cover- Riverine Population in the tribu- 2,097,229 ing 10 provinces, 55 districts and 276 Sub- tary catchment districts (5 Km from the river) § The population of the villages were counted and calculated from Ministry of Interior.

10 Tributary System Profile - Relevant to BSM Options (template to be filled for each tributary system)

§ There are 3 hydropower plants in this tributary including Chulabhon Ubonrat and Huai Kum hydropower plants 243,839 § The population around power plant involved with the PDF Fund (34 sub-districts)

§ Average population income is 43,133.88 Baht..

§ The relative poverty line value was 1,021 Baht per head per month while Socio-economic conditions in that of Thailand was 1,242 per head per month. the tributary catchment § Agriculture is dominated by paddy rice farming, follows by upland crops (such as sugar cane, cassava, and peanut), perennial crops and orchard.

§ Rural electrification levels: What are they in the catchment as a % of provincial or national electrification average? Is there a variation in remote lo- Other factors in the tributary cations of dams in the watershed? catchment? § Are other resources sectors in the catchment considering the introduction of BSM measures (e.g. mining, forestry, ecotourism) where there may be synergy with measures in the hydropower sector? Hydropower Situation(dams in the Tributary system) No of Hydropower Total Installed Total Av Annual Total Storage Projects Dams Capacity (MW) Energy (GWh) million m3

Existing Dams 3 67.2 117 117 Under Construction Planned Potential Total of above 3 67.2 117 117 Other Relevant factors § Three PDF Funds were calculated including Chulabhon, Ubol Ratana and Haui Kum Hydropower Plants.

§ Estimated potentially for revenue sharing for PDF Fund is approximately 2.3 Million Baht per year or $75,582 USD.

§ The consumption of fish in the Northeast was 33.8 kg / person / year. § The fish catch in Chi watershed is approximately 13.31 % of northeast watershed. The fish are catch from water storage (31%), natural water reservoir (59%) and village reservoir (10%). It means that the most of fish are caught from the Chi river. Fisheries § The production of fish cage culture from Chi river is approximately 2.37% compared to others type of culture including ponds and paddy field. § Department of fishery produce the young fish approximately 300-400 million fish to release into the natural reservoir for compensate for the decrease in natural water.

Navigation na

§ There are 1,854 projects in development of water resources and irrigation Irrigation projects covering total area of approximately 2,834,477 rai that can manage the water of about 4,998 million cubic meters.

11 Tributary System Profile - Relevant to BSM Options (template to be filled for each tributary system)

considerations Flood mitiga- Significance of reservoir operation of hydro schemes in the tributary (e.g. for tion / management flood management, protection of ecosystem services, etc.) Ecological Diversity / Ecosystem services § The problems of ecology system: § An invasive forest problem induce severe soil erosion and increasing sediment deposition in water resources. The water resources are shallow and deterioration of water quality. § A lack of proper soil conservation methods. The use of fertilizers and chemicals pollute water sources from agricultural . § An increasing of population and expanding of industrial areas result the problem of waste water discharged into bodies of water. § The water quality of Chi river is good. The dissolved oxygen was 3.0-7.5 mg/l and Total coliform bacteria was 90-50,000 MPN/100 ml.

Other significant factors Are there other factors to highlight concerning the Tributary of a water resource or bio-physical nature that may be relevant to the consideration of BSM options?

Other MRC work in the Bullet points helpful to indicate stakeholder views of BSM generally and BSM Tributary relevant to BSM options for the specific tributary system e.g.

MRC Programme studies na

National or INGO Studies na

Hydropower Developer or Operator EGAT

Summary Comment § The Chi River is the longest river in Thailand; it extends 765 km, but carries less water than the second longest river, the Mun. In wet seasons there are concerns about flash floods in the floodplain of the Chi River basin. on the potential role of BSM on hydropower in contributing to § Three PDF Funds were calculated including Chulabhon, Ubol Ratana and sustainable development in the Haui Kum Hydropower Plants. Estimated potentially for revenue sharing for tributary PDF Fund is approximately 2.3 Million Baht per year or $75,582 USD.

Additional Data as Endnotes: http://www.haii.or.th/wiki/index.php/ปริมาณตะกอนลุ่มนํ้าชี

12 Annex 2: Summary Matrix Description of BSM Options Evaluated in ISH13

Template 3a - Summary Matrix - Illustration and Examples - National-to-Local BSM Options selected for evaluation in ISH13

Summary Generic options for National-to-Local (NTL) forms of BSM for hydropower on Mekong tributaries Matrix 1 + NTL Options selected to evaluate in the ISH13 Process Summary Features / Alternative Mechanisms Generic Option Type + options Institutional Arrangements evaluated in ISH13 Main Beneficiary Groups Financing Sources Benefit Delivery Mechanisms

NTL Type 1: Sharing mone- § Provincial economies of tributaries Various financial sources that share or Money from various sources is channelled to a revenue account, with a formula tary benefits of hydropower with hydropower. spread the monetary benefits of set in regulations. Then it is allocated to either: § Residents of tributary basins. hydropower. E.g.:

§ Communities in the vicinity of § A Development Fund: which serves to administer the delivery of benefits in Otherwise expressed as sharing tributary hydropower projects. Project revenue streams: various ways (grant programmes, increments to existing provincial-national economic rent, or net economic / § Tapping a portion of revenue programmes, micro-loan funds, allocations to PES, etc) and handle monitor- financial gains arising from hydro- 1 4 Sub-national levels: tributary projects generate. ing and supervision) with appropriate multi-stakeholder governance; or power on Mekong tributaries. § Ultimately imbedded in electricity Provinces, districts, municipalities, tariffs (i.e., the cost are paid by the § Regular Developments budgets: of the Provincial and /or local governments 2 in the tributary where the project is located. The revenue sharing funds es- Includes existing and proposed LMB villages, etc. which either host, or may electricity users). sentially “top up” money for local development expenditure administered hydropower projects contained in the be affected by tributary hydropower MRC Hydropower Data Base for Non-tariff Sources, including: by existing governance mechanisms , or projects in +ve / –ve ways. Aiming to: domestic and/or export power mar- § Municipal taxes. § A mix of these two approaches (e.g. increments to Provincial budgets and a kets. § Government budget allocations. § Equitably spread resource utiliza- local Development Fund). § Various fees (see Volume 1-5 of tion benefits; BSM KB for illustrations). § Provide ongoing (sustainable) Issues such as funding levels and sources, eligible parties, eligible expenditures financial support to take ad- Innovative financing: e.g., and delivery mechanisms, beneficiary choice, etc., are prescribed by govern- vantage of local development op- § Payment for Ecological Services ment in appropriate legislation /regulation.

1 National-level benefit may be broadly defined as economic growth. Many people in the country may benefit directly and indirectly in terms of (i) national income from hydropower (e.g., direct /indirect taxes, fees, other contributions to national accounts including export revenue, and (ii) electricity consumers in all sectors in urban and rural settings. 2 The user pay principle is an IWRM principle. This means national electricity tariffs and export tariffs are a mechanism to spread resource utilization benefits where hydropower will (i) provide stable long-term tariffs, but at the same time (ii) tariffs will reflect the true costs (e.g., the contribution to benefit sharing is embodied directly in the national tariff and directly or indirectly in export PPAs). The approach in the case of electricity export depends how Governments (buyer and seller) wish to reflect BSM in PPA discussions for exports.

13 Summary Generic options for National-to-Local (NTL) forms of BSM for hydropower on Mekong tributaries Matrix 1 + NTL Options selected to evaluate in the ISH13 Process Summary Features / Alternative Mechanisms Generic Option Type + options Institutional Arrangements evaluated in ISH13 Main Beneficiary Groups Financing Sources Benefit Delivery Mechanisms portunities that resource trans- (PES). formation of hydropower may § Provincial to local equity participa- present. tion in Projects. § Emerging forms of carbon financing for qualifying projects. 3

1-1 No revenue sharing § Assumes revenue sharing is not § None § i.e., the do nothing additional or status quo mechanism is needed to needed. 5 spread monetary benefits § Assumes existing practices are of existing or proposed adequate to spread benefits hydropower in Mekong within society. tributaries.

§ 4 A Development Fund has more flexibility to tailored delivery of benefits through: - Community-led initiatives, - CSO/NGO initiatives, - Private sector initiatives. § Otherwise, benefits may be delivered by normal government development expenditure mechanisms, or “ring fencing” development budget increases from revenue sharing (e.g., to use revenue sharing funds for development expenditures only and not for recurrent expenditures). 3 In future depending on how carbon markets evolve this may be through the UN Clean Development Mechanisms (CDM) or other regional / private sector carbon financing Funds. There is considerable information available on both approaches. 5 The assumption otherwise is existing practices are enough, meaning practices that may (i) provide money from the capital budget of the project (in Concession Agreements) to fund investment that spread benefits, in additional and indirect benefits (e.g., local roads and job creation, and /or (ii) EMMP measures that are funded indirectly by project revenue (e.g., as part of operations).

14 Summary Generic options for National-to-Local (NTL) forms of BSM for hydropower on Mekong tributaries Matrix 1 + NTL Options selected to evaluate in the ISH13 Process Summary Features / Alternative Mechanisms Generic Option Type + options Institutional Arrangements evaluated in ISH13 Main Beneficiary Groups Financing Sources Benefit Delivery Mechanisms 1-2 Introduce local revenue Local communities and people living § A portion of project revenue § Local Development Fund (fund as an institutional mechanisms) with a sharing using local De- in the vicinity of projects. 6 stream that is derived from elec- community defined Charter reflecting BSM legislation / regulation;8 velopment Fund mecha- tricity (sales) channelled to a Local § Multi-stakeholder governance of the Fund, typically with representatives of nisms. Otherwise, target beneficiaries are Development Fund. local government, the NGO/CSO communities, local business, the hydro- § Amount linked to level of project power project, key provincial development agencies and the RBC/RBO. people that are legally defined in generation (i.e. revenue stream) in § A Fund Management Board may be established, if required by applicable In the vicinity of tributary applicable law, based on documents formula set in national regulation government regulation.9 hydropower projects. such as: § Ultimately imbedded in electricity § May be in combination with a district / provincial level and RBO/RBC fund- tariffs. ing mechanism (sharing monetary benefits) § The Project EIA / SIAs (e.g., people § See also Matrix 4c on cross-cutting considerations. living in project impact areas)), 7 § EMP Reports (environment /social mitigation & monitoring reports), § SEAs of the tributary, or § Other relevant project or tributary studies recognized by government

1-3 Introduce local revenue § Local communities and people § Project revenue (ultimately imbed- § Utilization of existing institutional arrangements and mechanisms sharing by increasing living in the vicinity of projects ded in electricity tariffs) § Some conditionality on eligible expenditures (e.g. no recurrent budget

6 Development expenditures at local levels may be beneficiary defined and follow the community driven development model. Activities supported may include grant contributions (i) to extend local development assistance programs delivered through provincial or national target programs (ii) to support community-based activities funded in part by a contribution in kind from local communities (iii) to operate small loan and micro-credit facilities including those of a revolving nature (iv) to investment in expanding connection to electrical services (v) to advance the use of isolated on-spot electrical generation in areas where it is uneconomical for grid-connected supply, and (vi) to support other investments for local socio-economic and cultural advancement of common interest to beneficiaries, such as activities to establish and operate a community newsletter to keep beneficiaries informed and enable the exchange views on effective use and monitoring of benefit sharing funds. 7 One alternative is to define eligible people as those living a specified distance from the project. For hydropower, another alternative is the geographic extent of the project impact area defined in the EIA for analysis and prediction of potential adverse environment and social impacts, or in an ex-post EIA undertaken on an existing project. This encompasses (i) settlements that border upstream stretches of the main river above the reservoir (ii) settlements that border of the reservoir and live in the immediate watershed of the reservoir (iii) settlements where the main project facilities are located, including the dam powerhouse, switchyard and staff housing and office facilities (iv) the resettlement community and resettlement host community (v) settlements bordering the river downstream of the dam in the dewatered section between the dam and powerhouse, and (vi) settlements immediately downstream of the powerhouse. 8 Flexibility for a mix of delivery mechanisms suited to local needs and preference: e.g., - Grant programmes; - Funding increments to expand existing government programmes or extension services ( beyond what is available normally; preference), - NGO/CSO delivered initiatives supporting intended beneficiaries; - Micro-credit schemes, etc.; 9 For example, as required by law in Viet Nam for all Public Funds – introduced during the existing BSM Pilot in 2010

15 Summary Generic options for National-to-Local (NTL) forms of BSM for hydropower on Mekong tributaries Matrix 1 + NTL Options selected to evaluate in the ISH13 Process Summary Features / Alternative Mechanisms Generic Option Type + options Institutional Arrangements evaluated in ISH13 Main Beneficiary Groups Financing Sources Benefit Delivery Mechanisms existing local develop- § Including households /settlements § Some portion of project revenue expenditures, only development). ment budgets. immediately upstream and down- channelled into existing Local De- § Some targeting of support (e.g., to a group of people or area). stream. velopment Budgets § Needs provisions to make sure this top up is additional funding and not In the vicinity of tributary subtracted from the allocation the area would normally receive – otherwise there would be no net gain locally. hydropower § Can be in combination with a district / provincial level and RBO/RBC funding mechanism (sharing monetary benefits)

1-4 Introduce revenue shar- § Provinces that tributary systems § Project revenue (tariff derived) § Mechanism as appropriate for Provincial-level development funds according at district / Provincial flow through § Allocated to Provincial-level funds ing to administrative procedures and laws in the country levels through Develop- § River basin residents (tributary § Amount linked to level of project § Representation of development interest in the basin (multi-stakeholder) in ment Fund mechanisms. basin / sub basin) generation (i.e. revenue stream) in the Fund governance formula set in national regulation § Provincial decisions on how BSM funds are administered and spent within Provinces with tributaries the scope of national regulation – which typically sets levels of payment. where hydropower is § May be in combination with a local area and RBO/RBC funding mechanism located. (sharing monetary benefits).

1-5 Introduce revenue shar- § Economies of provinces tributary § From project revenue (ultimately § Benefits delivered through normal provincial development funding institu- ing at district / Province flows through imbedded in electricity tariffs). tional arrangements levels by increasing § River basin residents (in the tribu- § Can be royalties or other form of § Guided by facilitating national regulation (see examples in the BSM existing Provincial Devel- tary basin / sub basin). revenue sharing. Knowledge base – Step 1 in the 12 Steps to implement ISH13). opment Budgets. § Amount linked to level of project § See also Matrix 4c on cross-cutting considerations generation (i.e. revenue stream) in § May be in combination with a local area and RBO/RBC funding mechanism Provinces with tributaries formula set in national regulation. (sharing monetary benefits) where hydropower is § Formula to allocate between provinces when the tributary flows located. through one or more Provinces.

1-6 Introduce revenue shar- § River basin residents (tributary § From project revenue (ultimately § RBO/RBC governance used to administer / manage the BSM Funds via their ing at the tributary scale basin / sub basin). imbedded in electricity tariffs). programme framework using the River Basin § Local communities and people § Allocated increments to RBO/RBC § RBC/RBOs may set up a special financing window for Benefit sharing entity (RB/RBO) living in the vicinity of projects. accounts, with conditions on § Flexibility for the RBO/RBC to make appropriate institutional arrangements § Including households /settlements management and use of funds in (e.g., a BSM Committee or Department) immediately upstream and down- regulation § Needs measures at basin and project area levels. stream. § Amount linked to level of project § May be in combination with a local area and provincial level funding mech- generation (i.e. revenue stream) in anism (sharing monetary benefits)

16 Summary Generic options for National-to-Local (NTL) forms of BSM for hydropower on Mekong tributaries Matrix 1 + NTL Options selected to evaluate in the ISH13 Process Summary Features / Alternative Mechanisms Generic Option Type + options Institutional Arrangements evaluated in ISH13 Main Beneficiary Groups Financing Sources Benefit Delivery Mechanisms formula set in national regulation

1-7 Introduce payments for § Rural / farming households. Various sources of money for PES: e.g. Requires legislation / laws11 ecological services (PES) § Local communities / community § hydropower companies directly (also referred to as envi- forest user groups. who wish to invest in reduction of Various alternatives such as having procedures for PES evaluation, valuation, ronmental services). § Other legal entities (that create reservoir sedimentation negotiation, monitoring and payment organized by: local employment opportunities § BSM Development fund alloca- § a Local Development Fund Payments to individuals, to take actions which provide / tions for PES actions § the hydropower company (possibly as part of the EMP) enhance ecosystem services for groups or legal entities, § Fees prescribed by legislation / § through extension services (e.g. Provincial forestry departments) people in the tributaries and the regulation collected by Provinces who take actions that § through CSO/NGO initiatives or community action groups environment. serve to protect, maintain § Nature – ecosystems. 10 PES money related to hydropower or improve ecosystem In the hydropower context, PES includes incentives for local actions like plant- ultimately comes from hydropower functions and services for ing trees in catchments and creating headwater forests, or adopting land use revenue streams > meaning electricity the benefit of others management (farming) practices that also reduce flooding and soil erosion. tariffs. parties in the tributary or This reduces reservoir sedimentation rates, which in turn helps to protect nature. reservoir volumes, electricity output and hence the hydropower revenue stream over the longer-term (which benefits everyone).

1-8 Collect provincial / munic- Measures may be widely spread. Some Various finance sources may be con- Various alternatives: 12 ipal taxes, fees, etc., for also place emphasis on specific bene- sidered: e.g. § Development Funds

10 Ecosystems services broadly fall into five categories (i) provisioning, such as the production of food, fish, fibre and water (ii) regulating, such as the control of disease vectors, waste decomposition and detoxification and maintaining hydrological functions of ecosystems (iii) supporting, such as nutrient dispersal and cycling for recession agriculture, (iv) cultural, such as spiritual and recreational benefits including ecotourism; and (v) preserving, which includes guarding against uncertainty through the maintenance of biological diversity. - Local benefits from activities funded by money raised by PES, e.g. income for community forest groups paid to plant & sustainably manage headwater forests; related non-power benefits, e.g., wildlife / habitat protection, bio-diversity value. food-security 12 Depends on financing source, e.g. § Municipal taxes typically go directly to the municipal budgets § Fees may be collected by Provinces then allocated to : - local Development Funds, - targeted Provincial Programmes (e.g., ethnic minority programmes, poverty reduction programmes), or - local development budgets at sub-provincial levels

17 Summary Generic options for National-to-Local (NTL) forms of BSM for hydropower on Mekong tributaries Matrix 1 + NTL Options selected to evaluate in the ISH13 Process Summary Features / Alternative Mechanisms Generic Option Type + options Institutional Arrangements evaluated in ISH13 Main Beneficiary Groups Financing Sources Benefit Delivery Mechanisms land or water used by ficiary groups, e.g.: § Local /Provincial taxes (if permit- § Funding increments to existing developments budget at sub-provincial hydropower projects in ted by the country legal / adminis- levels tributaries. § Local communities and people trative framework) A mix of these approaches living in the vicinity of tributary § Fees (e.g., for land used by reser- Non-consumptive use. projects; voirs and facilities, which would § District and other levels where the otherwise raise revenue via land project is located, and and other taxes), or § Provincial Economies (of provinces § Budget transfers from national to tributary flows through). sub-national levels

1-9 Set targets for local in- § Local communities and people § A Local Development Fund fi- § Normal local development / income raising programmes. come improvement for living in the vicinity of tributary nanced by revenue sharing, or § Various CCD (community driven development) and rural development people living in the vicini- projects § Provincial or national government models are present in Mekong Countries. The issue is financing measures ty of projects linked to budget commitments (from de- until agreed income targets are met (may take several years). poverty alleviation tar- Aiming to lift the local area communi- velopment budgets or loans). gets for the tributary / ty out of poverty in a specified time § Hydropower developer /operators province. frame (e.g. 5 -10 years). may agree also to pay for local income generation measures for a

Linked to provincial targets for pov- period of time to complement other long-term measures. erty alleviation, or beyond.

1-10 Coordinate among sector § Local communities and people § Mechanisms where national or § The investments made by the various funds can be designed to maximize funds that hydropower living in the vicinity of tributary provincial authorities tap into the local / basin / provincial benefits. sales contribute revenue projects; revenue collections from hydro- § One example is to contract local communities / enterprises to undertake to (by Law) to ensure § River basin residents, and power sales (domestic or export local measures for environment or water protection that may be obligations synergies for benefit § Provincial economies (of provinces sales). of the project entity (e.g. optimizing local employment, training and skills sharing are identified and tributary flows through). § Mechanisms where hydropower § Requires coordination across sectors to ensure benefit sharing opportuni- Companies pay feeds, which are optimised. § Nature and the environment. ties with project are communities and basin residents are optimized. then reflected in PPAs and ultimately in the cost of electricity Coordination is important to ensure Various institutional supply and consumer tariffs Funds that hydropower hydropower revenue can carry all revenue contribute to by funding obligations (i.e., tariff im- current or proposed pacts). national Laws (e.g. Envi-

18 Summary Generic options for National-to-Local (NTL) forms of BSM for hydropower on Mekong tributaries Matrix 1 + NTL Options selected to evaluate in the ISH13 Process Summary Features / Alternative Mechanisms Generic Option Type + options Institutional Arrangements evaluated in ISH13 Main Beneficiary Groups Financing Sources Benefit Delivery Mechanisms ronment Protection Implementation coordination is essen- Funds and Water Re- tial to reduce or eliminate unneeded source Protection Funds duplication of effort, overlap, and and Basin development potential for confusion and to address Funds, etc.) institutional capacity constraints.

NC Teams and national Working Groups list other options of interest

NTL Type 2: Non-monetary benefits § People living in the vicinity of § These are non-monetary § Governments (e.g., provincial, municipal and local or resource management such as enhancing local access to hydropower projects who rely on: measures. Financing is not the agencies) ensure local access to natural resources. natural resources or cultural re- - Natural resource access for lives main issue in non-monetary bene- § To be systematic, often needs an institution designated as “responsible” to sources. and livelihoods and culture re- fits. coordinate measures, supervise and monitor and to ensure that : sources. § Rather the emphasis is on clarify- - Local people have a “voice” in about decisions on local resource access Covers a range of local resource ing: that affect them at all stages of hydropower planning, implementation access entitlements to enable local § River communities / settlements in - Access rights of local commu- and operation, and nities, and riverine communities in the the tributary upstream or down- - Mechanisms exist to indicate the preferences pf beneficiaries and to stream of the project: vicinity of hydropower projects to - Responsibilities of government provide feedback on the type of permissions / approvals people prefer from local to provincial-levels to reinforce or introduce. enhance resource-based livelihoods - Who rely on aquatic ecosystem services significantly trans- to cooperate, and - Processes are bottom up rather than top down and follow community and social welfare through local formed by the project, or - In order to optimise local ac- driven development models in rural areas actions (e.g., forest, land, water, bio- - Who may participate in PES cess to natural / cultural re- § Once opportunities are identified by local communities on the preferred physical, and cultural resources). funded by hydropower revenue sources and the development way to enhance local resource access 15 authorities then need to:

designated for benefits sharing benefits that result. - issue permits / instructions to facilitate local access, and Dual aims are: or PES directly. § May be combined with long- - lower and/or remove any unnecessary legal impediments to local ac-

term financing ( e.g. from reve- cess to natural resources (e.g., old regulations that arbitrarily denying - To offset significant resources How far upstream and downstream nue sharing) so communities are local access to reservoirs that often may have multi-purpose uses such access lost due to resource trans- people would be eligible is both in a better position to: as fishing or river transport). 13 formations from hydropower. project and tributary specific. - Restore previous livelihoods,

13 Non-monetary benefits are particularly important for people living in subsistence and low-income situations, who rely heavily on natural resources for their day-to-day livelihoods, health, and culture. Under BSM arrangements they are long-term (essentially permanent in nature);

19 Summary Generic options for National-to-Local (NTL) forms of BSM for hydropower on Mekong tributaries Matrix 1 + NTL Options selected to evaluate in the ISH13 Process Summary Features / Alternative Mechanisms Generic Option Type + options Institutional Arrangements evaluated in ISH13 Main Beneficiary Groups Financing Sources Benefit Delivery Mechanisms - To enable people to take ad- and/or vantage of new livelihood oppor- Regulation is needed to guide on - Pursue new livelihood opportunities resource transformations these matters. tunities hydropower projects, create. the services, or resource transformations unlock for them. 14

2-1 No steps beyond existing § Assumes optimizing non- § Non-monetary measures § Assumes existing practices, systems and procedures are adequate to either practices are needed monetary benefits is already rou- enhance or remove unnecessary barriers to resource access concerning local resource tinely assessed and done, e.g.; in § Do nothing additional option –status quo access for project area - Tributary SEAs communities / river - Project EIAs / SIAs, and communities on tributary - Mitigation /monitoring hydropower projects

E.g. related to forest, land, water, bio-physical and

15 Communities are empowered to take local actions that enhance their livelihoods, welfare and culture, e.g.: - To intensify or extend agro-forestry and animal husbandry; - To improve forest access for gathering forest products and community managed forestry; - To facilitate arrangement between local communities and State Forest Enterprises for sustainable harvesting of timber products; - To establish reservoir fisheries programs and activities for patrolling and stocking - To establish aquaculture activities when suitable - To ensure resource access will not be an impediment start-up local enterprises and businesses based on ecotourism and other opportunities created by formation of reservoir and new wetland areas (e.g. in ecotourism). Similarly, measures for enhancing livelihood opportunities may include extending entitlements, permissions, or rights as necessary to: extend vocational training for new livelihood, new job skills and income diversification; start-up local enterprises and businesses based on ecotourism and other opportunities created with the formation of reservoir and new wetland areas; enable ecosystem services that benefit sustainable hydropower and livelihoods (e.g.; planting trees and maintaining headwater forests that have multiple benefits including protecting reservoirs from sedimentation – thus protecting long-term hydropower revenue); help with market access to sell locally produced goods and services; and otherwise facilitate and support community-defined local actions that enable communities to improve their quality of life through local action. 14 After resource access is confirmed, for example, where it is decided local people will have access to reservoirs for fisheries or river transport plus culture / recreation activities, local people may apply to BSM grant programme to help finance their activities. This may be to acquire boats, nets and other equipment for reservoir fisheries, or to help pay for fish stocking and patrolling, or to enable them o participate in activities related to ecotourism that will diversify the local economy and created new sources of local income.

20 Summary Generic options for National-to-Local (NTL) forms of BSM for hydropower on Mekong tributaries Matrix 1 + NTL Options selected to evaluate in the ISH13 Process Summary Features / Alternative Mechanisms Generic Option Type + options Institutional Arrangements evaluated in ISH13 Main Beneficiary Groups Financing Sources Benefit Delivery Mechanisms cultural resource access). 2-2 Introduce procedures to § Local communities and people § Non-monetary § Concerned government agencies may formulate requirements and clear evaluate opportunities to living in the vicinity of existing § Cost are indirect (e.g. for preparing procedures to engage local communities in evaluating opportunities that optimize local resource tributary hydropower projects the assessment, getting local go beyond current practice as part of (EMMPs) access and non-monetary § People in the tributary upstream views, and issuing local permis- § Ideally the tributary RBC/RBO would be involved in preparing guidelines benefits around existing and downstream of the project sions / permits as may be needed) and follow-up actions / monitoring. tributary hydropower who rely on river-based ecosystem services / culture resources. projects, engaging with local communities. 2-3 Systematically assess § Local communities and people § Non-monetary § Concerned government agencies responsible for environment /social scope to optimize local living in the vicinity of proposed § Cost are indirect (e.g. for preparing mitigation, management and monitoring and RAPs may formulate the re- resource access in project tributary hydropower projects. the assessment, getting local quirement and clear procedures. studies for proposed § People living upstream and down- views, and issuing local permis- § Ideally the RBC/RBO would be involved preparing guidelines and in follow- tributary hydropower stream of the proposed project sions / permits as may be needed) up actions / monitoring. projects, engaging with that currently rely on river-based § Guidance on how to routinely incorporate the assessments in project-level ecosystem services / culture re- local communities to studies prepared by public and IPP developers is important sources. identify and prioritize opportunities. 2-4 Identify unnecessary legal § Local communities and people § Non-monetary § Concerned government agencies responsible for environment /social hurdles to enhance local living in the vicinity of tributary § Cost are indirect (e.g. for preparing mitigation, management and monitoring. resource access (forestry, hydropower projects. the assessment, getting local § Ideally RBC/RBOs would be involved preparing guidelines and in follow-up land or water) at national, § River communities in tributaries views, and issuing local permis- actions / monitoring – especially in tributary basins with multiple hydro- provincial or local levels, (in varying degrees) sions / permits as may be needed) power projects to help effect coordination. and address them. 2-5 Involve river basin entities § Local communities and people § Non-monetary § Concerned government agencies responsible for environment /social in assessing opportunities living in the vicinity of tributary § Cost are indirect (e.g. for preparing mitigation, management and monitoring. to enhance local resource hydropower projects. the assessment, getting local § Ideally RBC/RBOs would be involved preparing guidelines and in follow-up access in the tributaries in § River communities in tributaries views, and issuing permissions / actions / monitoring – especially in tributary basins with multiple hydro- relation to the develop- (in varying degrees) permits as may be needed) power projects to help effect coordination. ment opportunities and risks of hydropower in the tributary. 2-6 Assess ways to combine § Local communities and people § Non-monetary § Concerned government agencies responsible for environment /social long-term financial sup- living in the vicinity of tributary § Cost are indirect (e.g. for preparing mitigation, management and monitoring.

21 Summary Generic options for National-to-Local (NTL) forms of BSM for hydropower on Mekong tributaries Matrix 1 + NTL Options selected to evaluate in the ISH13 Process Summary Features / Alternative Mechanisms Generic Option Type + options Institutional Arrangements evaluated in ISH13 Main Beneficiary Groups Financing Sources Benefit Delivery Mechanisms port from hydropower hydropower projects. the assessment, getting local § Ideally RBC/RBOs would be involved preparing guidelines and in follow-up revenue sharing with § River communities in tributaries views, and issuing permissions / actions / monitoring – especially in tributary basins with multiple hydro- measures to improve (in varying degrees) permits as may be needed) power projects to help effect coordination. local resource access. 2-7 Extend vocational train- § Local communities and people § Non-monetary § Concerned government agencies responsible for environment /social ing for new livelihoods, living in the vicinity of tributary § Cost are indirect (e.g. for preparing mitigation, management and monitoring. job skills, and income hydropower projects. the assessment, getting local § Ideally RBC/RBOs would be involved preparing guidelines and in follow-up diversification based on § River communities in tributaries views, and issuing permissions / actions / monitoring – especially in tributary basins with multiple hydro- natural resource access (in varying degrees) permits as may be needed) power projects to help effect coordination. changes due to hydropower. 2-8 Ensure women, youth, § Women and youth as represented § Non-monetary § Arrangements to facilitate local action by communities and people in the vulnerable groups and by local organizations authorized § Cost are indirect (e.g. for prepar- vicinity of tributary hydropower projects. ethnic groups can active- by government, in the vicinity of ing the assessment, getting local § Mechanisms also depend on whether it is an existing or proposed hydro- ly participate in training tributary hydropower projects, views, and issuing permissions / power project (e.g., for new projects, the body responsible for review of hy- activities and decisions § Vulnerable groups in the project permits as may be needed) dropower EIAs / SIAs and related EMMPs would set policy. regarding local resource vicinity as defined in national laws § Apart from involvement of the tributary RBC/RBO in preparing guidelines, (e.g., poor, elderly, handicapped, access. the participation of other government / non-government bodies responsi- war widows or single parent ble for poverty reduction or ethnic minorities’ programmes may be consid- households, etc) ered. § Ethnic minority communities in the vicinity of tributary hydropower projects (or impacted by them in terms of local development opportunities and risks) who have special status in national development laws

NTL Type 3: Equitable access to § Local communities and people in Depends on the specific beneficiary § Some measures fall within normal project implementation arrangements project services locally (e.g., electricity the vicinity of hydropower pro- group and how long Type 2 support is (e.g. the practice of electrical connection of resettlement households, how- and/or water access) jects. needed to improve electricity access. ever public and IPP projects need to have the same standards). § Not only resettled households, but § Any institutional arrangements for rural electrification connection or service Especially important in remote tribu- also households / settlements: Financing may be a mix of: improvement need to be linked to the existing rural electrification policy tary areas where hydropower projects - In the resettlement host com- and programmes and the progress of these in the tributary. munities; § For new projects, the arrangements need to be reflected in regulation and are often located. These areas tend to § Hydropower Project Capital Budgets - living near major project facili- Project Agreements between developers and authorities.

22 Summary Generic options for National-to-Local (NTL) forms of BSM for hydropower on Mekong tributaries Matrix 1 + NTL Options selected to evaluate in the ISH13 Process Summary Features / Alternative Mechanisms Generic Option Type + options Institutional Arrangements evaluated in ISH13 Main Beneficiary Groups Financing Sources Benefit Delivery Mechanisms have much lower levels of household ties and access roads; – e.g. for projects under construc- § Other measures may need to be part of the electric utility responsibility / or electrification than provincial or - living along the perimeter of tion budgets for the electrification the rural electrification entity. national averages. the reservoir; of directly affected/ resettled § A consistent approach for public and IPP projects is important. communities. - living along the river and minor § Measures funded by revenue sharing may be attached to a local develop- At the same time, reliable, affordable tributaries upstream & down- § Or priority within existing national ment fund, such as targeted assistance to poor & vulnerable households in or Provincial rural electrification electricity is essential to the economic stream. the project vicinity to: budgets – e.g. for indirectly affect- - Help pay first-time connection fees (that many poor families not in the re- well-being and advancement of ed households in the project vicin- Philosophy is local communities may settlement community cannot afford without help) education, health and the quality of ity. be among the first to receive benefits - For electrical safety training. life of all rural residents. § Or allocations from revenue shar- of electricity services from the project, ing provisions for the project. - Assistance obtaining high-efficiency lights / appliance to keep their bills Provides a stimulus to local economy not the last: e.g. down. for development and for the diversi- - Possibly a tariff subsidy for a period of time (in a targeted manner, and fication of rural economies § if they have no electricity, they get possibly for (small) levels of consumption.

a first-time connection, or

Otherwise, measures subject to local § If people already have connection, they can get improved electrical preference and electrical safety code services, e.g. 16 limitations. - local area power system improvements and replacements required to improve reliability, capacity, reducing outages and incidence of low voltage, etc), - demand side management and energy conservation programs, - potentially off-grid renewable energy systems where conventional line extension is too expensive. 3-1 No additional measures Assumes § Current practices are adequate § Current practices are adequate beyond current practice § Current practices and programme are needed to improve or for project-related investment and spread electricity access rural electrification are adequate

16 Including for example local area power system improvements and replacement required to furnish and improve electric service in rural areas (improving capacity, reducing outages, low voltage, etc), as well as demand side management, energy conservation programs, and on-grid and off-grid renewable energy systems

23 Summary Generic options for National-to-Local (NTL) forms of BSM for hydropower on Mekong tributaries Matrix 1 + NTL Options selected to evaluate in the ISH13 Process Summary Features / Alternative Mechanisms Generic Option Type + options Institutional Arrangements evaluated in ISH13 Main Beneficiary Groups Financing Sources Benefit Delivery Mechanisms in the tributary related to § Communities in the project area existing or proposed have no special entitlement to im- hydropower proved services or access.

3-2 Introduce a requirement § Resettled households § Capital budgets on new hydro- § Responsibility project developer (new projects) to electrify all resettled § Resettlement host community power projects – i.e. funded by § The benefits to communities in the project area come from various socio- households in areas Developer. economic benefits from access to reliable and affordable electricity in rural officially designated for The objective is to ensure consistent § Existing national / provincial rural areas. project resettlement in requirements on public and private electrification budgets on existing § It recognizes that electrification ratios (% of households with electricity new tributary hydropow- sector (IPP) projects. projects (e.g. by assigning priority access) in remote areas where tributary hydropower is located are often far in rural electrification programmes er. lower than provincial averages, and any existing services may be low relia- if such steps were not taken in bility.

past)

3-3 Introduce a requirement § Officially designated resettlement § Capital budgets of new projects – § Responsibility of project developer (new projects) for connection, refur- host communities i.e. developer funded. § Otherwise using institutional arrangements for rural electrification. bishment and strengthen- § Existing national / provincial rural § Benefits come from the various socio-economic benefits from access to ing of existing electrical electrification budgets on existing reliable and affordable electricity in rural areas (literacy, education, health, supply in the resettlement projects (as above). diversification of livelihoods etc.); host community of tribu- § Again it recognizes that electrification ratios (% of households with electrici- tary hydropower. ty access) in remote areas where tributary hydropower is located are often far lower than provincial averages, and any existing services may be low reliability. 3-4 Give priority to extend § Local communities and people § Existing national / provincial rural § On existing projects and new projects (beyond the resettlement areas) first electricity supply or living in the vicinity of projects ( electrification budgets time electrification or service improvement may be done via the entity re- improve reliability of apart from resettled and hosts) sponsible for rural electrification. electrical service to com- § May be first-time connection § Supplemental funding may be § A practical, alternative mechanism on new projects for first-time electrifica- munities in the vicinity of and/or improved electrical ser- from: tion or local area service improvement (beyond the resettlement areas) may tributary hydropower vices for households: - Revenue sharing mechanisms be via the project entity. projects within existing - in the vicinity of project facili- - Also potentially, a negotiated § Benefits from access to reliable / affordable electricity in rural areas. ties, provincial / national rural contribution from the project § Scope, timing and phasing of the investments may be link to: electrification pro- - along the reservoir perimeter, entity, which is reflected in the - Average poverty rates in the project vicinity compared to provincial aver- grammes. - along the minor tributaries Concession Agreement ages; upstream & downstream, or - Local preference for electrification support or reliability of existing service - Other people identified in EIA § By conventional grid extension / or improvement /SIA or environment & social § By off-grid sources, if they are the only economically feasible options,

24 Summary Generic options for National-to-Local (NTL) forms of BSM for hydropower on Mekong tributaries Matrix 1 + NTL Options selected to evaluate in the ISH13 Process Summary Features / Alternative Mechanisms Generic Option Type + options Institutional Arrangements evaluated in ISH13 Main Beneficiary Groups Financing Sources Benefit Delivery Mechanisms mitigation programmes. 3-5 Provide targeted assis- § Vulnerable groups in the project § Revenue sharing fund / mecha- § Local Development Fund (revenue sharing) tance for the poorest vicinity as defined in national laws, nisms Various types based on beneficiary preference and value, e.g.; households living in the e.g. (poor, elderly, handicapped, § Also potentially, a negotiated § One-time support for wiring connection and related costs; project vicinity. war widow and single parent contribution from the project enti- § Power safety awareness training and efficient use of electricity; households, etc.). ty, which is reflected in the Con- § One-time support for energy efficient lighting devices to reduce electricity § Ethnic or minority communities cession Agreement bills. with special status in national laws § Cost-sharing of electricity use for a transitional period (special status for development assistance). 3-6 Establish a requirement § Local communities and people § Assessment cost as part of project § Project developers or a rural electrification entity provide a preliminary to assess off-grid supply living in the vicinity of proposed preparation studies (developer assessment of feasibility and cost of small-scale renewable energy sources in areas uneconomical to new projects funded) and on-spot sources for low-density, remote or scattered village areas not connect to the grid as economical to connect to the power grid part of project prepara- § Regulatory agency overview tion studies. 3-7 Provided tariff subsidy for § Local communities and people § Revenue sharing funds, or § Rural electrification body according to the country situation, e.g.; communities in the vicini- living in the vicinity of projects § Existing national / provincial rural - Rural electrification entity or cooperatives, or ty of hydropower projects § May be targeted to lowest income electrification budgets - The national power utility for a given period of time. only (e.g. option 3-5) - The Ministry / Department or Regulatory agency overview - Benefits from access to reliable / affordable electricity in rural areas. § Targeted assistance may be delivered the Fund 3-8 Provided investment § Local communities and people § Revenue sharing funds, or § Regulatory provisions are needed capital, loan interest and living in the vicinity of projects. § Existing national / provincial rural § Qualifications are needed for individuals and organizations seeking such preferential tax support § Local entrepreneurs electrification budgets support for individuals / organiza- § Non-profit Cooperatives § Inspection and compliance mechanisms tions seeking to invest in § Loans and other support delivered through an appropriate selection or alternative electrical Various mechanisms. 17 mix of: supply in rural locales - The power utility where grid connection is - Rural electrification entity costly. - Local Area BSM Fund

17 Loans to provinces / states, subdivisions and agencies such as municipalities, people's utility districts, and cooperative, non-profit, limited-dividend, or mutual associations that provide retail electric service needs to rural areas or supply the power needs of distribution borrowers in rural areas

25 Summary Generic options for National-to-Local (NTL) forms of BSM for hydropower on Mekong tributaries Matrix 1 + NTL Options selected to evaluate in the ISH13 Process Summary Features / Alternative Mechanisms Generic Option Type + options Institutional Arrangements evaluated in ISH13 Main Beneficiary Groups Financing Sources Benefit Delivery Mechanisms

NTL Type 4: Optimizing additional § Provincial, sub-provincial and local § Two main sources of direct addi- § On new projects, governments would typically: and indirect benefits arising from economies. tional benefits are: - Identify the scope to optimize and target the various additional project project-relate investments and ex- § Relates to: (i) capital budgets during benefits, penditures during construction and - New hydropower projects with construction - Negotiate with developers / owners operation phases. the scope to optimize addition- - which may span several - Put appropriate provisions into Project Agreements (e.g. Concession al and indirect benefits from years Agreements and Power Purchase Agreements (PPAs). Mekong hydropower projects already construction phase: - financed by project de- § Clear policies on the type of additional benefits Government aim to opti- (i) Project-related capital in- provide a range of these additional velopers mize are important. Potential investors need to know what is expected. vestment, and (ii) Operating budgets for ser- benefits in varying degrees. § Investment (job creation) is also required to minimize adverse impacts of (ii) Project-related demand vices and procurement over the project, like the influx of many workers during construction (e.g., local for local goods, services the long-term: policing and measures to deal with social effects, including pressures on lo- For example, investments in public and procurement. - Including rehabilitation cal resources like hunting and fishing). infrastructure like roads and local jobs - Existing hydropower projects and refurbishment cycles, § Benefits are a by-product of project-related investments and expenditures which boost and help to diversify the with scope to optimize addi- - Is financed by the project and the jobs and economic boost they provide. For instance: local economy in remote and under- tional benefits from project- owner / operator - Access roads built for the project which local communities also use to developed areas of tributaries where related procurement expendi- gain access markets for agriculture produce, hydropower projects are often locat- tures in operation phases. Indirect benefits typically result from - Jobs for unskilled or semi-skilled work in the construction and operation ed. - Direct investments in public in- government investment, e.g. from: frastructure beyond project re- phase, and

lated investments (possible be- - Project and workforce demand for locally produced goods and services, Includes enhancing indirect benefits cause of the project) 18 § National development budgets which can boost local economy and incomes. (i.e., leveraging investments in the providing allocations to provinces - The value of hydropower in the Province or tributary made possible or municipalities. power system (i.e., ancillary ser- Examples of non-project investment made possible by the fact the hydropower by the project, and seek ways to vices unique to hydropower - To share financial gains ac- is there include financial transfers from national to Provincial > local levels for: enhance wider economic multipliers such as load following and reac- cruing at national levels § capacity building, training and local employment; from project procurement). tive power) 19 § Central Government borrowing to § additional local infrastructure such as bridges and all weather river cross- - Production linkages with the provide infrastructure in the Prov- ings,

18 Requiring hydropower projects to incorporate local development and rural electrification in their plans can further boost local and regional development and have a positive impact on the lives of the poor, especially when the project is located in remote and underdeveloped areas. 19 Ancillary services include those services necessary to support the transmission of electric power from seller to purchaser given the obligations of control areas and transmitting utilities within those control areas to maintain reliable operations of the interconnected transmission system. Broadly six different kinds of ancillary services are: (i) scheduling and dispatch (ii) reactive power and voltage control (iii) loss compensation (iv) load following (v) system protection and (vi) energy imbalance.

26 Summary Generic options for National-to-Local (NTL) forms of BSM for hydropower on Mekong tributaries Matrix 1 + NTL Options selected to evaluate in the ISH13 Process Summary Features / Alternative Mechanisms Generic Option Type + options Institutional Arrangements evaluated in ISH13 Main Beneficiary Groups Financing Sources Benefit Delivery Mechanisms different sectors of the econo- ince or locally (at concessionary or § improved government services such as for health and education; my (economic multipliers) commercial rates) § support for other water usages such as irrigation, navigation, flood / drought - Contribution to policies (e.g., § Additional expenditures by the control, aquaculture, and leisure; and local to regional energy securi- Developer operator beyond the § Investment in other benefits through integrated water resource manage- ty, long-term stability in tariffs, project (negotiated between gov- ment services. etc.) ernment and developers in Con- Procurement policies that may look at local / provincial capacities first § In a comprehensive approach to cession Agreements) BSM, attention is given to systematically enhance and target additional benefits in ways that stakeholders and the public accept.

4-1 No measures beyond § Assumes that current practices are § Current practices. § Current practices. current practice are adequate or optimal. needed to optimise or spread additional benefits deriving from existing or proposed tributary hydropower. 4-2 Introduce guidance to § Local communities living in the § Project capital budgets § Use of existing institutional arrangements and regulation that define gov- optimize local use and vicinity of projects ernment and developer roles and road alignment criteria. socio-economic benefit § Local communities and municipal- § Road alignments consistent with sub/provincial road plans from project access roads ities along the access road § Optimizing alignment to service settlements / towns with limited road (e.g. in selecting road access alignments and road Multiple development benefits of road surfacing, road construc- access and alignments designed to tion standards). meet local development expectations. 4-3 Introduce guidance to § Local communities living in the § Project capital budgets § Use of existing institutional arrangements and regulation that define gov- maximize local / sub- vicinity of projects ernment and developer roles regional employment § Provincial / national labour force § Mechanism to prioritise local jobs for selected skills categories opportunities during § Local recruitment policies (e.g. Local first) for specified job categories (ad- construction of tributary Income related benefit for locally justed for Public and IPP models) hydropower projects. employed individuals and families 4-4 Introduce guidance to § Local communities living in the § Project operating budgets § Use of existing institutional arrangements and regulation that define maximize local / sub- vicinity of projects § Local revenue sharing funds government and developer roles

27 Summary Generic options for National-to-Local (NTL) forms of BSM for hydropower on Mekong tributaries Matrix 1 + NTL Options selected to evaluate in the ISH13 Process Summary Features / Alternative Mechanisms Generic Option Type + options Institutional Arrangements evaluated in ISH13 Main Beneficiary Groups Financing Sources Benefit Delivery Mechanisms regional employment § Provincial / national labour force § Mechanism to engage local communities for selected jobs (e.g. vegetation benefits during the opera- clearing and maintenance of transmission rights-of-way clearing) tion of tributary hydro- Income related benefit for locally § Training and skills development (see 4-5) power projects. employed individuals and families 4-5 Introduce guidance for § Local communities living in the § Project capital and operating § Existing training mechanisms with community involvement in the training local training and job vicinity of projects budgets needs assessment including training for: skills enhancement to § Local revenue sharing funds - Construction jobs (various construction skills compatible with the pro- optimize local /provincial ject work-force approach of the developer; employment impacts in - Operating phase jobs (from security to higher skilled jobs, local en- construction and opera- gagement in project mitigation and monitoring programmes. tion. § Trades training and certification in line with national trade citification programmes (so skills are portable and recognized beyond the project) § Local Scholarships for (intermediate and community college education) 4-6 Provide additional na- § Provincial economy, sub- § Government (budgets or borrow- § Negotiation between government and developer tional development provincial and local levels. ing) § Reflected in project agreements budget for public infra- § Contributions from the from structure investment in developer (negotiated) Provinces that have § § May be linked to provincial-level tributary hydropower. revenue sharing and royalties (NTL generic type 1 sharing monetary benefits of hydropower) 4-7 Provide additional budg- § Provincial economy, sub- § Government (budgets or borrow- § Negotiation between government and developer et allocations for public provincial and local levels. ing) § Reflected in project agreements infrastructure operation § Negotiate amounts from operator and maintenance in the (also when concessions are rene- Province / tributary with gotiated) hydropower § May be linked to provincial-level revenue sharing and royalties (NTL generic type 1 sharing monetary benefits of hydropower) 4-8 Provide programmes to § Provincial economy, sub- § Government (budgets or borrow- § Negotiation between government and developer deal with boom-bust provincial and local levels. ing) § Reflected in project agreements cycles after hydropower § Negotiate amounts from develop- construction on tributar- er ies.

28 Summary Generic options for National-to-Local (NTL) forms of BSM for hydropower on Mekong tributaries Matrix 1 + NTL Options selected to evaluate in the ISH13 Process Summary Features / Alternative Mechanisms Generic Option Type + options Institutional Arrangements evaluated in ISH13 Main Beneficiary Groups Financing Sources Benefit Delivery Mechanisms

29 Template 3c- Summary Matrix Illustration - Other cross-cutting considerations for BSM options selected by NMCS for evaluation in ISH13

Summary Other cross-cutting considerations for BSM related to hydropower on Mekong tributaries Matrix 3

Summary Features / Alternative Mechanisms Generic Considerations Target Beneficiary Groups Financing Sources Institutional Mechanisms

CC-1: What legal instruments may § All stakeholders interested in § Indirect costs for studies and § Selection if legal instruments appropriate to the country legal framework be considered to introduce benefit sustainable development and appropriate national-level multi- and development policy. sharing mechanisms? management of hydropower on stakeholder stakeholder consulta- § Covers BSM options for NTL TPE BSM as well as TB dimensions of tributary tributary systems. tion process involving tributary hydropower, as applicable; e.g.; Deciding on the type of legal instru- § Directly applies to national to local stakeholders - Water, Energy or environment Legislation / (Acts / Decrees / regula- ment (e.g. laws, regulations, decrees, forms of benefit sharing; § Normal policy / planning / consul- tions) tation processes funded by na- directives) to introduce benefit shar- § Indirectly affects transboundary - Directive (e.g. Cabinet Directives) and Policy direction to utilities considerations of tributary hydro- tional line agencies ing mechanisms in a consistent man- - Concerns which Ministry or Department leads, and which co spon- power.20 § Potential for financial support sors legal instruments ner on existing and proposed tribu- from Development Partners (e.g., - Transboundary dimensions related to Agreement (e.g. bilateral or tary hydropower projects in the vie existing projects and Technical country. assistance) MRC based)

§ Potential support from MRC Various mechanisms may be used to deliver benefits: e.g. Programmes, especially concerning legal provisions on shared tributaries § Programmes delivered by local NGOs or CSOs; 21 § Programmes organized by the project developer / operator and integrated will livelihood restoration; § National or provincial support programmes for ethnic communities;

20 In the sense benefits shared among countries at the national levels would be shared with or spread to sub-national levels (e.g. Provinces of tributaries and river communities in the tributary through national-to- local options. 21 For example, (i) Grant contributions as incremental funding for local development assistance programs delivered through provincial or national target programs, (ii) Grant contributions to community-based activities funded in part by a contribution in kind from local communities (iii) grant contributions to operate small loan and micro-credit facilities including those of a revolving nature (iv) Grant contributions to investment in expanding connection to electrical services (v) support to advance the use of isolated on-spot electrical generation in areas where it is uneconomical for grid-connected supply (VI) Gant contributions to other investments for local socio-economic and cultural advancement of common interest to beneficiaries, such as activities to establish and operate a community newsletter to keep beneficiaries informed and enable the exchange views on effective use and monitoring of benefit sharing funds.

30 Summary Other cross-cutting considerations for BSM related to hydropower on Mekong tributaries Matrix 3

Summary Features / Alternative Mechanisms Generic Considerations Target Beneficiary Groups Financing Sources Institutional Mechanisms

§ RBO/RBC coordinated activities; § Combinations of the above.

CC 1-1 Incorporate requirements The decision will affect: § indirect costs for studies, and § normal government policy-making processes /procedures to prepare draft for benefit sharing on consultations for decision-making legislation / regulation tributary hydropower § Tributary river basin residents and § potential pilot projects to trial and § Approaches that are used in different countries and regions include the projects in appropriate economic sectors, evaluate draft provisions for laws incorporation of national-to Local forms of BSM in: national legislation and § Other target beneficiaries, de- and regulations, funded by a - Water Laws / Acts the country legal frame- pending on aims and focus of BSM combination of: - Electricity or Energy Laws / Acts work. legislation / regulation. - Line agency, or electricity utility - New Decree Laws specific to BSM, that may be sponsored by Water, En- budgets; vironment or Energy Ministry and co-sponsored by other key Ministries (e.g., within existing Benefits flow after the legal instru- - Development Partner support to ment to use is decided and imple- RBC/ RBOs or hydropower project Water or Electricity Laws 23 § Otherwise, options related to transboundary dimensions in bilateral or 22 an Acts, or in new Decree mented. regional agreements - MRC Programme support, espe- Laws specific to BSM) cially in the case of shared tributaries. CC Articulate BSM policy at The decision will affect: § indirect costs for studies, and § In processes for government approval of project agreements (new projects) 1-2 the national level, and § residents and economic sectors of consultations to support decision- e.g. direct the national elec- tributary river basins making - Project Development Agreements tricity utility and /or § Applies equally to existing and § Potential for pilot projects to test - Power Purchase Agreements concerned line Ministry to proposed tributary hydropower provisions and develop guidance - Concession Agreements 24 introduce BSM in tribu- This means no formal Act or Law. § Or government direction to electricity utilities tary hydropower Project Agreements. CC Incorporate official pov- § poor and vulnerable communities § Revenue sharing mechanisms (i.e., § Arrangement typically needs a body such as a local fund, local government 1-3 erty reduction targets in and households in the project vi- targeting or prioritizing some po- or the project to:

22 This refers to BSM steps that go beyond the current benefit sharing practices in Mekong countries as describe in Volume 1 of the KB. 23 For example, incorporating a BSM pilot in an existing donor supported hydropower project, or support for establishment / strengthening of a tributary RBC/RBO. 24 It is usually limited to countries with a few hydropower projects, or situations where the utility is wholly state owned and controlled, or essentially an arm of government.

31 Summary Other cross-cutting considerations for BSM related to hydropower on Mekong tributaries Matrix 3

Summary Features / Alternative Mechanisms Generic Considerations Target Beneficiary Groups Financing Sources Institutional Mechanisms

BSM planning and im- cinity tion of the local revenue sharing - Select and target support activities appropriate to poor and vulnerable plementation arrange- § all households in the vicinity of to poverty reduction in the short in the Project vicinity ments in the vicinity of projects. term or until targets are met. - Ensure participatory decision making by empowerment of the intended tributary hydropower. § Potential contribution from the beneficiaries as needed. Approaches like ensuring investments developers (if negotiated and in- - Close monitoring and evaluation of support to ensure it is effective corporated in Project Agreements) Relevant in situations supported by revenue-sharing funds § Potentially linked to existing or proposed livelihood restoration plans (new

where communities in raise income levels to at least average projects) the project vicinity live provincial levels, and thereafter meet § Potentially integrated into local government development plan or RBC / 25 well below national / evolving local development, cultural RBO Plans. provincial income aver- and welfare needs. ages. CC Clarify the proportional The decision will affect: § indirect costs for studies, and Various factors may be considered to decided the proportional share if there are 1-4 share of revenue sharing § Residents and economic sectors of consultations to support decision- two or more Provinces in the Tributary e.g.: that Provinces in the tributary river basins making - Provinces where the main project facility (head) is located;

tributary catchment are § Applies equally to existing and - Provinces affected by the impoundment entitled to receive for proposed tributary hydropower - Provinces on either side of the river bank; § Benefits flow after the legal in- hydropower in their - Provinces affected by access roads (may be +ve or –ve); tributary. strument to use is decided and implemented. - Provinces with residents in the tributary catchment. - Number of people in each province directly or indirectly affected (as indicated in project studies like EIAs or SEAs) CC Incorporate benefit The decision will affect: § Costs for studies, and MRC con- § Mechanism exists (MRC BDP processes and MRC Programmes) 1-5 sharing provisions related sultations to support decision- § Actual benefits delivered via NTL BSM options to transboundary dimen- § Residents and economic sectors of making § Plus any arrangements related to transboundary dimensions that may be

25 Various benefit mechanisms may be employed by RBC/RBOs: - Programmes delivered by local NGOs or CSOs; 25 - Programmes organized by the project developer / operator and integrated will livelihood restoration; - National or provincial support programmes for ethnic communities; - RBO/RBC coordinated activities; - Combinations of the above.

32 Summary Other cross-cutting considerations for BSM related to hydropower on Mekong tributaries Matrix 3

Summary Features / Alternative Mechanisms Generic Considerations Target Beneficiary Groups Financing Sources Institutional Mechanisms

sions of significant Me- tributary river basins § MRC programme budgets agreed. kong tributaries in MRC § The economy of Provinces in the Procedures, conditional Tributary basin on agreement under the § Applies equally to existing and Basin Development proposed tributary hydropower Strategy and MRC Framework.

CC-2: What measures may be con- § Provincial economies of tributar- § All sources apply (NTL Types 1-5) Refers to: § For NTL- ass appropriate to NTL sidered relating to the size and ies with hydropower § The main source is revenue shar- § all institutional mechanisms for BSM regulation scale of hydropower projects in § Residents of tributary basins ing (which is reflected in the tariff) NTL options in Matrix 1 § For transboundary dimensions – tributaries? § Communities in the vicinity of § all institutional mechanisms for as set out in agreements concern- tributary hydropower Projects The practicality and ability of small to transboundary dimensions of ing the project (s) in the tributary Alternative strategies to introduce micro hydropower projects to support tributary hydropower in Matrix 2 benefit sharing on tributary hydro- All stakeholders with an interest in revenue sharing is the main concern. power projects of different scales, sustainable development of tributar- A considerable larger number of types and sizes. ies and hydropower on tributaries. Therefore, the question is really how small, mini and micro hydropower large does the project need to be projects exist and may be anticipated Recognizes that all 132 LMB tributary before benefit sharing provisions are in future. projects currently listed in the MRC practical. Hydropower Data base are above 20 Projects may either be connected to MW. the national grid, for isolated system supply or for single users (e.g., dedi- cated supply to mining companies or industrial estates). CC Apply BSM policy equally § All stakeholders with an interest in § All sources apply (NTL Types 1-5) § Mechanisms as reflected in regulations 2-1 to all grid-connected sustainable development of tribu- § For NTL- as appropriate to NTL BSM regulation hydropower projects with taries and hydropower on tributar- Typically projects with reservoirs § For transboundary dimensions – as set out in relevant agreements on a legal requirement for an ies. above 1 mm3 or 1 MW require a full shared tributaries or regionally (e.g., MRC agreements) environment impact EIA. assessment (EIA). CC Apply BSM policy equally § All stakeholders with an interest in § All sources apply (NTL Types 1-5) § Mechanisms as reflected in regulations

33 Summary Other cross-cutting considerations for BSM related to hydropower on Mekong tributaries Matrix 3

Summary Features / Alternative Mechanisms Generic Considerations Target Beneficiary Groups Financing Sources Institutional Mechanisms

2-2 to all hydropower pro- sustainable development of tribu- § For NTL- as appropriate to NTL BSM regulation jects above an installed taries and hydropower on tributar- § For transboundary dimensions – as set out in relevant agreements on capacity defined in regu- ies. shared tributaries or regionally (e.g., MRC agreements) lation (e.g. 1.0 MW).

CC Separate regulations for § All stakeholders with an interest in § All sources apply (NTL Types 1-5) § Mechanisms as reflected in regulations 2-3 revenue sharing for sustainable development of tribu- § Different formulae for revenue sharing based on some constant like in- hydropower projects of taries and hydropower on tributar- stalled capacity e.g. different size categories ies. - 1-10 MW

(e.g. MW installed). - 10-50 MW

- 50-300 MW - Above 300 MW

CC Apply BSM policy equally § All stakeholders with an interest in § All sources apply (NTL Types 1-5) § For NTL- as appropriate to national regulation 2-4 to all multi-purpose dams sustainable development of tribu- § For transboundary dimensions – as set out in relevant agreements on with a hydropower com- taries and hydropower on tributar- shared tributaries or regionally (e.g., MRC agreements) ponent. ies. § Dams with out hydropower for other purposes require separate regulation § Includes for example irrigation by the concerned Ministry (e.g. Irrigation) projects with a hydropower component

§ All stakeholders interested in § Cost of evaluations and assess- § Utilizing existing tools and procedures and adding elements to take ac- sustainable development and ments are Internalized in the nor- count of benefit sharing management of hydropower on mal project preparation studies tributary systems: and in studies supporting mitiga- Principles include: tion and management § Provincial economies of tributar- § Many planning-type options

34 Summary Other cross-cutting considerations for BSM related to hydropower on Mekong tributaries Matrix 3

Summary Features / Alternative Mechanisms Generic Considerations Target Beneficiary Groups Financing Sources Institutional Mechanisms

ies with hydropower noted herein are either low cost § Pursuing a least cost-approach to BSM over the project economic life; § Residents of tributary basins § Building-in flexibly optimize operating strategies for different criteria over § Communities in the vicinity of the project life27 tributary hydropower Projects § Engaging affected communities in identifying potential benefit sharing measures when EIA / SAP, RAPs and EMPs are prepared; Sub-national levels: 26 § Targeting existing rural electrification funds to adversely affected people; § Includes sub-national groups § Boosting local development opportunities through enhancing resource (provinces, districts, municipali- access. ties, villages, etc., that host, or may be affected by tributary hydropower in +ve / –ve ways.

Actual delivery of benefits by appro-

priate NTL measures ( Matrix 1 op-

tions):

§ During project construction § During project operation CC Include assessments of § All stakeholders interested in § Internalized in the cost of strategic Studies conducted by line agencies, tributary RBC/RBOs or INGO studies recog- 3-1 benefit sharing in strate- sustainable development and planning / related studies of tribu- nized by governments, such as: gic studies for the identi- management of hydropower on tary development potential fication, selection and tributary systems: § hydropower sub-sector studies and strategies

operation of tributary Various sources, e.g.: § hydropower ranking studies for tributary basins With reference to the provisions in hydropower projects. § Line Agency or RBC / RBO budgets § Tributary or sector strategic environmental assessments (SEAs), and BSM regulation § Development Partner financial § integrated river basin planning and management studies (IWRM)

support § MRC Programme contribution or collaboration in studies

26 National-level benefit may be broadly defined as economic growth. Many people in the country may benefit directly and indirectly in terms of (i) national income from hydropower (e.g., direct /indirect taxes, fees, other contributions to national accounts including export revenue, and (ii) electricity consumers in all sectors in urban and rural settings. 27 with particular regard to water releases for downstream environmental flow provision linked to livelihoods;

35 Summary Other cross-cutting considerations for BSM related to hydropower on Mekong tributaries Matrix 3

Summary Features / Alternative Mechanisms Generic Considerations Target Beneficiary Groups Financing Sources Institutional Mechanisms

CC Include benefit sharing in § All stakeholders in tributary bene- § Costs of assessments Internalized § Part of normal project preparation study / review processes for EIA / SIAs 3-2 project feasibility and EIA fit sharing project preparation studies and related studies. studies that form the § Developer financed § National agencies may issue guidance on how BSM considerations are taken basis for national approv- With reference to the provisions in into account in project studies based on legal / regulatory provisions. als of tributary hydro- BSM regulation § MRC may facilitate preparation of design guidance for Significant Tributar- power. ies including a section on BSM aspects (i.e., as part of the MRC mandate for cooperation in sustainable development).28 CC Incorporate concise § All stakeholders in tributary bene- § Costs of assessments Internalized § Part of normal project preparation study / review process. 3-3 assessments of potential fit sharing project preparation studies § National agencies issue guidance. benefit sharing measures § Developer financed studies § MRC may facilitate preparation of guidance development. in project EIAs linked to Covering both potentially adverse the identification of social impacts and opportunities to enhance and environmental im- /unlock local development opportuni- pacts of construction and ties that resource transformations of operation of tributary hydropower may bring (such as the hydropower. reservoir and new wetland areas). CC Explicitly identify and § Households in the project vicinity § Project proponent financing the § Undertaken as part of the EIA /SIA 3-4 report on local prefer- § River basin communities EIA /SIA § During the project Environment Impact Assessment (EIA) and resettlement ences for resource access and compensation processes for proposed projects. entitlements, permissions This refers to proposed projects. or rights in discussions Actual delivery of benefits by appropriate NTL measures ( Matrix 1 options): with local communities § During project construction during Project Prepara- § During project operation tion studies. CC Assess the scope to § Households in the project vicinity § Financing of feasibility and de- § Undertaken as part of the project feasibility and detailed design 3-5 enhance the physical § Tributary river basin communities tailed design studies by the Pro- § Line agencies may issue guidance consistent with BSM regulations design of hydropower § Economies or provinces in the ject Proponent § MRC may incorporate a BSM section in the first Design Guidance for Signifi- projects to provide great- tributary cant Tributaries, e.g., how to assess the scope to: er flexibility for adaptive - build-in operational flexibility;

28 Similar to the preliminary design guidance for proposed Mekong mainstream dams approved by the MRC Joint Committee in 2010

36 Summary Other cross-cutting considerations for BSM related to hydropower on Mekong tributaries Matrix 3

Summary Features / Alternative Mechanisms Generic Considerations Target Beneficiary Groups Financing Sources Institutional Mechanisms

management and opti- Alternatives include selecting equip- - Include equipment that reduces adverse impacts on ecosystem functions mize how benefits and ment for the project and designing and services (e.g., fish passage structures, fish-friendly turbines and tech- costs are distributed in structures (including retrofit) to en- niques to control the chemical quality of water releases); the tributary to different hance sustainable performance, e.g., - Minimize adverse impacts on downstream river flow change for alternative stakeholder / develop- intakes, outlets, gate arrangements, operating strategies. 30 ment interests. downstream re-regulation structures - Identify the status of electricity access in the project impact area.31 and turbine designs.29 - Highlight increments in capital or operating costs of such alternatives, and indicate the value / benefit-cost. CC Require assessments of § Households in the project vicinity § Project capital budget mainly (i.e., § Line agencies may issue guidance consistent with BSM regulation, for 3-6 opportunities to optimize § Tributary river basin communities the project developer) example, related to: benefit sharing during § Economies of the county and § Other potential contributions (e.g. - for local employment in project or related construction works; the construction phases provinces of tributaries line agency, provincial govern- - for source goods and services locally in ways that contribute to the local of tributary hydropower ment or development partners economy; projects. Delivery of benefits linked to the - in training local people for labour and semi-skilled jobs available once procurement of goods and services the project is operational. for the project - Community or village contracts for specific tasks. 32 § MRC may incorporate a section in the first Design Guidance for Significant

29 For example: - Intakes: providing variable level intakes to improve water quality of downstream releases - Outlets: sizing and location of outlets (e.g. bottom flow outlets) to allow a greater range of release patterns, - Gates and other arrangements for sediment bypass, sluicing and flushing, - Re-regulation: inclusion of re-regulation structures to deal with peaking and provide additional flexibility for power generation and downstream releases to optimize other benefits, and - design of upstream and downstream fish passage structures, flows in fish passages and “fish friendly” turbines, etc., 30 This will include considerations like the amount of reservoir draw down, maintaining minimum downstream water releases in diversion projects and downstream re-regulation weirs; 31 For example (i) assess the current level of rural electrification and quality of electrical service (ii) provide specifications and indicative costs to electrify the resettlement households and the resettlement host community if it is not connected (iii) for communities living the project impact area with no electricity service, provide an indicative cost of electrification via grid extension or via alternative small-scale isolated generation where grid connection is not considered to be economically feasible (iv) for communities with existing electrical service, assess provide an indicative cost for refurbishment of electrical supply equipment to improve levels of service and reliability of supply, and (v) where feasible, provide a breakdown of household electricity access with income levels The Line agency would make the determination if these assessments are better don by the rural electrification body. 32 including activities such as clearing and maintenance of transmission rights-of-way, slope stabilization works and field monitoring of project impacts

37 Summary Other cross-cutting considerations for BSM related to hydropower on Mekong tributaries Matrix 3

Summary Features / Alternative Mechanisms Generic Considerations Target Beneficiary Groups Financing Sources Institutional Mechanisms

Tributaries on these aspects. CC Require assessments of § Households in the project vicinity § Revenue sharing § Systematic review of the 5- types of national-to local benefit sharing (Matrix 3-7 opportunities to optimize § Tributary river basin communities § Other contributions (e.g. line 1) as identified in BSM regulation benefit sharing in the § Economies of the county and agency, provincial government or § Systematic review of options to address transboundary dimensions of operation phase of tribu- provinces of tributaries development partners tributary hydropower tary hydropower projects.

CC-4: What measures may be § Provincial economies of tributar- Refers to: Refers to: considered for hydropower projects ies with hydropower § all NTL options in Matrix 1 § all institutional mechanisms for NTL options in Matrix 1 for power export or national supply § Residents of tributary basins § all transboundary dimension § all institutional mechanisms for transboundary dimensions of tributary § Communities in the vicinity of options in Matrix 2 hydropower in Matrix 2 Alternative strategies / procedures for tributary hydropower Projects benefit sharing on tributary hydro- Projects that export power to neigh- The main difference between domestic supply only projects and projects with power projects that supply domestic All stakeholders in sustainable devel- bouring countries intrinsically involve and export component is the latter are based on negotiation between buyers power markets and export power opment of tributaries. sharing hydropower benefits between and sellers in two countries. markets in neighbouring countries. two or more Mekong countries. Recognizes most of the 132 tributary § For NTL- ass appropriate to NTL BSM regulation projects now listed in the MRC Hydro- § For transboundary dimensions – as set out in agreements concerning the power Database are for national and project (s) in the tributary export markets.

CC Treat tributary projects § All stakeholders in sustainable § All potential financing sources § Mechanisms as appropriate in national regulation for tributary hydropower 4-1 supplying domestic and development of tributaries. apply (as for NTL Types 1-5 in Ma- or agreements between two or more riparian countries. export power markets in trix 1 and transboundary dimen- National-to-local BSM Provides a consistent approach. sions in Matrix 2) regulation. Does not distort negotiation on proportion of power output from the tributary project allocated for domestic / export power markets. CC Treat proposed tributary § All stakeholders in sustainable § All sources apply (NTL Types 1-5) § Mechanisms as appropriate in national regulation for tributary hydropower

38 Summary Other cross-cutting considerations for BSM related to hydropower on Mekong tributaries Matrix 3

Summary Features / Alternative Mechanisms Generic Considerations Target Beneficiary Groups Financing Sources Institutional Mechanisms

4-2 hydropower projects development of tributaries. § The main source is revenue shar- or agreements between two or more riparian countries. supplying domestic and ing § For new projects to supply only national power markets, revenue sharing export markets equally in Provides a consistent approach. provisions are reflected in national consumer electricity tariffs established national BSM regulation Revenue sharing is essentially a “pass- by governments. with respect to revenue This alternative focuses specifically on through" for hydropower projects. § For new projects to supply export power markets, revenue sharing provi- sharing. the revenues sharing aspect for new sions are factored into the: or proposed projects. It is paid by electricity users who - The PPA negotiated for power export, and benefit from electricity supply (i.e. - Reflected in the revenue management plan regarding the national fi- Does not distort any negotiation on internalized in the tariff, and the PPA) nancial / economic gains; proportion of power output from the tributary project allocated for domestic / export power markets. CC Treat existing tributary § All stakeholders with and interest § All sources apply (NTL Types 1-5) § The mechanisms for revenue sharing is the main issue 4-3 hydropower projects in sustainable development of § The main source is revenue shar- § For existing tributary hydropower projects that only supply national power supplying domestic and tributaries and hydropower. ing (which is reflected in the tariff) markets, the revenue sharing provisions are reflected in national consumer export markets equally in electricity tariffs (e.g., a charge on top of the existing PPA). national BSM regulation – This provides a consistent approach. Revenue sharing is essentially a “pass- § For existing projects that supply export power markets, revenue sharing with respect to revenue through" for hydropower projects. provisions are factored into the: sharing. This alternative focuses specifically on - The revenue management plan of the country receiving payment for the revenues sharing aspect for exist- It is paid by electricity users who exports, and ing projects that already have signed benefit from electricity supply (i.e. - The PPA when it comes up for re-negotiation (e.g. at the end of conces- PPAs for the concession period of the internalized in the tariff) sion period). project (e.g., 20-30 years or more).

CC-5: What measures may be con- § All stakeholders in tributary bene- § Budgets of project preparation § Various models exist in different countries to provide risk management, fit sharing studies (developers) which can be adapted. 33

33 Models available from international organizations such as Transparency International and multilateral development agencies (World Bank and ADB) supporting governance improvement plans and related M&E programmes in development projects. TI for example provides tools like citizens report cards (CRC) to addresses critical themes in the delivery of public services such as access to services, quality and reliability of

39 Summary Other cross-cutting considerations for BSM related to hydropower on Mekong tributaries Matrix 3

Summary Features / Alternative Mechanisms Generic Considerations Target Beneficiary Groups Financing Sources Institutional Mechanisms sidered for transparency, dispute § Revenue sharing funds (for oper- § Transparency-related plans are prepared under the guidance of a multi- avoidance and settlement? Transparency and social accountabil- ating projects) stakeholder Fund Management Committee or Board, following regulations ity is important in all transactions § Potentially support from Devel- prescribed in Lay / regulation s Alternative measures to strengthen including the selection, evaluation, opment Partners for demonstra- § MRC programmes and Development partners may support the training / transparency, dispute avoidance and award and effective use of funds from tion projects acquisition of models to use. settling disputes that may arise on revenue sharing. § Transparency is generally part of a risk management strategy. RBC/RBOs implementation of national benefit may be involved in communications with tributary basin residents. sharing law and policies related to This avoids abuse of power or percep-

Tributary hydropower. tion of misuse of funds.

(clarified in law when feasible and § Enhances beneficiary confidence practical) funds are allocated in a fair and transparent manner. § Helps to avoid risk of unplanned interruption or suspension of benefit sharing.

CC Clearly set out steps to § Beneficiary groups § Normal policy development / § Normal process of drafting policy / laws / agreements 5-1 strengthen transparency § All stakeholders interested in consultation budgets § Enhances beneficiary confidence funds are allocated in a fair and transpar- and dispute settlement sustainable development and ent manner. mechanisms in BSM Laws management of hydropower on § Avoids unplanned interruption or suspension of benefit sharing. or Agreements. tributary systems.

CC Prepare transparency § Beneficiary groups § Revenue sharing funds § Various models exist that provide adequate risk management and can be 5-2 plans for Local Area § All stakeholders interested in § E.g. from the portion for admin- adapted

services, problems encountered by users of services and responsiveness of service providers in addressing these problems, transparency in service provisions like disclosure of service quality standards and norms, and costs incurred in using a service including hidden costs such as bribes. The CRC also provides a summative satisfaction score that captures the totality of critical service-related parameters. http://www.transparency.org/content/search?cx=011301395855252246152%3Adso1vyx3hck&cof=FORID%3A11&ie=UTF-8&q=Governance+improvement+plans&sa.x=20&sa.y=8 World Bank provides guidance materials such as World Bank Paper 121 Setting standards for communication and governance. http://www- wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2007/08/10/000011823_20070810125218/Rendered/PDF/405620Setting018082137169501PUBLIC1.pdf

40 Summary Other cross-cutting considerations for BSM related to hydropower on Mekong tributaries Matrix 3

Summary Features / Alternative Mechanisms Generic Considerations Target Beneficiary Groups Financing Sources Institutional Mechanisms

Development Funds sustainable development and istration and management35 § Plans are prepared under guidance of the Fund Management Committee or (institutional arrange- management of hydropower on Board following regulations and or Models ments) that collect/ tributary systems. § MRC and Development partners may support the training / acquisition of distribute money for Transparency Plans also knows as models revenue sharing on Governance Improvement Plans 34 tributary hydropower. (GIPs).

CC Prepare social accounta- § Local communities in the vicinity § Revenue sharing funds § Plans prepared under guidance of the multi-stakeholder committee or 5-3 bility plans for Local of projects § E.g. from the portion for admin- Board for the Local Fund following government regulations, and the Development Funds § All stakeholders interested in istration and management37 Fund Charter established for benefit sustainable development and § Social accountability means an open and transparent process that directly sharing on tributary management of hydropower on involves beneficiaries in verifying the fairness and effective use of revenue tributary systems. sharing money / and other support given by the Local Development Fund. hydropower. 36 Social accountability Plans;

CC Clarify how disputes and § All stakeholders in tributary bene- § Revenue sharing funds § Generally dispute resolution and appeal is handled in the manner pre- 5-4 appeals will be handled in fit sharing § E.g. from the portion for admin- scribed by applicable law. administration of dis- § Enhances beneficiary confidence istration and management § For Local, municipal or Provincial Development funds that support activities bursements for revenue funds are allocated in a fair and normally falling within the authority of Provinces, resolution at provincial sharing on tributary transparent manner. levels is often appropriate. hydropower. § Avoids unplanned interruption or § Disputes arising between Provinces in the same country that sharing a the suspension of benefit sharing. tributary may be resolved at national levels or otherwise in a mutually agreed manner. § Disputes between provinces in two or more countries that share a tributary may be resolved in bilateral or regional negotiation processes.

34 http://issuu.com/world.bank.publications/docs/9780821382165 35 Overall it is important to limit the proportion of revenue that Funds use for administration and management (e.g. no more than 10 or 15 percent). 36 See Transparency International for tools (e.g. The Community Development Fund (CDF) Social Audit Guide: A Handbook for Communitieshttp://gateway.transparency.org/tools/detail/378) and Opportunities in Dam Planning and Management: A Communication Practitioner’s Handbook for Large Water Infrastructure noted above. 37 As above.

41 Summary Other cross-cutting considerations for BSM related to hydropower on Mekong tributaries Matrix 3

Summary Features / Alternative Mechanisms Generic Considerations Target Beneficiary Groups Financing Sources Institutional Mechanisms

42 Template 3b- Summary Matrix Illustration BSM Options for the transboundary dimensions of tributary hydropower selected by NMCS for evaluation in ISH13

Summary Generic BSM Options for transboundary dimensions of hydropower on Mekong tributaries Matrix 2 + the TB dimension options selected to evaluate in the ISH13 process Summary Features / Alternative Mechanisms Generic Option Type + options evaluated in ISH13 Target Beneficiary Groups Financing Sources Institutional Mechanisms

Generic TB Type 1: increasing In varying degrees: Individual, parallel or joint investment Existing institutional mechanisms used to identify, agree upon and manage benefits “to the river”. of riparian countries in appropriate transboundary dimensions of tributary hydropower, e.g.: § Economies of provinces in two or infrastructure and water management § MRC Framework (4 Member Countries and 2 upstream Dialogue Partners) Covers a range of mutually beneficial more riparian countries that share strategies – various sources. E.g. § Bi-national discussion and Agreement frameworks investments and management strat- tributaries, which have hydropow- egies to protect water and related er; Government expenditures: Transboundary dimensions (TB) of tributary hydropower are addressed in the resources in Mekong tributaries § Residents of tributary basins § Development budgets of riparian MRC Basin Development Plan and Strategy. Benefits “to the river” delivered including: shared between two or more ri- countries through ongoing implementation, continuous improvement and coordination parian countries, which have hy- § Development Partner contribu- of: dropower; - water quantity and quality; tions § Mekong mainstream river basin - sediment mechanisms for river § Various resource use fees, taxes on § National regulatory frameworks (including energy, power, water and envi- residents upstream / downstream morphology; hydropower entities. ronment laws and Sector Programmes); of the tributary confluence with - functioning of aquatic ecosys- § Tributary RBC/RBO Programmes the mainstream. tems; Revenue / tariff contributions: § Provincial / sub-provincial programmes;

- wetlands; § National electricity tariffs (as a § MRC Procedures and Programmes (coordinated with the above); - biodiversity and cultural values, source for water use fees, etc.) and § Export tariff on tributary hydro- MRC and National Programmes in the water sector as well as fisheries, flood - other IWRM factors related to power (as above) and drought management, tourism, watershed management and environment, overall bio-physical sustainability etc. Other innovative financing sources: Cooperative measures are subject to and mechanisms in future, e.g.: MRC Procedures - implementation of all five MRC Procedures is especially § Agreement and negotiated out- PES and Carbon financing; relevant to TB BSM Types 1 to 3. 38 § A Mekong Fund with a mix of comes. financing sources (see Option 1-7)

1-1 No addition measures § Provincial economies / residents of § Assumes current practice is ade- § Assumes this aspect is adequately addressed by ongoing and evolving tributary basins quate implementation of:

38 Including (i) Procedures for Data and Information Exchange and Sharing (PDIES) (ii) Procedures for Notification, Prior Consultation and Agreement (PNPCA) (iii) Procedures for Maintenance of Flow on the Mainstream (PMFM) (iv) Procedures for Water Quality (PWQ) and (v) Procedures for Water Use Monitoring (PWUM)

43 Summary Generic BSM Options for transboundary dimensions of hydropower on Mekong tributaries Matrix 2 + the TB dimension options selected to evaluate in the ISH13 process Summary Features / Alternative Mechanisms Generic Option Type + options evaluated in ISH13 Target Beneficiary Groups Financing Sources Institutional Mechanisms

beyond current practice § Mainstream river basin residents § Accepts there is always room to are needed to share upstream / downstream of the expand financing support for exist- § relevant National line-agency programmes benefits related to trans- tributary confluence. ing / evolving strategies and § tributary RBC / RBO activities (potentially) boundary dimensions of modes of cooperation, e.g. via § existing cooperation arrangements under the MRC as the regional river

tributary hydropower. Assumes that mutually beneficial basin entity - National line agency or RBO/RBC development of Mekong tributary systems (water and related resources) programmes and budgets - Development Partner support for is adequately addressed by ongoing national initiatives and evolving National programmes - MRC Development Partner sup- and cooperation mechanisms. port cooperation in MRC Pro- grammes

1-2 Provide guidelines to § Provincial economies / residents of § MRC Programme Budgets § Existing MRC Programmes and dialogue processes: evaluate BSM options for tributary basins § Funded by: - BDP analysis and BDS negotiation process transboundary dimen- § Mainstream river basin residents - MRC Member Countries - MRC Programme support to NMCS (sector based) - § sions of tributary hydro- upstream / downstream of the MRC Development Partner Relevant national agencies and potentially RBC/RBOs playing a key role contributions power in MRC Pro- tributary confluence. grammes and MRC Pro- cedures. 1-3 Provide guidelines to § Residents of tributary basins § Normal government financing of § Strengthening / reinforcing RBO/RBC mechanisms in national laws. evaluate BSM options for shared between two or more ri- RBC / RBOs of Mekong tributaries § MRC guidance / technical support to RBO/RBCs on shared tributaries after transboundary dimen- parian countries; these entities are functional; sions of tributary hydro- § Economies of provinces in riparian Otherwise: § MRC facilitated cooperation (meetings / information sharing / planning interactions. Etc.) between RBO/RBCs on tributaries shared between two or power in strategic plans countries associated with the trib- § Development Partner contribu- more Mekong countries; and strategies developed utary; tions to RBC/RBOs; § MRC Programme support to facili- § MRC Programme support as appropriate to help pilot / implement guide- by tributary RBC / RBOs. tate preparation of guidelines or lines and translation of measures to tributary RBC/RBO plans. models § Innovative financing of RBOs/RBCs authorized by government, e.g.; - revenue sharing contribution to tributary basin entities) - See NTL Type 1 BSM options for revenue sharing (in Matrix 1) 1-4 Coordinate / align BSM- § Residents of tributary basins with § Normal national government § Strengthen / reinforce RBO/RBC mechanisms provided in national laws financial support to RBO/RBCs § MRC guidance / technical support for cooperation between RBO/RBCs on

44 Summary Generic BSM Options for transboundary dimensions of hydropower on Mekong tributaries Matrix 2 + the TB dimension options selected to evaluate in the ISH13 process Summary Features / Alternative Mechanisms Generic Option Type + options evaluated in ISH13 Target Beneficiary Groups Financing Sources Institutional Mechanisms

related provisions for hydropower shared between two shared tributaries, once they are functional catchment management or more riparian countries; Otherwise: § RBP/RBC Programmes to define mechanisms and MRC Programme support in tributary basins with § Economies of provinces in riparian § Development Partner contribu- as appropriate; hydropower shared by countries associated with tributar- tions § Actual implementation measures to be agreed in national processes two or more countries. ies that generate hydropower rev- § MRC Programme support on start enue; up § Innovative financing of RBOs/RBCs authorized by governments, e.g.; - revenue sharing contribution to tributary basin entities; - Sees NTL Type 1 BSM options for revenue sharing (see Matrix 1). 1-5 Expand available financ- § Provincial economies / residents of § Revenue from tributary hydropow- § Revenue sharing mechanisms, in cases when funds are shared between ing for measures to pro- tributary basins with hydropower er (see NTL Revenue sharing op- counties in an agreed proportion; tect / enhance water § Mainstream river basin residents tions in Matrix 1) § Serves as additional finance to address specific concerns resolved by benefit resource quality using upstream / downstream of the sharing in a targeted manner. § Existing National Programmes would utilize more funding to deliver benefits hydropower revenue in tributary confluence. § MRC Programmes may play a facilitating role. tributary basins shared by two or more countries. 1-6 Enhance riparian cooper- § Residents of tributary basins with § Normal national government § Existing EFA / IBFN undertaking according to accepted good practice. ation in preparing envi- hydropower shared between two financial support to national line § Cooperation between riparian sharing tributary basins, possibly via ronment flow assessment or more riparian countries; agencies and/or RBO/RBCs strengthening cooperation between RBC/RBOs in the respective countries and provision in reservoir § Economies of provinces in riparian § Potentially MRC Programme sup- on the same tributary port to help cooperation / coordi- operation / management countries associated with the trib- nation either to develop models or strategies in tributaries utary; help build capacity shared by two or more Complements Type 2 Options Countries.

Benefits arising from improved environmental flows and related ecosystem services 1-7 Evaluate merits and § Provincial economies / residents of § Financial contribution from hydro- § Regional Mekong Fund integrated with the MRC framework. enabling conditions to LMB tributary basins with hydropower revenue on significant tribu- § The regional Fund may have multiple financing windows extending across establish a “Mekong power; taries; the collective interests of MRC Member Countries, as embodied in the 1995 Fund” to facilitate benefit § Mainstream river basin residents Mekong Agreement, especially including: - Transboundary dimensions of benefit sharing

45 Summary Generic BSM Options for transboundary dimensions of hydropower on Mekong tributaries Matrix 2 + the TB dimension options selected to evaluate in the ISH13 process Summary Features / Alternative Mechanisms Generic Option Type + options evaluated in ISH13 Target Beneficiary Groups Financing Sources Institutional Mechanisms

sharing on transboundary upstream / downstream of the Plus potentially expanded to: - Operation of the MRCS dimensions of tributary tributary confluence; - MRC Programmes hydropower (and poten- § National Economies of MRC Mem- § Financial contributions from § Countries may apply to the Fund bases on agreed criteria. tially LMB-UMB main- ber countries. hydropower revenue from pro- For details see Initial Considerations On A Possible Regional Funding Mecha-

stream hydropower). posed LMB mainstream hydro- nism Established Under The Framework Of Mekong Cooperation To Advance Multiple benefits arising from a per- power schemes; Sustainability Dimensions of Hydropower. manent, self-financing Mekong Fund § Financial contribution from hy- th (Preparatory Meeting of the MRC Joint Committee, Agenda B.4, 16 Sixteenth to implement the 1995 Agreement. dropower revenue from potential Meeting of the MRC Council, 25 November 2009, Hua Hin, Thailand UMB mainstream hydropower; § Contributions from developers of hydropower projects; § Potential for contributions from other resource sectors impacting on water resource status. § Contributions of Development

Partners ( such as for specific as-

pects or “financing windows” of a Mekong Fund); and § Innovative financing such as carbon financing revenue deriving from qualifying hydropower projects on significant tributaries and mainstream (regional payments for offsetting thermal CO2 emis-

sions).39

Generic TB Type 2: increasing In varying degrees: Normal financial sources for infrastruc- Mechanisms specified in Agreements between riparian states (and reflected as benefits “from the river” ture investment by Mekong countries required in project level agreements). § Residents of tributary basins and sustainable management of such Infrastructure investment / manage- shared between two or more ri- infrastructure. Existing institutional mechanisms utilized for delivery of benefits i.e.42

39 One new source of financing that hydropower can attract is carbon financing. Hydropower schemes already supported by the Clean Development Mechanism (CDM) under the Kyoto Protocol (and UNFCCC) typically account for an increase in project revenues of 5-10%. Opinions on the future of carbon financing nevertheless vary. Some key questions going forward are (i) to what extent will both the rules of access to carbon financing, and the size of the pipeline or pool of global funds for carbon financing change in future, and (ii) what comparative advantage can the Mekong establish to successfully compete for such funds, for eligible hydropower projects that are compliant with MRC Procedures.

46 Summary Generic BSM Options for transboundary dimensions of hydropower on Mekong tributaries Matrix 2 + the TB dimension options selected to evaluate in the ISH13 process Summary Features / Alternative Mechanisms Generic Option Type + options evaluated in ISH13 Target Beneficiary Groups Financing Sources Institutional Mechanisms ment strategies optimizing consump- parian countries; tive & in-stream water use, balanced § Economies of provinces in riparian Government sources § National Programmes in sectors (e.g. power, agriculture / irrigation, fisheries, with water resource protection and countries associated with the trib- navigation) maintaining ecosystem services.40 utary; § Development budgets of riparian § Regulatory frameworks for private sector investment and/or management § National / sub-national economies countries concerned of infrastructure

Generally means identifying hydro- of riparian countries; § Contributions of Development Explicit or added emphasis on factors in infrastructure provision to optimize the power and related infrastructure § Potentially, river basin residents Partners upstream / downstream of the § Various government resource use spread and range of benefits, such as : (hard and soft)41 consistent with (i) tributary confluence with the Me- fees, taxes on hydropower entities. IWRM–based tributary development kong mainstream. § design features strategies, and (ii) recognizing signifi- Private sector sources: § management features cant transboundary dimensions, and § multi-purpose functionality (iii) adaptive management. E.g. Balancing among sector development § National electricity tariffs (as the opportunities and aims, e.g., for irriga- ultimate source of money for water Cooperation to have consistent sustainable development strategies for hydro- § Balancing development opportu- tion, power, fisheries, navigation, use fees, PES, etc. power on tributaries shared by two or more riparian countries (and wider na- nities and risks; flood-drought management, ecosys- § Export tariff on tributary hydro- tional plans for sustainable development of the sectors that utilize services – § Recognizing sector synergies and power (as above) tem services, tourism and recreation. e.g. the power sector, climate change mitigation / adaptation strategy. tradeoffs within sectors and across

sectors; Other innovative financing sources

§ Spreading resource utilization (envisaged in future) e.g. benefits (equitably);

§ Applying IWRM / sustainability principles to selection, design and § Payment for Ecological Services operation of infrastructure. (PES) § Carbon financing (CDM and Other)

42 Mutual benefit arising from sustainable resource management and utilization practices delivered national or sector programmes: e.g. public investment delivered by line ministries / agencies / utilities; private investment delivered in regulated procedures; community initiative coordinated with or jointly with the above.

40 Ecosystems services broadly fall into five categories (i) provisioning, such as the production of food, fish, fibre and water (ii) regulating, such as the control of disease vectors, waste decomposition and detoxification and maintaining hydrological functions of ecosystems (iii) supporting, such as nutrient dispersal and cycling for recession agriculture, (iv) cultural, such as spiritual and recreational benefits including ecotourism; and (v) preserving, which includes guarding against uncertainty through the maintenance of biological diversity.

41 Hard infrastructure is typically defined to include physical infrastructure such as roads and bridges, ports, canals, railway, power, irrigation, telecommunication facilities, etc., while the soft infrastructure includes institutional capacity, education, training health, tourism, etc.,

47 Summary Generic BSM Options for transboundary dimensions of hydropower on Mekong tributaries Matrix 2 + the TB dimension options selected to evaluate in the ISH13 process Summary Features / Alternative Mechanisms Generic Option Type + options evaluated in ISH13 Target Beneficiary Groups Financing Sources Institutional Mechanisms

2-1 Additional measures to § Assumes current practices for § Assumes current practices are § Assumes current practices are adequate at this time and countries act increase sharing of bene- “mutually beneficial” development adequate at this time. independently. fits from the river are not are adequate, not withstanding needed for transboundary the Basin Development Strategy. dimensions of tributary hydropower. 2-2 Ensure strategies for § Residents of tributary basins § Normal financing sources for § Existing MRC Programmes and Procedures infrastructure provision shared between two or more ri- investments in sustainable devel- § MRC BDP assessment and operation on Mekong parian countries receiving services; opment of tributaries; tributaries conform to the § Economies of provinces / riparian § MRC Programme Funds for analy- MRC Basin Development countries receiving services; sis and guidance, Strategy and IWRM/ sustainability principles. Additional benefits arise from implementing agreed measures, 2-3 Assess the scope to opti- § Residents of tributary basins § Normal financing as part of hy- § Done with normal procedures and mechanisms for the planning, design, mize operation of existing shared between two or more ri- dropower operations development and approval of hydropower operations /planned reservoirs for parian countries receiving services; § Assessment part of hydropower § Links to the MRC BDP process § multi-purpose functional- § Economies of provinces / riparian mitigation and monitoring costs Eventual links to preparation of RBO / RBC management plans for tributary systems shared by two or more countries. ity, with consideration of countries receiving services; § MRC Programmes to provide transboundary dimen- assessments, guidance and sup- sions. Additional benefits arise from imple- port menting agreed measures. 2-4 Assess the scope to opti- § Residents of tributary basins § Normal financing for project § Normal responsibility of national agency for within country situations mize reservoir operation shared between two or more ri- preparation studies (for proposed § For transboundary dimensions of tributary hydropower, this extends such for hydropower on tribu- parian countries receiving services; projects); consideration to shared tributaries or otherwise on an tributary specific basis § taries shared by two or § Economies of provinces / riparian § Normal financing for mitigation Requires cooperation / coordination of the respective national line agencies or RBO/RBCs more countries. countries receiving services; and monitoring costs (for existing § MRCS may play a facilitating role projects) Additional benefits arise from imple- § MRC Programme support to menting agreed measures to balance provide assessments, models and downstream development opportuni- guidance ties / risk concerning transboundary dimensions of tributary. 2-5 Introduce regulatory § Residents of tributary basins § Normal government regulatory § Similar to MRC preliminary design guidance for LMB mainstream hydropow- provisions to routinely shared between two or more ri- process (indirect costs for studies er proposals produced in 2009. parian countries receiving services; and consultation processes). § Update national regulations on relevant physical provisions and design

48 Summary Generic BSM Options for transboundary dimensions of hydropower on Mekong tributaries Matrix 2 + the TB dimension options selected to evaluate in the ISH13 process Summary Features / Alternative Mechanisms Generic Option Type + options evaluated in ISH13 Target Beneficiary Groups Financing Sources Institutional Mechanisms

build-in the flexibility to § Actual implementation costs considerations (e.g. variable level intakes (water quality related), the size and modify operations over Concerning physical flexibility to reflected uniformly in costs of IPP position of bottom flow outlets for releases, provisions for sediment sluicing the life of hydropower rebalance benefits and benefit distri- and public sector hydropower and flushing, fish passage structures, etc. ) assets. bution as development needs and projects. § Consistent with inter-generational dimensions of sustainable hydropower and overall least-cost analysis, i.e. values change over decades e.g. § Enhances the value of hydropower - It is less costly to build in provisions for flexible operation then retrofit Important as hydropower assets on a life-cycle basis – leads to least cost approaches for long- them later. is long-life infrastructure - flexibility to operate reservoirs / term sustainable operation - Allows future generations scope to change operations. of 100 years or more. releases (after concession periods) to § Flexibility to re-optimize operation is maintained for future generations; place more future emphasis on recrea- § Can be done for new projects, arrangements needed for existing projects Conditions / values in the tion, tourism, environmental values or (with existing PPAs). basin will change. flood operation for flood mitigation). 2-6 Assess ways to improve § Residents of tributary basins § Normal financing sources for § Using existing national regulations and mechanisms to coordinate power coordination of reservoir shared between two or more ri- hydropower management; system planning, operation and dispatch and link with water management operations on aspects parian countries receiving services; § After an assessment of opportuni- considerations (e.g., environmental flows, multiple uses like navigation, such as flood manage- § Economies of provinces / riparian ties to improve net benefits is flood management policies, drought reserves in reservoirs0 etc.) § MRC Programmes may offer support to member countries in ways that may ment, sediment man- countries receiving services; completed the results would feed into any negotiation mutually aim to: agement / fish passage in - Facilitate cooperation between line agencies and / or tributary To optimize the range of benefits agreed. multi-reservoir cascades RBOs/RBCs on shared tributaries; (from consumptive and non- on tributaries shared by - Prepare guidelines two or more countries. consumptive uses) and mitigate - Assess / report opportunities in MRC BDP /BDS processes, and development risks and hydrological - fund demonstration projects risks in shared tributaries (i.e., for § Mechanisms may also be needed in special situations to coordinate power normal operation as well as flood and export dispatch, such as to: drought conditions) - Minimize significant differences in reservoir operation for tributary hydropower projects in cascades (i.e., when projects in the same tributary dispatch to power markets in two or more Member Countries )43 - Where greater net benefits may be achieved by coordinating tributary hydropower dispatch with other RE generators. . 2-7 Prepare guidance on how § Residents of tributary basins § Normal financing sources for § Existing national planning and regulatory systems

43 And there is potential to release water in the cascade according to different rule curves – and not parameters that may be set for the river such as for environment flow conditions in the tributary (potentially affecting a variety of water quality and ecosystem services that riverine communities in countries that share the tributary may rely on, or for coordinated flushing and sluicing or reservoirs to maintain reservoir capacities, etc.).

49 Summary Generic BSM Options for transboundary dimensions of hydropower on Mekong tributaries Matrix 2 + the TB dimension options selected to evaluate in the ISH13 process Summary Features / Alternative Mechanisms Generic Option Type + options evaluated in ISH13 Target Beneficiary Groups Financing Sources Institutional Mechanisms

to factor the valuation of shared between two or more ri- feasibility and EIA/SIA (for pro- § MRC Programmes may play various roles such as to: ecosystem services into parian countries receiving services; posed projects). - Facilitate cooperation between line agencies and/ or tributary project preparation § Economies of provinces / riparian § Normal financing sources for RBOs/RBCs in Member counties that share a tributary studies informing deci- countries receiving services; hydropower mitigation, monitor- - Prepare Guidelines - Organize and fund demonstration projects sions about hydropower ing and management (for existing projects); - Identify, assess and report opportunities in the BDP /BDS processes and related infrastructure Benefits deriving from and distributed § Normal financing sources for (such as follow-up to ISH13) development and man- by the ecosystem service concerned tributary level SEAs undertaken by § agement on Mekong line agencies or tributary tributaries. RBC/RBOs § MRC Programme support to develop models and build capacity 2-8 Assess the scope to opti- § Power systems of two or more § Assessments prepared in the § Existing institutional mechanisms for power system studies and RE genera- mize opportunities for countries sharing tributaries with power sector and for national Re- tion development other intermittent renew- hydropower44 newable Energy (RE) programmes. § Linkage to GMS and other Mekong Platforms for regional power planning able energy (RE) genera- § Economies of Member counties § Normal financing of power sector and development. § Benefits from increasing al RE Generation in Mekong power systems tors (non-hydro options) (power sector expenditures and studies and RE programmes.

with tributary hydropow- policies). § Development Partner support.

er taking account of Hydropower complements helps the unique power system introduction of intermittent RE power benefits of tributary sources like solar, wind and biomass hydropower. on power systems.

Optimizing ancillary power benefits

on national grids through provision of electrical services unique to hydropower and externalities.45

44 Recognizing tributary hydropower often supplies power markets in two Mekong countries (exporter and importer). 45 The economic value of ancillary services unique to hydropower that serve to lower the required national investments in power generation and power grids and ultimately help to reduce upward pressure on consumer electricity tariffs (e.g., reactive power, load following, quick start, improved system reliability). Also the economic benefits of externalities like the avoided GHG emissions that would happen if conventional thermal generation was needed (as is the case for most bulk generation supply in the Mekong) as well as the avoided air pollution from thermal power with impacts on human health, buildings (via sulphur dioxide (SO2), effects on crop yield and environment quality.

50 Summary Generic BSM Options for transboundary dimensions of hydropower on Mekong tributaries Matrix 2 + the TB dimension options selected to evaluate in the ISH13 process Summary Features / Alternative Mechanisms Generic Option Type + options evaluated in ISH13 Target Beneficiary Groups Financing Sources Institutional Mechanisms

Generic TB Type 3: reducing costs § National / sub-national economies Normal financing sources for invest- Normal institutional mechanisms to address transboundary dimensions of “because of the river”. of riparian countries; ments in the sustainable development tributary hydropower e.g.: § Residence of tributary basins that of tributaries such as: § National Programmes and regulatory frameworks (public and private sector Sharing benefits of tributary hydro- have higher development spend- investment) power as part of the regional strategy ing as a result of saving elsewhere § Development budgets of riparian § MRC Programme Framework and Procedures 48 § to cooperate on sustainable devel- in the national economy. countries concerned Government mechanisms for bilateral agreement (e.g. Foreign Ministries and other bilateral and multi-state Agreements)) opment of the Mekong River basin § Links to reducing costs of extreme § Contributions of MRC and Member hydrological events on49 and specifically to enhance the bilat- Country Development Partners Mekong tributaries shared by § Various government resource use Pays more attention to transboundary dimensions of BSM related to tributary eral and regional conditions to: i. two or more countries, and fees, taxes, etc. on hydropower en- hydropower. Underpins a policy shift to cooperation and development, away

ii. Potentially the Mekong main- tities from dispute over impact assessments due to uncertainty and elevating to 1. Avoid serious conflicts over stream in situations when hy- § Private sector financing leveraged other strategic approaches, e.g. allocation & management of wa- dropower in the tributary under by government regulation ter in tributary systems, especially consideration measurably or § Innovative financing sources as shared tributaries; - Shifts from food (and energy) self-sufficiency to food (and energy) security. significantly influences the they become available. 2. Avoid non-development costs in - Explicit consideration of tradeoffs in the development opportunity and risks mainstream situations, e.g. - each Country due to tensions or between upper and lower riparian to empower negotiation.

conflict, such as additional securi- - Embodiment of principles such as PES, not only at the national-to local level 50 ty / military expenditures. 46 o In cases of prolonged or but also at the regional level. 3. Exploit potential development deep dry season drought synergies to reduce overall the o Extreme flood events Governments may choose to undertake such negotiations in Inter- costs in each country has by pur- governmental meetings not open to media. suing mutually beneficial devel- Mutual benefit of sustainable resource opment and management of utilization delivered national or sector tributary systems. 47

46 For example, where riparian government have more money to investment in mutually beneficial forms of sustainable development of Mekong Tributaries using money freed up from (i) reducing non-development spending, such as for military operations that governments otherwise feel are needed if tensions remained high. 47 In general, where inter-dependencies exist, pooling the resource potential of an entire river system offers a wider range of technically feasible alternatives, and by avoiding duplication, it offers an opportunity to select the most economical combination of sites for cooperation for attaining mutually desired objectives. Overall reductions in the total development spending by riparian countries may results where a shift to a cooperative approach leads to the same development outcome but at lower total cost (e.g. due to various development synergies that arises from systematic considerations of mutually beneficial sustainable development in the selection, design and operation of infrastructure such as tributary hydropower). Some observers also argue that economic efficiency alone is not a sufficient condition for cooperation, especially when it is related to the transfer of a scarce resource, such as water, among potential cooperating entities. 48 See previous endnote. 49 This includes hydrological events or risks that are a consequence of upstream reservoir development and reservoir management practices.

51 Summary Generic BSM Options for transboundary dimensions of hydropower on Mekong tributaries Matrix 2 + the TB dimension options selected to evaluate in the ISH13 process Summary Features / Alternative Mechanisms Generic Option Type + options evaluated in ISH13 Target Beneficiary Groups Financing Sources Institutional Mechanisms

programmes: Principles underpinning reducing costs because of the river are embodied in the Basin Development Strate- gy.

3-1 Measures to avoid or § Assumes Governments already § Existing practices are adequate at § Existing practices are adequate at this time. reduce cost because of takes these complex factors into this time. the river are not essential account on a tributary specific ba- for transboundary dimen- sis; sions of tributary hydro- § Assumes limited scope for addi- power. tional measures.

3-2 Identify opportunities to § National / sub-national economies § MRC Programmes for the assess- § Existing mechanisms with the BDP and MRC Programmes reduce development of riparian countries. ments; costs by increasing coop- § Normal financing sources for eration on shared tribu- Benefits delivered through the im- investments in the sustainable de- taries in the MRC Basin plementation of cooperation velopment of tributaries. Development Strategy measures Process. 3-3 Systematically identify § National / sub-national economies § MRC Programmes for the assess- § Existing mechanisms with the BDP and MRC Programmes the measures and costs to of riparian countries. ments; § Often applied to the concept of the cost to take advantage of increasing low take advantage of devel- § Normal financing sources for flow due to upstream hydropower regulation (e.g. river transport, irrigation opment opportunities on Benefits delivered through invest- investments in the sustainable de- or municipal water supply off takes, hydropower generation) § Recognizes investment is needed to offset adverse impacts (to balance shared tributaries in the ments that take advantage of river velopment of tributaries. development opportunity risk) MRC Basin Development flow and related changes. Strategy Process. 3-4 Initiate, strengthen and § National / sub-national economies § RBO/RBC funding for the assess- § Need to strengthen / reinforce the tributary RBO/RBC capacities regularize planning and of riparian countries; ments. § Existing mechanisms with the BDP and MRC Programmes can help to facili- technical exchanges § Residents of the shared tributaries. § Normal financing sources for tate exchanges and analysis supporting exchanges.

50 Upper riparian may take actions that improve development opportunities and services downstream and there are examples in international area. This needs to be balanced with the water resource protection aims and no harm philosophy in the 1995 Mekong Agreement as part of the negotiated outcome philosophy.

52 Summary Generic BSM Options for transboundary dimensions of hydropower on Mekong tributaries Matrix 2 + the TB dimension options selected to evaluate in the ISH13 process Summary Features / Alternative Mechanisms Generic Option Type + options evaluated in ISH13 Target Beneficiary Groups Financing Sources Institutional Mechanisms

between RBC/RBOs in investments in the sustainable de- § Applies to coordination of national-to-local BSM measures in shared tribu- shared tributaries, facili- Benefits delivered through the im- velopment of tributaries. taries as well as consideration of transboundary dimensions of hydropower tated by the MRC. plementation of cooperation on the tributary. measures. 3-5 Enhance cooperation § National / sub-national economies § Government line agency financing § Need to strengthen / reinforce the line agency and tributary RBO/RBC capac- between on shared tribu- of riparian countries; § Potential Development Partner ities. taries to reduce drought § Residents of the shared tributaries contribution § Existing mechanisms with the BDP and MRC Programmes can help to facili- and flood risk. § Potentially residents of the Me- § MRC Programme support for tate.

kong mainstream in close proximi- guidance preparation (e.g. BDP, ty to the tributary confluence with FMMP, ISH, EP) and capacity build- the mainstream ing.

Generic TB Type 4: increasing In varying degrees: Mutually beneficial trade arrange- Use of existing negotiation mechanisms. benefits “beyond the river” ments and / or development coopera- § National / sub-national economies tion between riparian countries going § Bilateral Agreements The approach is to move beyond of riparian countries; beyond the water and electricity § Multi-state Agreements, with the MRC or GMS Platform (ADB), ASEAN sharing water and services deriving § Economies of provinces in riparian sector: from water resources to bring coop- countries associated with the trib- If a BSM agreement on transboundary dimensions of tributary hydropower is eration in trade and other sectors into utary; For example: not feasible by itself, putting other trade issues on the negotiation menu may discussions. § Sectors of the economies involved result a mutually beneficial agreement. and the companies and employ- § Normal trade in goods and services § Trade – through normal trade structures ees. § It is part of the notion of DOS (devel- between countries (facilitating or Investment in infrastructure by either : - Public sector opment opportunity space) in the enhancing provisions such as reduc- - Private sector, or MRC Basin Development strategy. ing duties or taxes); Provincial to local levels to the extent § Strategic infrastructure agreements, - Public-Private models The notion is the DOS can also be the next national economic gains are e.g., agreements on transport inte- used as a “cooperation space” or spread and shared in the Tributary. gration (for road, rail, air or water How net benefits are shared depend on the type of Agreement reached and the “negotiation space” to explore mutu- transport facilities). sector ally beneficial options, including § Direct or indirect industrial offsets See NTL Options in Matrix 1. and counter trade51

51 An offset agreement is an agreement between two parties (countries) whereby a one agrees to buy products from the other in order to complete and agreement Often, the aim of this process is to even-up a country's balance of trade. Direct offsets may include investments related to the project such as sub-contracts for supply of equipment, labour or services. Indirect offsets are when one party agrees to buy goods

53 Summary Generic BSM Options for transboundary dimensions of hydropower on Mekong tributaries Matrix 2 + the TB dimension options selected to evaluate in the ISH13 process Summary Features / Alternative Mechanisms Generic Option Type + options evaluated in ISH13 Target Beneficiary Groups Financing Sources Institutional Mechanisms benefit and impact sharing agree- § Concession rates on power ex- Because agreements are government-to-government (bilateral or multi-lateral) ments that go beyond the specific change or specific arrangements at how net benefits are spread from national to Provincial to local levels depends project level, and to consider other the national level (e.g., share of cost on NTL BSM mechanisms (see Matrix 1). opportunities (possibly unrelated to in transmission interconnection) water - e.g. trade or transport) for facilitating equitable outcomes.

Such options seek to expand the range of benefits to share through the integration of regional infrastructure, markets and trade. The underlying premise is cooperation on water matters is facilitated by wider agreements.

4-1 No provisions for this § National / sub-national economies § Current practices for bilateral and § Current mechanisms are adequate. form of benefit sharing of riparian countries; inter-governmental discussion are are needed for trans- adequate to reflect this type of boundary dimensions of benefit sharing opportunity. tributary hydropower. 4-2 Explore joint and mutual- § National / sub-national economies § MRC Programmes and budgets § As part of MRC supported efforts to enhance the DOS moving toward sus- ly beneficial development of riparian countries; § Government national line agency tainable development through a transparent process: opportunities beyond budgets and related work § Referred to in the BDS (2011) national plans, within and outside the water sector in bilateral processes or the MRC Basin Develop- ment Strategy. 4-3 Close the knowledge gap § National / sub-national economies § MRC Programmes and budgets § As part of MRC supported efforts to enhance the DOS moving toward sus- to overcome hurdles in of riparian countries; § Government national line agency tainable development through a transparent process:

which are unrelated to the hydropower product, which may be raw materials, agricultural commodities or other products as well as other investments like technology transfer, training, Foreign Direct Investment, Credit Assistance and Financing. Counter-trade can also be considered one of the many forms of offset. In counter-trade goods are paid through barters or other mechanisms without the exchange of money.

54 Summary Generic BSM Options for transboundary dimensions of hydropower on Mekong tributaries Matrix 2 + the TB dimension options selected to evaluate in the ISH13 process Summary Features / Alternative Mechanisms Generic Option Type + options evaluated in ISH13 Target Beneficiary Groups Financing Sources Institutional Mechanisms

Riparian counties agree- budgets and related work ing on the value of benefits and costs of hydropower on shared tributaries. 4-4 Explore scope to enhance § National / sub-national economies § Trade related § Using existing bilateral / regional mechanisms for: cooperation in trade of of riparian countries; § Supporting studies of trade statis- - dialogue, negotiation and agreement on trade matters; goods and services to - Related to the project generation tics - includes measures such as reducing import / export duties or taxes on overcome hurdles valuing and services § May be some element of indirect goods and services. § How benefits are distributed sub-nationally depends on national-to-local benefits and costs of - Related to the improved trade subsidy of trade paid for out in- situation mechanisms. hydropower on shared crease government revenue from § Net benefits flowing from in- tributaries. tributary hydropower. creased trade into public accounts, for consumers and the economy depending on the nature of such agreements. § Potential for some portion of net benefits to be shared with provincial to local levels of the tributary, with complementary NTL mechanisms (mainly Type 1). 4-5 Explore scope for indus- § National / sub-national economies § Normal financing sources for § Using existing bilateral / regional mechanisms for: trial offsets and counter of riparian countries; investments in the sustainable de- - Dialogue, negotiation and agreement on trade matters trade to overcome hur- § Hydropower industry, contractors velopment of tributaries; - Measures such as reducing duties or taxes on goods and services. dles valuing and sharing and their employees; § Potential for some portion of net benefits to be shared with provincial to local levels of the tributary, with complementary NTL mechanisms (mainly benefits and costs of § Benefits from increased trade to Type 1). hydropower on shared tributaries. public accounts, consumers and the economy depending on the

nature of such agreements. 4-6 Explore scope for cooper- § National / sub-national economies § Normal financing sources for § Using existing bilateral / regional mechanisms for: ation on strategic infra- of riparian countries; investments in infrastructure de- - dialogue, negotiation and agreement on infrastructure cooperation structure agreements, § Economic sectors involved (insti- velopment; - normal mechanisms for cooperation on infrastructure funding, construc- (e.g., agreements on tutions, companies, employees) tion and operation. Potential for some portion of net benefits to be shared with provincial to local transport integration such - Public sector investment (gov- levels of the tributary, with complementary NTL mechanisms (mainly Type 1). as for road, rail, air or Public benefits that flow from strate- ernment budgets or loans) - Private Sector (equity and loans) water transport facilities). gic infrastructure investments

55 Summary Generic BSM Options for transboundary dimensions of hydropower on Mekong tributaries Matrix 2 + the TB dimension options selected to evaluate in the ISH13 process Summary Features / Alternative Mechanisms Generic Option Type + options evaluated in ISH13 Target Beneficiary Groups Financing Sources Institutional Mechanisms

- Development Partners.

4-7 Explore scope for conces- § National / sub-national economies § Ultimate financing source is hy- § Arrangements between national power utilities: sion rates on export of riparian countries; dropower revenue and savings - dialogue, negotiation and agreement with normal government actors power trade, or intercon- § The public and communities in over alternative generation (eco- - Reflected in power exchange / trade agreements. nection and supply ar- areas that receive power (where nomic rent) rangements to overcome no alternative with the same relia- § From a power system economics hurdles valuing and bility, cost or timing is available) perspective;

sharing benefits and costs

of hydropower on shared tributaries.

56 Annex 3: Plots and Scoring Sheets for the Working Group Evaluation

NTL Generic Type 1: Sharing Monetary Benefits

Benefits of Hydropower

This spreadsheet illustrates some options for this Generic Type to keep, modify or drop based on discussions in the ISH13 WG seminar. The scores shown here are only place markers to show the Plots at the bottom of the spreadsheet work. Refer to Template 3a for summary descriptions of each option noted here.

58 NTL Generic Type 2: Optimizing Non-Monetary Benefits (including facilitating local resource access)

Benefits of Hydropower

This spread sheet illustrates some options for this Generic Type to keep, modify or drop based on discussions in the ISH13 WG seminar. The scores shown here are only place markers to show the Plots at the bottom of the spread sheet work. Refer to Template 3a for summary descriptions of each option noted here.

60 NTL Generic Type 3: Ensuring Equitable Access to Electricity Services

Benefits of Hydropower

62 NTL Generic Type 4: Optimizing Additional Benefits

Benefits of Hydropower

64 Annex 4: Key Messages on BSM – ISH/MRC

KEY MESSAGES AND FREQUENTLY ASKED QUESTIONS ON HYDROPOWER BENEFIT SHARING MECHANISMS (BSM) 1 July 2012

This Note contains Key Messages and Frequently Asked Questions (FAQ) on benefit sharing relevant to Mekong hydropower. These were originally provided in Volume 1 of the Benefit Sharing Knowledge Base (KB) compiled by the Initiative on Sustainable Hydropower in May 2011.

This is the July 2012 update, specifically to inform national working groups formed to help NMCS implement ISH13, “Benefits sharing options elaborated for Mekong tributary hydropower”, by 2013.52 The Key Messages may be read in conjunction with the FAQ, which go into detail on questions NMCS have already raised about BSM concepts and practice. This update will also be available on the MRC Website for all MRC stakeholders to access.

KEY MESSAGES

1. Benefit sharing is a practical way to spread benefits of water resource utilization across the economy, catalyse broader-based economic growth and support social equity policies.

§ Experience with Benefit Sharing Mechanisms (BSM) is growing world-wide, not only applied in the water resource sector on hydropower, but also in other natural resource sectors like forestry, mining, agriculture and eco-tourism.

§ The 1995 Mekong Agreement aims to provide for mutually beneficial utilization of the Mekong River and related resources. Benefit sharing is one of the seven strategic priorities for basin development set out in the MRC Basin De- velopment Strategy, endorsed by Member Countries in 2011.53 It is imbedded in approved MRC Programme work, including the Initiative on Sustainable Hydropower (ISH) and the Basin Development Plan (BDP).

§ Benefit sharing is key to improving the sustainability of hydropower, also a MRC strategic priority for basin development. It underpins Member Country efforts to place decisions about hydropower development and management in an IWRM river basin perspective. 54 § Benefit sharing is consistent with all Mekong governments’ national development policies of reducing poverty and closing the gap between rich and poor.

2. Benefit sharing may be pursued at different scales (e.g., at regional, national, tributary or sub-basin, and local scales). § Two main categories of benefit sharing found in international practice are national-to-local (NTL-BSM), sometimes called project-level BSM, and transboundary benefit sharing mechanisms (TB-BSM).

§ National-to-local BSM types aim to share benefits that normally accrue at national levels with river basin residents at provincial, district/municipal or local levels where hydropower projects are located. Appropriate measures are typically set out in enabling legislation with supporting regulations.

52 The material supports MRC Member Country efforts to implement ISH Output 4.1c., “Benefit sharing mechanisms (BSM) elaborated at regional, national and local levels”. 53 Strategic Priority 5, “Seek options for sharing the potential benefits and risks of development opportunities”, also connected to Strategic Priority 3, “Improve the sustainability of hydropower development.” 54 The MRC’s Rapid Basin-wide Hydropower Sustainability Assessment Tool (RSAT) uses benefit sharing as a criterion to evaluate progress toward hydropower sustainability and placing decisions about hydropower in a river basin perspective.

65 § Transboundary benefit sharing mechanisms are based on principles embodied in IWRM practice, which are negotiated outcomes and Agreements among countries who share an international river.

§ MRC Basin Development Strategy (2011) calls for Mekong Counties to cooperate in … “ exploring mutually beneficial options, including benefit and impact sharing agreements that go beyond the project level” … to balance development opportunities and risks of hydropower across sectors, and at the regional scale.

3. Governments may choose a range of mechanisms to share the benefits of hydropower with provinces, local communities, and river basin residents. § Common types of national-to-local benefit sharing around the world include: 55

(i) Sharing monetary benefits from national to local levels according to an approach stipulated in law, recognizing that the financial benefits of hydropower mainly accrue at national economy level (or flow to national electricity consumers, many of which may live outside the river basin);

(ii) Facilitating non-monetary benefits, recognizing that most rural, riverine communities need help to remove barriers that impede their access to natural resources (forest, water, or land) to help offset access loss due to hydropower, plus to take advantage of the local development opportunities created. 56

(iii) Equitably sharing project services, ensuring communities in project areas receive first-time electricity connection, or more reliable electricity supply – making them among the first, not the last to benefit from electrical services generated by hydropower in their area;

(iv) Optimizing additional benefits, systematically maximizing the development benefits of project-related investments and procurement, such as roads, public infrastructure and jobs which serve as local /sub-regional development stimulus.

§ Modern approaches incorporate all types of benefit sharing in a systematic and coherent way. It views benefit sharing as a package of measures, not a single mechanism.

§ It is also important to make benefit sharing mechanisms flexible so they can adapt to changing development priorities of people, as these priorities evolve over time. For example, certain forms of benefit sharing can be targeted to help achieve poverty reduction targets in the first years.

4. All MRC Member Countries have some experience with sharing the benefits of hydropower, which they can build on, and share experience with each other.

§ Benefit sharing is not actually new in the Mekong. All MRC Member Countries have experience with one or more types of benefit, especially with optimizing additional benefits of hydropower. In the past, people may not have la- belled measures as “benefit sharing”.

§ Among the steps MRC Member Countries have recently taken to advance benefit sharing thinking and practices related to hydropower include:

- NMCS and national line agencies in Cambodia and Lao PDR have sought to draw lessons from international experience to help them formulate national policies for benefit sharing.

- Lao PDR has experience with revenue management, where a portion of hydropower revenue is allocated to poverty alleviation programmes at national and sub-national (e.g., from NT2, which has a major power export component). Lao PDR has experience with innovative measures to raise local incomes of people living in the

55 In previous Reports, 5 types of NTL type were discussed. Indirect and additional benefits are considered in the same category, as “additional benefits” to streamline things. Indirect and additional benefits are actually distin- guished by the fact indirect benefits arise from project-related investments (access roads, jobs, public infrastructure) and additional benefits are investments additional to project-related investments (commitments for public infrastructure including roads beyond what is required for the project), but otherwise only possible because of the project. Because the actual impacts are similar these categories are merged. 56 Encompassing the steps governments (at all levels) may take to give local communities better access to natural resources (e.g. such as issuing permissions and removing unnecessary barriers that impede access to land or forest resources locally); and also the permissions to unlock the development opportunities resource transformations of hydropower may provide.

66 vicinity of hydropower projects. Government and EDL take equity stakes in projects, which generate divi- dends. Lao PDR also has policy provisions for hydropower revenue to help finance river basin, forest, and environmental protection funds, not yet fully defined or made operational. In a highly positive step, Lao PDR recently formed an inter-ministry committee to consider way to introduce BSM more systematically in national policy.

- Thailand passed laws in 2007 to establish revenue sharing on existing and new power projects, through the mechanisms of Community Development Funds (CDFs) and Power Development Funds (PDFs). These apply to all power generation projects, not just hydropower. As yet no Funds have been established on hydropower projects (though processes are reportedly underway). EGAT said 102 thermal power plants in 40 provinces, including 26 power plants of EGAT established local “Funds” in 2009. The PDFs which may take over from CDFs as the primary institutional arrangement for local revenue sharing, aim to finance improvements in … “the environment, socio-economic conditions and quality of life of people living in the vicinity of power projects”. 57 As stipulated in the Energy Industry Act (2007), “… contributions sent to the Fund … shall be deducted from the (electricity) tariffs”.

- In Viet Nam, from 2007 the Electricity Regulatory Authority of Viet Nam (ERAV) developed a draft decree Law for benefit sharing with local communities affected by hydropower. The draft contains provisions for revenue sharing, facilitation of non-monetary benefits, equitable access to electricity and optimizing additional benefits. The provisions were pilot tested by ERAV in cooperation with Quang Nam Province in 2010 on the 210 MW A’Vuong Project. 58. Viet Nam also collects water use fees from hydropower revenues allocated to Prov- inces where the projects are located. Viet Nam laws also have provisions for environmental protection funds and payment for Forest Ecological Services (PES) that hydropower revenue must be allocated to, which have yet to be fully defined, or made operational.

o China allocates a portion of revenue from hydropower to local development reconstruction funds in reservoir areas and to pay for longer-term (20-year) compensation. These are also applied to hydropower projects in the Lancang-Mekong River cascade.

5. Revenue sharing is a well recognized and common approach many governments use to share the monetary benefits of hydropower within society.

§ Mechanisms for sharing monetary benefits of hydropower take many forms (e.g. revenue sharing, equity sharing, taxes, royalties, preferential electricity tariffs for local communities, and new innovative financing sources such as payment for ecological services (PES) and carbon financing).

§ Revenue sharing is perhaps the most common and visible mechanism. Countries typically choose a mix of mechanisms to spread monetary benefits from national to local levels and river basin entities where hydropower is located, not just a single measure.

§ Governments need to balance several factors in deciding the amount of revenue sharing (as a percentage of gross revenue). Among these considerations include:

i. ensuring revenue sharing is a meaningful amount, otherwise it is meaningless; ii. ensuring the impact on consumer electricity tariffs is acceptable; iii. taking account of other uses for hydropower revenue (e.g. environment protection funds) iv. the presence of alternative means of sharing monetary benefits, such as royalties, and v. political and public perceptions of what is fair, which evolves over time.

§ In developing economies, an allocation to benefit sharing of 1-3% equivalent of gross revenue is common. Overall the percentage of hydropower revenue shared in total (i.e., for other water and environment protection funds as well as benefit sharing) may be higher. The total ultimately depends on government policy on hydropower revenue management and what is fair and sustainable in the tariff.

57 People living within 5 kilometres in some cases, though regulations are under development for sizes and types of power projects. 58 Clarification of next steps to take the draft decree law forward in Viet Nam is still pending. Discussion at the first national BSM workshop co-sponsored by VNMC and MRCS in Sept 2011 suggested that while additional TAs from the ADB are reportedly under preparation linked to trial implementation of the PES Decree Law of 2010, there is no active consideration of the draft BSM Decree Law in ERAV at present. It remains a good starting point to pick up discussion.

67 6. Benefit sharing is positive from all view points, when introduced in a systematic way with genuine participation of beneficiaries and stakeholders.

§ Benefit sharing, properly conceived and implemented:

- Allows project-affected people and traditional river users, as well as river basin residents involved in catchment management to become partners in projects. It provides them with a stronger voice in decisions that affect them, and an opportunity to be first among project beneficiaries, not last.

- From the government perspective, benefit sharing is a practical policy tool to achieve greater social inclu- siveness and balance social, economic and environmental factors in planning, design, implementation and operation of hydropower projects.

- From the hydropower developer and hydropower operator perspective, benefit sharing increases capacity to work effectively with local communities. Good community relations are important for many reasons, ranging from the reduced risk of project delays on new projects, to improved prospects for local cooperation in catchment management and implementing environment mitigation measures. Reducing reputational risk is also a major factor.

- From the perspective of investors and financial institutions, the presence of an explicit policy framework with realistic provisions for local benefit sharing is an indicator that locally affected communities and general public are more likely to support a project – all things considered. As a result, the investor’s risk exposure is reduced and investors are more inclined to become financing partners. This can reduce the cost of money the society pays for hydropower investments (regardless of whether public or private sector borrowing is used, e.g. reductions in interest rates on debt financing).

- From the electricity consumer perspective (i.e. households, consumers in the services sector, and industry users) it means the government can reach decisions to optimally develop water resources and provide what are potentially more stable tariffs, a reliable power supply and ultimately less expensive water and energy services.

§ Overall benefit sharing is a tool to manage development risks and enhance development opportunities for all, not only for some.

7. It is important for government authorities leading dialogue processes on BSM to have a clear understanding of different mechanisms (BSM) and how they work in practice.

§ Despite the prominence of benefit sharing, the concept is not always clearly defined. In part, this is due to many different objectives and ways to share benefits in different sectors. It is also because people have different points of emphasis and expectations about benefit sharing.

§ Even for countries that have practiced some forms of monetary benefit sharing, experience shows that people still have many different pre-conceptions, views and ideas when the topic is discussed in multi-stakeholder venues – especially around water and energy infrastructure like hydropower and large dams.

§ It is important for government official leading internal and public dialogue processes on BSM to have a clear understanding of the different types of benefit sharing mechanisms (BSM) and how to respond to the different arguments of stakeholders. 59

8. Misconceptions about benefit sharing that slow or frustrate consensus need to be addressed early, both in inter-ministry discussions and in public dialogue with stakeholders, including the media.

§ A clear strategy to raise awareness on how benefit sharing helps to overcome real and perceived shortcomings of hydropower is helpful;

§ It is important that people understand what benefit sharing is and is not, especially those participating in multi- stakeholder dialogue processes, as well as the media. For instance, it is helpful to have clarity on:

- The distinction between short-term resettlement compensation and longer-term benefit sharing;

59 Because Mekong countries are at different stages in introducing and implementing benefit sharing for hydropower, different emphasis and support may be necessary in each country. However, the mechanisms are essentially the same.

68 - That benefit sharing is not only for resettlement communities, but for all communities in the project area and basin residents more generally. - Revenue sharing is not part of the project capital budget or the same as profit sharing. It derives from the revenue stream the project generates and thus is ultimately reflected in the consumer electricity tariff. - Similarly, revenue sharing is not something to be negotiated between local communities and hydropower companies. In the Mekong context, it is set out in government regulation. - Revenue sharing is not something only for rich developed countries, or too complex for developing countries; and - Benefit sharing applies to both existing and new projects, not just new projects.

9. Benefit sharing is not a new ground to fight ideological battles on hydropower. § Some voices argue that benefit sharing is only something proponents of new hydropower want. They say it is a way to “green up” hydropower, or “white wash” concerns about the impacts of hydropower. Experience from around the world suggest otherwise.

§ As set out in the Basin Development strategy (2011), MRC’s view is broadly:

- Decisions about hydropower need to take place in a basin-wide perspective, accounting fully for all three dimensions of sustainable development (economic, social and environmental) and have flexibility for intergenerational equity. - Benefit sharing is a crucial component of sustainability, but not a deciding factor whether governments should pursue new hydropower, or not - Benefit sharing is a way to improve the sustainable management of existing hydropower.

§ International non-government organizations from the social and environment fields pro-actively support benefit sharing around natural resource use and extraction, including hydropower.

§ Benefit sharing mechanisms also underpin the sort of partnerships needed to genuinely involve people in development decisions that affect them.

10. Benefit sharing is not to be confused with hydropower-related resettlement compensation measures, which are one-time or short term, whereas benefit sharing is long term.

§ Resettlement compensation is a short-term measure governed by national regulations. It is part of the project cost financed by the hydropower developer (public or private).

§ Benefit sharing goes beyond resettlement compensation. It recognizes that hydropower development and operation affects many other people in the project vicinity and riverine communities, not only people who may be resettled.

§ By definition and in fairness, benefit sharing means the communities, municipalities and provinces who “host “ hydropower projects (subject to national agreement) are entitled to a portion of the benefits arising from development of water resources in their locale and river basin, which they depend on.

§ Hydropower projects are long-life structures that provide a stream of benefits over the economic life of the project, which is often 50-100 years or more. Thus sharing these benefits is a long term endeavour.

11. Benefit sharing stems from government policy and regulation; it is not something for hydropower developers and operators to negotiate. § Benefit sharing is a long-term relationship, on the one hand, between the main consumers of electricity services in towns, cities and industry, and, on the other hand, the local communities and residents of the river basin who host the project in their locale or basin.

§ Benefit sharing is not a negotiation between hydropower companies and local communities and provinces. Hy- dropower developer/ operators are not the drivers of benefit sharing arrangements or entities to set “rules” for BSM, or negotiate profit sharing deals project-by-project.

69 § The government role is to set out a regulatory framework. This is especially important if there is a mix of IPP and public sector hydropower projects, as in the Mekong. 60 This includes the rules and provisions for revenue management, which includes measures like royalties and revenue sharing.

§ Revenue sharing is a tariff-based measure. Experiences show that the public will support an increase in electricity tariffs of a reasonable amount if (i) the money is used to fairly distribute benefits, especially to poor rural areas where projects are built, and (ii) the information is conveyed in a consistent and transparent way, bringing in supportive voices from civil society.

12. A systematic, collaborative approach is best to introduce comprehensive forms of benefit sharing, to reflect good practice and meet stakeholder expectations.

§ Steps that countries take to systematically introduce comprehensive arrangements for benefit sharing include:

i. starting with awareness raising, engaging with all stakeholders; ii. undertaking pilot projects to build confidence and seek stakeholder consensus on approaches and mechanisms most suited for the delivery of benefits; iii. introducing appropriate enabling policies and legislation based on accepted good practice; iv. adequately considering actions needed at all stages of the infrastructure project cycle; v. carefully choosing the sources of finance (or mix) to share monetary benefits; vi. selecting appropriate mechanisms for delivery of benefits, regardless of financing sources; vii. introducing appropriate institutional arrangements, minimizing need for new structures; and viii. ensuring effective 2-way communication, and encouraging partnership approaches.

§ Among the main challenges in introducing benefit sharing are the complexity of some mechanisms and investments in capacity building. More specific challenges relate to addressing:

- Misconceptions about benefit sharing that may hinder, slow or frustrate progress; - Ensuring bottom-up processes to decide local mechanisms for delivery of benefits and beneficiary choice of benefits (within the framework of regulations set by government); - Ensuring that benefit delivery mechanisms are properly integrated with existing local, governance and development systems so they complement efforts and add value, and - Ensuring open and transparent implementation arrangements for BSM.

13. Benefit sharing applies to other resource sectors in the Mekong, not only hydropower.

§ World-wide experience with benefit sharing in all sectors is growing such as the mining, forestry, petroleum, ecotourism and genetic resources harvesting (i.e. harvesting plants for medicines funded by the pharmaceutical industry).

§ At the same time, experiences are mixed (i.e. some remarkable successes as well as some clear failures). The pool of experience nevertheless creates opportunities for cross-fertilization of ideas and sharing lessons among sectors to help identify best practice, and critically, to minimize miss-steps; § Opportunities exist to link sector-based strategies for BSM to challenges that many emergent river basin organizations face in coordinating sustainable management of land-water resources at basin and sub-basin scales (e.g., in the mining, forestry, agriculture, ecotourism and hydropower sectors).

14. It is important for governments to coordination all Funds for water resource and environment protection that hydropower is require by law to support, including revenue sharing.

60 This does not preclude hydropower developers and owners from playing a role, either to help fund or implement agreed benefit sharing mechanisms. However, any such agreements need to be reflected in Project Concession Agreements.

70 § Acts and Decree Laws in Member Countries increasing call for hydropower revenue to help finance Funds for water use and water resource protection, environment protection, payment for ecological services (PES), funding for river basin organizations, and benefit sharing.

§ While these Funds have been introduced in enabling legislation recently in the Mekong, most Funds have yet to be fully coordinated, defined or established. One reason is limited institutional capacity. Another complexity is different Ministries or bodies may be responsible for the Funds for their sector, where the common element is they all look to receive revenue from hydropower sales.

§ While many opportunities exist to exploit development synergies among these different Fund mechanisms, it is also essential to avoid confusion about what the various Funds do and how they link, which could lead to implementation delay, or duplication of effort.61

§ Opportunities to integrate the delivery of benefits from such funds are often available. These opportunities can be explored to make the Funds more effective, have less stakeholder confusion and respond to situations where there is limited implementation capacity. Sometimes a rationalization of Funds is advisable.

61 Hydropower in many Mekong countries increasingly makes revenue contributions to these development funds. While payment or fees may depend or project size or generated output, payments are ultimately reflected in electricity tariffs (i.e. the electricity consumer pays).

71 Annex 5: Legislation and Regulation

Annex 5-1: Energy Industry Act B.E. 2550 (2007) (Unofficial Translation)

ENERGY INDUSTRY ACT B.E. 2550 (2007) Published in the Government Gazette Vol. 124, Part 89 a, dated 10th December B.E. 2550 (2007)

CONTENTS PREAMBLE/DEFINITIONS (Section 1-6) DIVISION 1: GENERAL PROVISIONS (Section 7-9)

Objectives Fundamental Policy Guidelines on Energy Industry Authority and Duties of the Minister

DIVISION 2: THE REGULATORY BODY FOR THE ENERGY INDUSTRY OPERATION

Part 1: The Energy Regulatory Commission (Section 10-29) Part 2: The Office of the Energy Regulatory Commission (Section 30-46)

DIVISION 3: REGULATION OF THE ENERGY INDUSTRY OPERATION

Part 1: License for the Energy Industry Operation (Section 47-63) Part 2: Tariffs for the Energy Industry Operation (Section 64-71) Part 3: Establishment of Standards and Safety in the Energy Industry Operation(Section 72-78) Part 4: The Energy Network Systems and the Energy Network System Operators (Section 79-88)

DIVISION 4: ENERGY CONSUMER PROTECTION Part 1: Service Standards and Service Extension (Section 89-92) Part 2: The Power Development Fund (Section 93-97) Part 3: Regional Energy Consumer Committees (Section 98-103)

DIVISION 5: UTILIZATION OF IMMOVABLE PROPERTY(Section 104-118)

72 DIVISION 6: REDRESS OF DISPUTES AND LODGING OF APPEALS(Section 119-121)

DIVISION 7: COMPETENT OFFICIALS (Section 122-126)

DIVISION 8: DISCIPLINARY PROCEDURES (Section 127-128)

DIVISION 9: PUNISHMENT (Section 129-141)

TRANSITIONAL PROVISIONS (Section 142-155)

ENERGY INDUSTRY ACT B.E. 2550 (2007) ______BHUMIBOL ADULYADEJ, REX., Given on the 9th day of December, B.E. 2550; Being the 62nd Year of the Present Reign.

His Majesty King Bhumibol Adulyadej has been graciously pleased to proclaim that:

Whereas it is deemed appropriate to enact a law on energy industry operation;

This Act contains certain provisions that restrain the rights and liberty of an individual, which is allowed by the provisions under Section 29, conjoined with Section 33, Section 41, Section 42 and Section 43 of the Constitution of the Royal Kingdom of Thailand.

His Majesty the King, by and with the advice and consent of the National Legislative Assembly, is graciously pleased to enact an Act as follows:

Section 1:This Act shall be called the “Energy Industry Act, B.E. 2550.”

Section 2:This Act shall come into force as from the day following the date of its publication in the Government Gazette.

Section 3:This Act is not enforceable on the following cases:

(1)Petroleum industry under the law on petroleum, exclusively those located in the exploration blocks or between the exploration blocks that are associated with each other.

(2)Petroleum industry under the law on Thailand-Malaysia Joint Organization and the law on other joint organizations of the like, exclusively in the joint development areas or areas with a similar sense.

(3)The safety standards of petroleum transportation and storage under the law on petroleum control.

(4)The application to be a petroleum trader, the report on the trade volume, the reserve and the petroleum quality under the law on petroleum trade.

73 Section 4:This Act shall have effect on any conduct of the energy industry undertaken anywhere in Thailand.

Section 5:In this Act,

“Energy” means electricity or natural gas.

“Renewable energy” means renewable energy under the law on the National Energy Policy Council.

“Natural gas” means hydrocarbon compounds with methane being the major component, in the form of gas or liquid.

“Energy industry” means the electricity industry, the natural gas industry or the energy network system business.

“Electricity industry” means the production, procurement, transmission or distribution of electricity, or the control of a power system.

“Natural gas industry” means the natural gas transmission through pipelines via a natural gas transmission system, natural gas storage and transformation of natural gas from liquid to gas, natural gas procurement and wholesale, or natural gas retail via a natural gas distribution system, exclusive of the natural gas industry operation in the transportation sector.

“Energy network system” means a power network system or a natural gas network system.

“Power network system” means a power transmission system or a power distribution system.

“Power system” means a power generation system, a power transmission system and a power distribution system which are under the operation and control of licensees.

“Power generation system” means the power generation system of a licensee from the power plant to the connecting point with a power network system, and shall mean to include the fuel supply system for the power generation.

“Power transmission system” means a system that transmits electricity from a power generation system to a power distribution system, and shall mean to include the power system operator controlling that given power transmission system.

“Power distribution system” means a system that transmits electricity from a power transmission system or a power generation system to power consumers who arenot licensees, and shall mean to include the power system operator controlling that given power distribution system.

“Natural gas network system” means a natural gas transmission system or a natural gas distribution system.

“Natural gas transmission system” means a pipeline system used for receiving natural gas from a natural gas pur- chasing point and for transmitting it to a natural gas distribution point or a natural gas distribution system or a power plant of the Electricity Generating Authority of Thailand or a power plant of an Independent Power Produc- er, including the equipment or any other thing necessary for receiving and transmitting natural gas.

“Natural gas distribution system” means a pipeline system connecting with the natural gas transmission system, including the equipment or any other thing necessary for the distribution of natural gas.

“Energy network system operator” means the power system operator or the natural gas transmission operator.

“Power system operator” means the agency responsible for the power system control.

“Energy industry facility” means a building, a location, machinery, an energy network system and any other equipment used in the energy industry operation.

“Tariff” means the price of energy per unit, cost of services or conditions of service provision, or other fees that a licensee charges energy consumers.

74 "Thailand" includes also the areas of the continental shelf over which the Kingdom of Thailand has jurisdiction under the principles of international laws or under compacts made with foreign governments;

“Fund” means the Power Development Fund.

“License” means a license for the energy industry operation.

“Licensee” means a person who has been granted a license for the energy industry operation.

“ERC” means the Energy Regulatory Commission.

“Office” means the Office of the Energy Regulatory Commission.

“Secretary General” means the Secretary General of the Energy Regulatory Office.

“Competent official” means a person appointed by the ERC to have the authority and duties to execute the work under this Act.

“Minister” the Minister who has the care and charge of this Act.

Section 6:The Minister of Energy shall have charge and control of the execution of this Act and shall be empowered to issue Ministerial Regulations for the execution of the work under this Act.

Such Ministerial Regulations shall come into effect upon their publication in the Government Gazette.

DIVISION 1

GENERAL PROVISIONS

______

Section 7:The objectives of this Act are to:

(1)promote adequate and secure energy service provision, while maintaining fairness for both energy consumers and licensees;

(2)protect energy consumers’ benefits in terms of both tariffs and service quality;

(3)promote competition in the energy industry and prevent abusive use of dominance in the energy industry operation;

(4)promote fairness and transparency of the service provision of the energy network systems, without unjust discrimination;

(5)promote the efficient energy industry operation and ensure fairness for both licensees and energy consumers;

(6)protect the rights and liberty of the energy consumers, local communities, general public and licensees in terms of participation, accessibility, utilization and management of energy under the criteria that are fair for stakeholders;

(7)promote economical and efficient use of energy and resources in the energy industry operation, with due consideration of the environmental impact and the balance of natural resources; and

(8)promote the use renewable energy that has less adverse impact on the environment in the electricity industry operation.

Section 8:The government should establish the fundamental policy guidelines on energy industry as follows:

75 (1)Procure energy to adequately meet the demand, with good quality, security as well as reasonable and fair prices, emphasizing full exploitation and

(2)Promote economical, efficient and worthwhile use of energy, including promoting the application of efficient technologies as well as the distributed generation system in power generation, in order to reduce the investment in energy utilization, to reduce fuel costs in the manufacturing processes and to reduce health impact and other associated impacts resulting from energy production and utilization, while increasing the economic competitive edge of the country.

(3)Promote the participation of the local communities and the general public in the management and monitoring of energy-related operations to ensure that the management and tariff determination are carried out with transparency, with the establishment of a regulatory body for the energy industry operation to protect energy consumers and to ensure fairness for all stakeholders.

(4)Promote correct knowledge, awareness and behavior with relation to the economical, efficient and worthwhile use of energy among the general public.

(5)Support the electricity industry as the fundamental public utility, the maintenance of the power system security and reliability; in this regard, the government will be responsible for the operation of the power network system business, the power system operator and hydropower plants – with the Electricity Generating Authority of Thailand being the operator of the power transmission system, and the Metropolitan Electricity Authority and the Provincial Electricity Authority being the operators of the power distribution systems -- including the re- tention of an appropriate share of the power generation capacity of the state-owned electricity industry.

Section 9:For the purpose of regulating the energy industry operation under this Act, the Minister shall have the following authority and duties:

(1)recommend to the cabinet the policy on the energy industry structure;

(2)recommend to the National Energy Policy Council (NEPC) the policy on the energy procurement and the policy on diversification of fuel sources and types for power generation to ensure efficiency and security of the electricity industry;

(3)consider the power development plan, the investment plans of the electricity industry, the natural gas procurement plan and the energy network system expansion plans, commented by the ERC pursuant to Section 11 (5), for submission to the cabinet for approval;

(4)propose to the NEPC the policy on the protection against and solution to energy shortages;

(5)propose to the NEPC the policy, targets and general strategies of the energy industry operation;

(6)set the policy on customer service standards and energy industry operation standards;

(7)set the policy on extensive provision of energy services as well as energy services for the underprivileged, including the policy dealing with the energy consumers’ petitions;

(8)recommend to the NEPC the policy on the sending of contributions to the Fund and on the Fund utilization;

(9)consider the operational plan of the ERC and the expenditure budget of the Office for submission to the cabinet for approval;

(10)approve the rules and Codes of Conduct of the ERC Commissioners and the competent officials, as proposed by the ERC pursuant to Section 11 (8); and

(11)perform any other duty as stipulated in this Act.

All the regulations, rules, announcements or codes to be generally enforced shall come into effect upon their publication in the Government Gazette.

DIVISION 2

THE REGULATORY BODY FOR THE ENERGY INDUSTRY OPERATION

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Part 1

The Energy Regulatory Commission

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Section 10:There shall be established the Energy Regulatory Commission, comprising one Chairman and six other commissioners graciously appointed by His Majesty the King.

The Secretary General shall be the Secretary to the ERC.

Section 11:The ERC shall have the following authority and duties:

(1)regulate the energy industry operation to ensure the compliance with the objectives of this Act under the policy framework of the government;

(2)issue an announcement determining the types of licenses for energy industry operation, and recommend the issuance of a Royal Decree to determine the categories, capacities and characteristics of energy industry that are exempt from the license requirement;

(3) establish measures to ensure security and reliability of the power system;

(4)establish the regulations and criteria of the electricity procurement and the issuance of Requests for Proposals for the purchase of power as well as monitor the selection procedures to ensure fairness for all stakeholders;

(5)provide comments on the power development plan, the investment plans of the electricity industry, the natural gas procurement plan and the energy network system expansion plans for submission to the Minister under Section 9 (3);

(6)inspect the energy industry operation of the licensees to ensure efficiency and transparency;

(7)issue regulations or announcements establishing the customer service standards and quality, including measures to protect energy consumers against adverse impacts resulting from the energy industry operation;

(8)propose the rules and Codes of Conduct of the ERC Commissioners and the competent officials to the Minister under Section 9 (10);

(9)issue regulations or announcements on the determination of the policy and guidelines with regard to the stake holding or the conflict of interests of the ERC Commissioners and the competent officials;

(10)issue regulations or announcements on the determination of criteria, method and conditions of the contribution sending to the Fund and the Fund utilization to be in line with the NEPC policy under Section 9 (8);

(11)issue orders and determine the administrative fines pursuant to Division 8 – Disciplinary Procedures;

(12)provide comments or recommendations related to the energy industry operation to the Minister and the cabinet;

(13)promote and support the research study in the field of energy industry operation;

(14)promote knowledge and awareness in relation to energy in the society and among the general public;

77 (15)promote and support human resources development in order to increase efficiency in the energy industry operation;

(16)promote economical and efficient use of energy and the use of renewable energy and energy that has less adverse impact on the environment, with due consideration of the efficiency of the electricity industry operation and the balance of natural resources;

(17)coordinate with other agencies in relation to the execution of the duties stipulated in this Act; and

(18)perform any other task as stipulated in this Act or in other laws as part of the ERC’s authority and duties.

All the regulations, rules, announcements or codes to be generally enforced shall take effect upon their publication in the Government Gazette.

All the orders to be exclusively enforced on any individuals shall come into force upon their notification to the subject of such an order in accordance with the rules and procedure on notification of an administrative order under the law on administrative procedure.

Section 12:The ERC Commissioners must have practical achievements or hands-on experience illustrating pro- found knowledge, understanding and expertise or must have a minimum of ten years’ experience in the fields of energy, mathematics, law, science, engineering, economics, finance, accounting, natural resources and environment, consumer protection, or in other fields which will contribute to the energy industry. In this regard, the working period in each of the mentioned fields can be accumulated.

Among the ERC Commissioners, there shall be Commissioners from the energy field, at least one each from the electricity industry and the natural gas industry.

Section 13:The ERC Commissioners shall have the qualifications and shall not possess any disqualification as follows:

(1)having Thai nationality;

(2)having attained the age of 40;

(3)must not be a member of the House of Representatives, a member of the Senate, a political official, a member of a local assembly or a local administrator;

(4)must not hold any position in a political party;

(5)must not be insane or mentally disordered;

(6)must not be addicted to drugs;

(7)must not be adjudged as bankrupt or formerly be bankrupt or corrupt;

(8)must not be adjudged incompetent or quasi-incompetent;

(9)must not be convicted and sentenced to imprisonment and detained by a court warrant;

(10)must not be a person who used to be imprisoned by a final judgment for two years or more and who has completed the sentence for less than five years on the date of being nominated, except for offenses committed through negligence or petty offenses;

(11)must not be convicted and sentenced by a court to have the assets confiscated by the state due to immoder- ate wealth or unusual increase of assets;

(12)have never been dismissed, discharged or removed from service of a government agency or a private entity on the grounds of dishonesty, or serious malfeasance, or quasi-corruption and quasi-disciplinary misconduct;

78 (13)must not be a judge of the Constitutional Court, an election committee member, a state ombudsman, a member of the Counter Corruption Commission, a member of the Auditor-General of Thailand, a member of the Na- tional Human Rights Commission of Thailand or a member of the National Economic and Social Advisory Council; and

(14)have never been removed from office by the resolution of the Senate.

Section 14:In appointing the ERC Commissioners, the Minister shall propose to the cabinet the names of a Screen- ing Committee, comprising nine members, to be appointed to carry out the selection of qualified persons to be nominated ERC Commissioners. The Screening Committee shall comprise:

(1)a former Permanent Secretary of Energy, a former Permanent Secretary of Finance, a former Permanent Secre- tary of Industry, or a former Secretary-General of the National Economic and Social Development Board, totaling four persons;

(2)one representative of the Federation of Thai Industries that is not an energy industry operator;

(3)one representative of the Council of Engineers;

(4)one representative of the rectors of public higher education institutes;

(5)one representative of the National Economic and Social Advisory Council; and

(6)one representative of the non-profit organizations, of which the achievements have been well recognized for no less than five years in the field of consumer protection, or natural resources and environment, or energy.

In the event that the selection of the persons under (1) cannot meet the required number, a former Permanent Secretary of another ministry or a person of an equivalent post in other government agencies, as deemed appropriate, shall be appointed in lieu of the missing required number.

The Screening Committee Members shall make public the details of their business stake holding with any energy industry operators during the past two (2) years, including those of their spouse and children who have not reached maturity, and shall not have any personal legal cases against any energy industry operators during the mentioned period.

The Screening Committee Members shall have no right to be nominated ERC Commissioners.

The Screening Committee shall elect one among them as Chairman of the Screening Committee.

The selection of the representatives under (4) and (6) shall be in line with the criteria, procedures and conditions set forth by the Minister.

The Office shall function as the administrative agency for the selection of the ERC Commissioners.

The Screening Committee Members shall have remuneration and other expenses for the duty execution as prescribed by the cabinet.

The Screening Committee Members shall have the qualifications and shall not possess any disqualification under Section 13.

Section 15:The selection and appointment proceedings of the ERC Commissioners shall be as follows:

(1)The Screening Committee shall consider and select persons with knowledge, understanding and expertise or experience as described under Section 12, having qualifications and not possessing any disqualification under Section 13, totaling seven (7) persons, for submission to the Minister together with their particulars, which shall clearly indicate or be accompanied with testimonials illustrating that the persons are qualified in one of the fields specified under Section 12, including a letter of consent of each nominated person, and shall make public the information/particulars of the nominated persons.

79 (2)The Minister shall submit the names of the selected persons together with the particulars under (1) to the cabinet for approval.

(3)In the event that the number of approved individuals does not meet the required number of the ERC Commis- sioners to be appointed, the Screening Committee shall again consider and select persons in line with (1), to present to the Minister for further submission to the cabinet for approval.

(4)For the initial appointment of the ERC Commissioners, when the cabinet has approved all the required compo- sitions of the ERC, those persons shall meet and elect one among themselves as Chairman and inform the Prime Minister; the latter shall present the names of the nominated ERC Commissioners to His Majesty the King for his gracious appointment as ERC Chairman and as ERC Commissioners.

In executing the duties under this Section, the Screening Committee Members shall be considered officials under the Criminal Code.

The determination of the time frame, criteria, procedures and conditions of the selection of the ERC Commission- ers shall comply with the stipulations announced by the Minister.

Section 16:

Apart from the qualifications and disqualifications under Section 13, an ERC Commissioner:

(1)shall not be a civil servant with an assigned post or a regular monthly salary;

(2)shall not be a staff member or employee of a government agency or a local government affairs bureau, or a board member of or an advisor to a government agency that holds a business in or operates a business in the energy industry, and the spouse of that person shall not be a board member of or an advisor to a government agency that holds a business in or operates a business in the energy industry;

(3)shall not hold any position or be a partner of a partnership company or a shareholder in a company or an organization, holding a business in or operating the energy industry, and this shall mean to include the spouse and any children who have not reached maturity of that ERC Commissioner; and

(4)shall not undertake any occupation or profession that has a stake or conflict of interests, either directly or indirectly, with the execution of duties as an ERC Commissioner.

In submitting the names of the selected persons to the cabinet under Section 15 (2), the disqualifications of an ERC Commissioner under Clause one hereof shall be presented at the same time. When the cabinet has considered and approved a person who is a person under (1), (2), (3) or (4), the Prime Minister shall present his name to His Majesty the King for his gracious appointment only after the person has divested himself of the status specified under (1), (2) or (3) or has shown acceptable evidence that he has quit the occupation or profession under (4) within 15 days as from the date on which the cabinet has granted the approval. If that person does not resign or quit his occupation or profession within the specified period of time, he shall be considered as never having been nominated ERC Commissioner. The selection of an alternative person shall be made.

Section 17:

The ERC Commissioners shall hold office for a term of six years as from the date of appointment by His Majesty the King and shall be in office only for one term.

At the initial term, after three years’ time, three (3) of the ERC Commissioners shall be discharged from office by drawing a lottery; such a discharge shall be regarded as the completion of the office term.

The discharged ERC Commissioners, by completion of the office term or by lottery drawing, shall continue performing their duties until new ERC Commissioners are appointed.

80 The selection of a new set of the ERC Commissioners, pursuant to Section 15, shall be made in advance, as deemed appropriate, in order that they are in place to take over the duties once the outgoing ERC Commissioners complete their office term. 11

The Prime Minister shall present the names of the nominated ERC Commissioners to His Majesty the King for his gracious appointment.

Section 18:When His Majesty the King has graciously appointed the ERC, the duty of the Screening Committee shall be terminated.

Section 19:Apart from vacating office upon completion of the term, an ERC Commissioner shall vacate office upon:

(1)death;

(2)having attained the age of 70;

(3)resignation;

(4)lack of qualifications or having any disqualification under Section 13;

(5)having committed an act in violation of Section 16;

(6)the cabinet has passed a resolution to remove the ERC Commissioner from his office on the grounds of misconduct, negligence, dishonesty or incompetence.

When an ERC Commissioner vacates office prior to the completion of the term, the selection and appointment of an ERC Commissioner to fill the vacancy shall be made according to Section 15, and the remaining Commissioners shall be able to continue performing their duties. The ERC shall be regarded as comprising the remaining Com- missioners, except for the case where the remaining Commissioners are less than four (4) persons.

In the event that the Chairman of the ERC vacates office under Clause one hereof, the ERC shall hold a meeting to elect one among themselves as Chairman and inform the Prime Minister, who shall present the nomination to His Majesty the King for his gracious appointment as Chairman of the ERC.

Section 20:Within two years after having vacated office, an ex-ERC Commissioner shall be prohibited from undertaking a career or professional practice that brings about money or any other privilege/benefit from a juristic entity undertaking an energy industry business.

The provision of Clause one hereof shall also apply to a juristic entity with the following characteristics:

(1)any other juristic entity that is a shareholder or a partner, holding no less than 25% of the shares in the juristic entity under Clause one hereof;

(2)any other juristic entity that is a shareholder or a partner, holding no less than 25% of the shares in the juristic entity under (1); and

(3)any other juristic entity that is a shareholder or a partner, holding no less than 25% of the shares in the juristic entity under (2).

The provisions of Clause one and Clause two hereof shall also apply to the board members of and advisors to the said juristic entities.

Section 21:Within the period of time specified under Section 20, the ERC Commissioners shall be prohibited from holding shares of the juristic entities under Section 20, except that the shareholding of such juristic entities is acquired via purchase in the stock market, within the amount specified by the Counter Corruption Commission.

Section 22:At any meeting of the ERC, attendance of no less than half of the existing ERC Commissioners shall be required to constitute a quorum.

81 The ERC Chairman shall preside over the meeting. In the event that the Chairman does not attend or is absent from the meeting or cannot perform his duties, the ERC Commissioners present shall elect one among themselves to preside over the meeting.

The decision of the meeting shall be made by a majority of votes. Each ERC Commissioner has one vote. In case of an equality of votes, the person who presides over the meeting shall have an additional vote as a casting vote.

Section 23:The ERC Chairman and the ERC Commissioners shall be considered as high ranking state officers under the constitutional law on counter corruption.

Section 24:The ERC shall have the authority to appoint a sub-committee or a person to deliberate any matter or to carry out any task as entrusted by the ERC.

The procedures for executing the duties of the assigned sub-committee or person shall be in line with those stipulated by the ERC.

Section 25:In the execution of their duty, the ERC, the sub-committee and the person appointed by the ERC under Section 24 shall have the authority to request a government agency or any person to furnish facts in writing, to be present to provide explanations, or to send relevant documents and evidence for deliberation.

In executing their duty under Clause one hereof, the ERC Chairman, the ERC Commissioners, the sub-committee and the person appointed by the ERC under Section 24 shall be regarded officials under the Criminal Code.

Section 26:Prior to issuing any regulations, rules, announcements or codes of the ERC, which will affect a person, a group of persons or licensees, the ERC shall disclose the essence of the regulations, rules, announcements or codes and shall provide the interested person, group of persons or licensees with the opportunity to make repre- sentations to the ERC, in accordance with the hearing process established by the ERC.

In the case of emergency or exigency so as to maintain the energy security of the country or in any other circum- stance as stipulated in the Ministerial Regulations, the ERC may not take action as stipulated under Clause one hereof; however, a report must be made to the cabinet for acknowledgement.

Section 27:For the issuance of any administrative order of the ERC, the law on administrative procedure shall apply mutatis mutandis.

Section 28:In issuing any regulations, rules, announcements, codes or orders of the ERC, the resolution of the meeting together with the facts and rationale, consisting of the details about the regulations, rules, announcements, codes or orders, shall be recorded in the Minutes of the ERC’s meeting.

The Office shall summarize the Minutes of the ERC’s meetings in its Annual Report, which shall include the details about the number of the ERC Commissioners’ attendance in and absence from the meetings, and shall have it published for dissemination to interested persons or shall also be posted on the website of the Office.

The ERC shall provide reasons, in writing, within sixty (60) days, in respect of the issuance of any regulations, rules, announcements, codes or orders affecting a person, a group of persons or licensees if so requested by the affected person, group of persons or licensees. If the execution of the ERC affects the general public, the reasons for such execution shall also be made public via the website of the Office.

In the Annual Report of the Office under Clause two hereof, the outcomes of the sub-committee’s meetings and the number of the sub-committee members’ attendance in and absence from the meetings, as well as the execution of the person under Section 24 shall be summarized therein.

Section 29:The ERC Chairman and the ERC Commissioners shall work full-time and shall receive remuneration, expenditures for the duty execution and other rights/benefits as specified in a Royal Decree.

82 The remuneration and other expenditures for the duty execution of the Chairman of the sub-committee, the sub- committee members and the person under Section 24 shall comply with the regulations stipulated by the ERC and shall also be made public via the website of the Office.

The remuneration, expenditures for the duty execution and other rights/benefits of the ERC Commissioners, the sub-committee members and the person under Section 24 shall be considered as the operating cost of the Office.

PART 2

THE OFFICE OF THE ENERGY REGULATORY COMMISSION

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Section 30:There shall be established the Office of the Energy Regulatory Commission, being a state entity, which is not considered a government agency or state-owned enterprise under the law on budgetary procedure, with the status of a juristic entity, and shall be under the supervision of the ERC.

Section 31:The Office shall have the authority and responsibilities for the general tasks of the Office and shall have the following power and duties:

(1)to be responsible for the administrative work of the ERC;

(2)to receive fees as specified by law or determined by the ERC;

(3)to receive petitions concerning the energy industry operation;

(4)to study, compile, analyze and disseminate information related to the energy industry operation, competitive conditions of the energy industry operation, the load forecast and other relevant information;

(5)to develop the revenue and expenditure estimates of the Office for submission to the ERC for approval; and

(6)to perform any other task as entrusted by the ERC or as stipulated in this Act or in other laws to be the authority and duties of the Office.

Section 32:

The operation of the Office is not subject to the enforcement of the law on labor protection, the law on labor relations and the law on compensation. In this regard, the Secretary General, staff members and employees of the Office shall receive the rights/benefits of no less than those specified in the mentioned laws.

Section 33:

The ERC shall have the authority to issue regulations, rules or announcements concerning the general work management, personnel management, budgeting, finance and assets, and other functions of the Office, especially in the following matters:

(1)The internal division of the organizational structure of the Office and the scope of work of each division.

(2)The establishment of the posts, monthly salary scale and other remuneration of the Secretary General, staff members and employees of the Office, including the permission to receive other salary and remuneration.

(3)The determination of qualifications, selection, assignment, appointment, probation, transfer, promotion, salary increase, discharge, removal, dismissal, service suspension, disciplines, disciplinary inquiry and penalty, filing grievances, appeals and punishment to be applied to the Secretary General and staff members of the Office, as well as the procedures and conditions of engaging employees of the Office.

(4)The acting as officer-in-charge or the acting for the post of the Secretary General and staff members of the Of- fice.

83 (5)The establishment of the uniform and clothing of staff members and employees of the Office.

(6)The engagement and appointment of a person to be an expert or a specialist that will be helpful for the duty execution of the ERC, including the remuneration rate for such an engagement.

(7)The management and administration of the budget, assets and inventories of the Office.

(8)The provision of welfare or other assistance for staff members and employees of the Office.

The regulations, rules or announcements under Clause one hereof shall be published in the Government Gazette.

Section 34:There shall be a Secretary General of the Office to be responsible for the operation of the Office and report directly to the ERC Chairman. He shall be the commanding officer of the staff members and employees of the Office.

With regard to the activities of the Office that deal with outsiders, the Secretary General shall be the representative of the Office. In this regard, the Secretary General may assign any person to act on his behalf on specific activities, which shall comply with the regulations stipulated by the ERC.

Section 35:The ERC shall have the authority to select and appoint the Secretary General.

The Secretary General shall have the qualifications and shall not possess any disqualification described under Section 13 and Section 16, Clause one thereof, and shall be able to work full-time for the Office.

Section 36:The Secretary General shall hold office for a term of five (5) years counting from the date of appointment and may be re-appointed; however, he cannot hold office more than two (2) consecutive terms.

Section 37:Apart from vacating office upon completion of the term under Section 36 or pursuant to the engagement contract, the Secretary General shall vacate office upon:

(1)death;

(2)having attained the age of 60;

(3)resignation;

(4)lack qualifications or possess any disqualification stipulated under Section 13 or Section 16, Clause one thereof;

(5)the ERC has passed a resolution, derived from no less than two-third of votes of the existing ERC Commission- ers, to remove him from service, on the grounds of serious misconduct, serious malfeasance or inability to perform his duties.

Section 38:The provisions under Section 20 and Section 21 shall apply to the Secretary General and staff members, for the posts specified by the ERC.

Section 39:The Secretary General and staff members of the Office shall be considered state officials under the constitutional law on counter corruption.

The Secretary General shall be a high ranking officer under the constitutional law on counter corruption.

Section 40:The Office may acquire revenue and assets as follows:

(1)the revenue or benefits derived from the execution of authority and duties as assigned to the ERC and the Of- fice under this Act;

(2)a general subsidy allocated by the government;

(3)donated money or assets; and

(4)interest or any benefit incurred from the money or assets of the Office.

84 As for the revenue of the Office under Clause one hereof, excluding the revenue under (3), after having deducted the operating expenditures of the Office and other costs, as it may think fit, whatever remaining shall be remitted to the Ministry of Finance as state revenue. In the event that the revenue of the Office is inadequate for the operating costs and that no money can be obtained from other sources, the government shall allocate money from the government budget to the Office, as a general subsidy pursuant to (2), at an amount deemed necessary.

Section 41:The ERC shall present to the cabinet for approval the operational plan, expenditure budget and revenue estimation of the Office in each fiscal year, including the plan for determining the rates of fees and other benefits under Section 40 (1).

When the plan for determining the rates of fees and other benefits under Clause one hereof is approved, the ERC shall set the rates of fees and other benefits in compliance with the approved plan, so that the Office would gain revenue according to the operational plan already approved by the cabinet.

With regard to the subsidy to be requested for allocation from the government budget, the Minister shall present to the cabinet the expenditure budget of the fiscal year for which the support is being requested. The allocation of the general subsidy for the Office shall be incorporated into the Fiscal Budget Bill or the Additional Budget Bill, whichever is the case.

Section 42:The Office shall have the authority to occupy, oversee, maintain, use and make profits from its assets, in line with the regulations prescribed by the ERC.

As for the assets that are state properties under the law on state properties, the criteria, procedures and conditions of the possession, maintenance, usage and profit-making in relation to the state properties under the law on state properties shall be applied mutatis mutandis. The revenue derived from the aforesaid acts shall be delivered as state revenue.

Section 43:

All immovable properties acquired by the Office through purchase or exchange, using the revenue or assets of the Office, or through donation under Section 40 (3), shall become under the ownership of the Office.

Section 44:The accounting of the Office and of the Fund shall be made according to the international standards under the format, criteria, methods and conditions specified by the ERC. The accounting separation shall be distinctly made, and there shall be an internal audit of the finance, accounting and inventories of the Office and of the Fund. A report on the audit outcome shall be made to the ERC at least once a year.

A staff member of the Office shall be assigned to specifically undertake the internal audit function and shall report directly to the ERC according to the regulations set forth by the ERC.

Section 45:The Office shall prepare the financial statements and work sheets of the Office and of the Fund to be submitted to the internal auditor within one hundred and twenty (120) days as from the end of each fiscal year.

In each fiscal year round, the Office of the Auditor General of Thailand, or an outsider as appointed by the ERC with consent of the Office of the Auditor General of Thailand, shall audit and assess the budget expenditure and the assets of the Office and of the Fund, by providing analytical comments on the expenditure performance in terms of the objective compliance and the degree of economy, worthiness, efficiency and effectiveness achieved.

The Office shall be an entity subject to auditing under the constitutional law on the government audit.

Section 46:At the end of each fiscal year, the ERC shall have to prepare an annual report to be presented to the National Energy Policy Council, the Minister, the cabinet, the House of Representatives and the Senate, and to be made public. The report shall cover the acquisition and expenditure of the money that need not be remitted to the Ministry of Finance as state revenue, the achievements of the ERC, the Office and the Fund in the past year,

85 together with the rationales of the decisions made, the financial statements, the work sheets together with the auditor’s report, including the future operational plans of the ERC, the Office and the Fund.

DIVISION 3

REGULATION OF THE ENERGY INDUSTRY OPERATION

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PART 1

LICENSE FOR THE ENERGY INDUSTRY OPERATION

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Section 47:The energy industry operation, either with or without remuneration, shall have to obtain a license from the ERC.

In issuing a license, the ERC shall announce and determine the type and validity period of license that corresponds with the capacity and characteristics of individual energy industry categories, taking into account the impact on the people, the worthiness in the economic, social and investment aspects, including the competitive features of each business category. Conditions to be exclusively applied may also be specified.

The determination of categories, capacities and characteristics of the energy industry that are exempt from the license requirement shall be promulgated through the issuance of a Royal Decree.

For the benefit of data/statistics collection, the ERC may announce and prescribe that the energy industry that are exempt from the license requirement pursuant to Clause three hereof shall have to notify the Office of their operation.

Section 48:In the case that the facility construction or factory establishment for the purpose of energy industry operation must comply with the law on factories, the law on building control, the law on town and country planning or the law on energy development and promotion, the authorization under the laws on those respective matters shall become under the authority and duties of the ERC under this Act. In this regard, the ERC shall have to solicit for comments from the authoritative agencies under the respective laws, and the concerned agencies must provide comments and indicate the amount of fees to be collected under those respective laws, to the ERC.

The Office shall deliver the fees collected by the ERC under Clause one hereof to the respective authoritative agencies under those laws for further action.

Section 49:The ERC shall have the power to order a business operator who is considered to be an energy industry operator requiring a license but who has not yet obtained any license to stop or suspend the energy industry operation or to disconnect from the energy network system.

After the ERC has issued the order under Clause one hereof, if the business operator fails to abide by the order, the ERC shall have the authority to order the competent officials to take any necessary action to achieve the objective of the order under Clause one hereof.

In such a case, the business operator shall have to pay for the expenses actually incurred to the Office.

Section 50:The qualifications of an applicant for a license, the criteria, procedures and conditions of the application for a license and the license issuance, including the license fees and the rates of the energy industry operation fees, shall be in line with the regulations stipulated and announced by the ERC, which shall correspond with the plans under Section 9 (3) or with the energy policy as approved by the cabinet.

86 Section 51:The criteria, procedures and conditions of license issuance stipulated by the ERC under Section 50 shall take into account the difference of the categories, capacities and characteristics of the energy industry and shall not create an undue burden on the energy industry operation of the licensees and shall not lead to the limi- tation of market competition. Also, they shall not be discriminately applied to the licensees who operate the energy industry of the same category, capacity and characteristics.

The criteria, procedures and conditions under Clause one hereof shall include one or more of the following issues:

(1)the location and surrounding conditions of an energy business facility;

(2)technical, engineering and safety standards;

(3)standards and quality of the service provision;

(4)tariffs;

(5)efficiency of the energy and resource utilization;

(6)efficiency of the energy industry operation and service provision;

(7)categories and types of fuel, including requirements for the use of renewable energy;

(8)processes and technologies used in the energy industry operation;

(9)protection against and solution to energy shortages;

(10)competition in the energy industry operation and prevention of abusive use of monopoly power;

(11)shareholding structure and relationship with other energy industry operators;

(12)the hearing process and public relations to raise understanding of the general public and stakeholders;

(13)environmental standards;

(14)measures to alleviate social and environmental impacts in the vicinity of the energy business facility;

(15)the comprehensiveness and completeness of the report made to the ERC.

Section 52:When an applicant for a license has paid the license fee and the fee for the energy industry operation to the Office, the ERC shall issue a license to that applicant.

After having issued the licenses, the ERC shall make public the name list of the licensees via the website of the Office.

Section 53:When a licensee wishes to commence operation of any part of his electricity industry, the licensee shall have to inform the Office prior to the commencement date of the operation according to the criteria, procedures and conditions set forth by the ERC.

In the event that the licensee wishes to carry out a trial run of the machinery or equipment prior to the commencement of the electricity industry operation under Clause one hereof, the licensee shall have to inform the Power System Operator of the date, time and duration of the trial run of the machinery or equipment, and the Power System Operator shall promptly notify back to the licensee of the exact date and time scheduled for the trial run.

Section 54:The duration of the energy industry operation shall accord with the duration specified in the license.

In requesting extension of a license, the licensee shall have to submit a petition for the extension before the license expires. After the petition submission, the petitioner will still be regarded as a licensee until a contrary notification is received.

87 The application for license extension and the license granting, including the rate of the license extension fee, shall be in conformity with the criteria, procedures and conditions stipulated by the ERC. The mentioned criteria, procedures and conditions shall be similar to the criteria, procedures and conditions under Section 50 and Section 51.

Section 55:The licensee shall be prohibited from transferring the rights granted by the license to another person, in whole or in part, unless approval is granted by the ERC, according to the criteria, procedures and conditions specified by the ERC.

Section 56:In the case where it is found that the licensee lacks the qualifications or fails to comply with the regulations stipulated by the ERC under Section 50, the ERC may order the suspension or cancellation of the license, according to the criteria, procedures and conditions specified by the ERC.

Section 57:In the event that occasional electricity shortages may occur or that it is essential to reserve fuel for electricity generation for the sake of the security or economic benefits of the country, the ERC, by and with consent of the Minister, shall have the power to order the licensees to increase or reduce their electricity generation or distribution.

In the case of occasional shortages of natural gas and for the sake of the national security, the ERC shall have the power to order the licensees who are natural gas suppliers and wholesalers to negotiate with natural gas sellers in order to seek for the means to increase the natural gas production and supply volume and to report the outcome of the negotiations to the ERC.

Section 58:Licensees are prohibited to halt or cease their energy services, unless they have taken actions in conformity with the criteria, procedures and conditions prescribed by the ERC.

Section 59:Any licensee who wishes to discontinue the energy industry operation shall have to inform the Office in writing in advance, according to the criteria, procedures, conditions and period of time as prescribed by the ERC.

In the case that the discontinuity of the energy industry operation, according to the categories, capacities and locations specified by the ERC, will affect the energy system security and is still pending for another licensee to take over his operation, the ERC shall have the power to order a government or private agency with experience and expertise in the energy industry operation to temporarily run the business until another licensee takes over the operation or until it is deemed by the ERC that the energy industry operation should be discontinued.

The replacing government or private agency shall be regarded as a licensee, having the rights and duties under this Act.

The government or private agency that operates the business in lieu of the licensee shall have the rights to enter and use the energy industry facility of the licensee having discontinued the operation under Clause one hereof, to the extent that it is deemed necessary to maintain the continuity of the energy service provision. The government or private agency shall exercise caution to keep and protect the assets of the licensee in the same manner that an energy industry 23 operator or a person with such a profession should do. If damage is caused to the licensee, he shall have the rights to claim for compensation for such damage from the Office, according to the criteria, procedures and conditions prescribed by the ERC.

The apportionment of the revenue and costs incurred, during the period of the operation in lieu of the licensee, between the replacing operator and the licensee who has discontinued the energy industry operation shall be in conformity with the criteria, procedures and conditions prescribed by the ERC.

Section 60:The ERC shall have the power to issue the regulations establishing the criteria to prevent any acts that are monopolistic, reduce competition or limit competition in the energy service provision.

88 Section 61:In the event that a licensee does not comply with the criteria under Section 60, the ERC shall have the following authority:

(1)to order the licensee to stop or correct the practice that is monopolistic, reduces competition or limits competition;

(2)to change the license conditions.

Section 62:In the case where the ERC views that the service provision of a licensee may cause damage to the systems, machinery and equipment of energy consumers or other energy industry operators, the ERC shall have the power to order that licensee to improve his service provision within the period of time determined by the ERC.

Section 63:A licensee shall prepare and submit to the ERC the information pertaining to his energy industry operation, which may include the account illustrating the financial status and financial statements, according to the criteria, procedures and conditions specified by the ERC.

In the case of a licensee operating a power network system together with the Power System Operator, the accounts and balance sheets of the operation of the power network system and the Power System Operator shall have to be distinctly separated from those of other business categories.

PART 2

TARIFFS FOR THE ENERGY INDUSTRY OPERATION

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Section 64:The Minister, by and with consent of the NEPC, shall set the policy and guidelines on the tariff determination in the energy industry operation.

Section 65:Under the policy and guidelines approved by the NEPC, the ERC shall establish the criteria for determining the tariffs of licensees under each category, based on the following approaches that:

(1)should reflect the actual costs and take into account the appropriate return on investment capital of efficient energy industry operation;

(2)should be at the rates that enhance efficient and adequate energy supply to satisfy the domestic energy demand;

(3)should induce efficiency improvement in the energy industry operation;

(4)take into account fairness for both energy consumers and licensees;

(5)take into account the assistance to the underprivileged power consumers or the electricity supply in order to decentralize prosperity to provincial areas;

(6)have an explicit and transparent tariff calculation and make public the tariffs; and

(7)do not exert unjust discrimination against energy consumers or those who wish to use energy.

Section 66:The ERC shall regulate the tariffs set by the licensees to ensure their compliance with the policy and guidelines as approved under Section 64 and pursuant to the criteria under Section 65.

In the event that the tariffs are at the rates generally enforced, the ERC shall disclose the formula or the methodology used in the tariff calculation, including the information about the variables used in the tariff calculation, except for the case that the ERC considers such variables are commercially confidential information of the licensees.

89 Section 67:With regard to the tariff regulation under Section 66, Clause one thereof, the licensees shall propose the tariffs to the ERC for approval. The considerationprocess must be transparent, and a consultation must be arranged to obtain views from the stakeholders.

Section 68:In the case where the ERC views that the tariffs become inappropriate due to a change in economic or social conditions, or the investment or technology, the ERC shall have the following authority:

(1)to adjust the tariffs; or

(2)to order the licensees to make the tariff adjustment for submission to the ERC for approval, and the ERC shall finalize the consideration within thirty (30) days as from the date of receipt of complete documents/evidences.

The tariff adjustment under Clause one hereof shall also be undertaken under the policy and guideline framework as approved under Section 64.

Section 69:

In the case where a licensee views that the tariffs adjusted or approved by the ERC is inappropriate due to a change in economic or social conditions, or the investment, technology or any other factor, the licensee may petition for tariff adjustment to the ERC for approval. The ERC shall finalize the consideration within thirty (30) days as from the date of receipt of complete documents/ evidences.

The tariff adjustment under Clause one hereof shall also be undertaken under the policy and guideline framework as approved under Section 64.

Section 70:

Licensees shall make public the tariffs as approved by the ERC, according to the criteria, methods and conditions specified by the ERC.

Section 71:

Licensees are prohibited from collecting tariffs at the rates higher than those approved by the ERC.

PART 3

ESTABLISHMENT OF STANDARDS AND SAFETY IN THE ENERGY INDUSTRY OPERATION

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Section 72:The energy industry operation shall comply with the engineering standards and shall ensure safety pursuant to the regulations prescribed by the ERC. The prescribed regulations:

(1)shall not create an undue burden on the licensees;

(2)shall not be so rigid that they would limit or hinder the competition;

(3)shall not create biased benefits for any particular licensee; and

(4)shall be transparent.

In the event that the energy industry operation of a licensee fails to comply with the regulations under Clause one hereof, the ERC shall have the authority to order the licensee to improve or to rectify the operation.

Section 73:The standards of the equipment to be connected to the energy network system of a licensee operating such a system, including the testing methods and the testing outcome certification, shall be in conformity with the regulations prescribed by the ERC.

90 The regulations under Clause one hereof may require that the standards of certain types of equipment to be connected to the energy network system be tested and certified prior to their utilization in the energy industry operation.

In developing the regulations under Clause one hereof, the licensees operating the energy network systems shall develop the details for submission to the ERC for consideration.

Section 74:A licensee shall have to undertake the maintenance, repair and improvement of the energy network system, equipment or other devices used for the energy industry operation to ensure that their operating efficiency and standards comply with the regulations issued under Section 72, Clause one thereof. In the case of any damage or breakdown, repair must be expeditiously taken to restore the operation.

Section 75:In establishing the standards under Section 72, Clause one thereof, and Section 73, Clause one thereof, the ERC may refer to the standards established by other agencies entrusted with the power and duties under the laws on those respective matters.

Section 76:Any entity wishing to undertake the testing and certification of the standards of the equipment to be connected to an energy network system shall have to acquire a license to be a standard testing and certifying agency from the ERC.

The qualifications of an applicant for the license to be a standard testing and certifying agency, the application submission for such a license, the license issuance, the license extension, the license validity period, the fees for licenseissuance and extension, including the fee for the testing and certification, shall be in conformity with the criteria, procedures and conditions prescribed by the ERC.

Section 77:The ERC shall have the power to revoke the license to undertake the testing and certification of the standards of the equipment to be connected to an energy network system in the following cases:

(1)lack of qualifications as stipulated in the announcement issued under Section 76, Clause two thereof;

(2)dishonesty in undertaking the testing, in reporting the testing outcome or in certifying the testing outcome;

(3)delay in the undertaking of the testing, reporting the testing outcome or certifying the testing outcome, with undue reasons, hence causing serious damage to a person requesting the testing; or

(4)failure of the inspectors to meet the standard qualifications, or having insufficient number of the inspectors as stipulated in the announcement issued under Section 76, Clause two thereof.

Section 78:The revocation of the license to be a standard testing and certifying agency under Section 77 shall not affect the standard certification undertaken by the agency prior to the license revocation except that the certification is below the standards specified by the ERC, in which case the ERC may give an order to revoke that certification.

In the case where any person is affected by the damage caused by the standard certification which is below standards and hence the revocation under Clause one hereof, the standard testing and certifying agency whose license is revoked shall be liable for the compensation for such damage.

PART 4

THE ENERGY NETWORK SYSTEMS

AND THE ENERGY NETWORK SYSTEM OPERATORS

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91 Section 79:A licensee who has an energy network system shall carry out the operation in line with what is stipulated in the energy network system expansion plan.

A licensee who has an energy network system and who is a government agency as determined by the ERC shall develop his energy network system expansion plan and present it to the Minister for further submission to the cabinet for approval.

In considering the energy network system expansion plan under Clause two hereof, the ERC shall provide comments on the subject. In this regard, if the mentioned plan has significant impacts on the general public, the ERC shall organize a hearing process in accordance with Section 26.

A licensee who has an energy network system and who is not a government agency under Clause two hereof shall develop his energy network system expansion plan for submission to the ERC for approval in compliance with the scope and criteria specified by the ERC.

Section 80:A licensee who has an energy network system shall fairly carry out his energy industry without unjust discrimination.

Section 81:A licensee who has an energy network system must allow other licensees or energy industry operators to utilize or connect to his energy network system in accordance with the codes stipulated and announced by the licensee operating the energy network system.

The codes under Clause one hereof shall comprise the code of the energy network system connection, the code of utilization of the energy network system facilities and the code of the energy network system operation. Such codes shall be based on the following principles:

(1)They must not adversely affect the security, safety and quality of the energy system.

(2)They must not disadvantage energy consumers and the public as a whole.

(3)They must not unjustly discriminate or hinder other licensees or energy industry operators.

(4)The technical specifications at the end-use points or at the point of connection to the energy network system must be clear, technically feasible and must not impose an undue burden on the person who requests to utilize or connect to the energy network system.

(5)Duties and liability of both the person who requests to utilize or connect to the energy network system and the person who allows the utilization of or connection to the system must be clearly stipulated.

(6)Any other characteristic as specified and announced by the ERC.

The codes under Clause one and Clause two hereof shall not cause the licensee operating the energy network system to lose benefits or to be at a disadvantage in the competition against other licensees or energy industry operators.

Section 82:In the case where the ERC views that the code of the energy network system connection, the code of utilization of the energy network system facilities and the code of the energy network system operation do not comply with the principles under Section 81, the ERC shall have the power to order the licensee issuing such codes to revise or improve the codes to comply with the principles under Section 81.

Section 83:In the case where a licensee or an energy industry operator, wishing to use or connect to an energy network system views that the code of the energy network system connection, the code of utilization of the energy network system facilities and the code of the energy network system operation do not comply with the principles under Section 81, the licensee or the energy industry operator can file a petition to the ERC for consideration.

In the case where the ERC views that the codes do not comply with the principles under Section 81, the ERC shall have the power to order the licensee issuing such codes to revise or improve the codes to comply with the principles under Section 81.

92 Section 84:In the event that a licensee who has an energy network system refuses to allow utilization of or connection to his energy network system, the person who has been refused has the right to file a petition for the ERC’s consideration.

When the ERC has made a decision on the petition under Clause one hereof, the concerned parties shall abide by the decision.

Section 85:A licensee who has an energy network system shall provide the person who requests to utilize or connect to his energy network system with accurate information necessary for the utilization of or connection to the system. He shall not take any action that would disrupt the normal operation of the other licensee or energy industry operator utilizing or connecting to his energy network system.

Section 86:A licensee who has an energy network system must disclose the contracts, agreements, conditions and tariffs for the utilization of or connection to his energy network system, according to the criteria, procedures and conditions established and announced by the ERC.

Section 87:A licensee with an energy network system operator shall be responsible for the control, management and overseeing of the energy system to ensure the overall system balance, security, stability, efficiency and reliability and shall have thepower and duties to execute other tasks as specified by the ERC under the conditions of the license issuance.

The licensee with the power system operator shall fairly instruct licensees operating the electricity industry to generate electricity and shall not exert unjust discrimination.

Section 88:In the case where a petition is filed to the ERC claiming that the licensee with the power system operator has breached the provision of Section 87, Clause two thereof, the ERC shall finalize the deliberation on the petition within thirty (30) days as from the date the petition is received.

In the case where the ERC views that the licensee with the power system operator has breached Section 87, Clause two thereof, and hence has caused damage to the petitioner, the ERC shall, preliminarily, determine also the amount of the compensation for such damage.

DIVISION 4

ENERGY CONSUMER PROTECTION

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PART 1

SERVICE STANDARDS AND SERVICE EXTENSION

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Section 89:The licensees shall provide energy services pursuant to the standards established by the ERC, which shall include the technical and engineering standards as well as the service quality standards.

The licensees who fail to meet the standards specified under Clause one hereof shall be liable for the compensation payment to energy consumers, according to the regulations established by the ERC.

The licensees shall submit a report on the service provision quality to the ERC, according to the regulations set forth by the ERC.

Section 90:The ERC may designate a licensee to arrange for energy service provision in a particular locality where no energy service exists or where the service is not extensive or is inadequate to meet the demand of energy consumers in that locality.

93 The designation under Clause one hereof shall conform to the policy set forth by the Minister under Section 9 (7).

Section 91:The ERC shall have the power to issue an announcement establishing the standard models of contracts pertaining to the energy service provision and may also specify matters of which the contracts can differ from the contract standard models.

The standard models of contracts pertaining to the energy service provision shall have, at least, the following aspects:

(1)the provisions on duty and liability of both the licensee and the energy consumer, which must be clearly indicated;

(2)no provisions that restrict the energy consumer’s utilization of services, without appropriate reasons; and

(3)no provisions that unjustly discriminate or hinder the energy consumer.

Section 92:The licensee must publicize the contract model of his energy service provision to energy consumers in accordance with the criteria set forth by the ERC, and the contract model shall be noticeably displayed in the establishment of the licensee to allow examination by the general public.

94 PART 2

THE POWER DEVELOPMENT FUND

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Section 93:A fund shall be set up in the Office, under the name “Power Development Fund,” with the following objectives: to be used as a capital to support extensive extension of electricity service provision to various localities so as to decentralize prosperity to provincial areas; to develop the local communities affected by the operation of a power plant; to promote the use of renewable energy and technologies in the electricity industry operation that have less impact on the environment, with due consideration on the balance of natural resources; and to create fairness for power consumers.

Section 94:The Fund consists of the following:

(1)the contributions obtained under Section 96;

(2)the fines collected from licensees for the electricity industry operation under Section 128 and Section 140;

(3)donated money or assets; and

(4)interest or any benefit incurred from the money or assets of the Fund.

The money and assets belonging to the Fund are not subject to remittance to the Ministry of Finance as state revenue under the law on treasury balance and the law on budgetary procedure.

Section 95:The Office shall receive, disburse, keep and manage the money of the Fund separately from the budget of the Office.

The receipt, disbursement, keeping and management of the money of the Fund shall be in conformity with the regulations set forth by the ERC.

Section 96:The electricity industry licensees shall deliver contributions to the Fund in accordance with the regulations prescribed by the ERC under the policy framework of the NEPC under Section 11 (10). The contributions sent to the Fund to be used under Section 97 (1) shall be deducted from the tariffs.

The establishment of the criteria, procedures and conditions of the contribution delivery to the Fund under Clause one hereof shall include the distinct account separation according to the activities specified under Section 97 (1), (2), (3), (4) and (5), taking into consideration the impacts on power consumers who have to absorb the burden resulting from the electricity industry licensees’ obligation to deliver such contributions.

Section 97:The Fund shall be used for the following activities:

(1)to compensate and subsidize for electricity industry licensees who have provided services for underprivileged power consumers or to enhance extensive electrification or to support the policy on the development decen- tralization to provincial areas;

(2)to compensate power consumers who have to pay the tariffs at a higher rate resulting from the act of the licensee with the power system operator that breaches Section 87, Clause two thereof;

(3)to develop or rehabilitate a locality that is affected by the power plant operation;

(4)to promote the use of renewable energy and technologies for electricity industry operation that have less impact on the environment;

(5)to increase knowledge, awareness and participation of the society and people in power-related issues; and

(6)to pay for the costs of the Fund management.

95 The use of the Fund under (1), (2), (3), (4) and (5) shall comply with the regulations prescribed by the ERC under the policy framework of the NEPC under Section 11 (10), and there shall be the distinct account separation by activity.

PART 3

REGIONAL ENERGY CONSUMER COMMITTEES

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Section 98:For the benefit of energy consumer protection, the ERC shall appoint the Regional Energy Consumer Committees, each comprising one Chairman and other members, not exceeding 10 persons, representing energy consumers in each region.

The qualifications, terms of office, discharge from office, working procedures, remuneration and other expenses for the duty execution of the Regional Energy Consumer Committees shall comply with the stipulations of the ERC, and the aforementioned remuneration and other expenses shall be considered as part of the operating expenditure of the Office.

The division of regional areas under Clause one hereof shall be determined by the ERC.

Section 99:The Regional Energy Consumer Committees shall have the following power and duties:

(1)to address the petitions of energy consumers and give advice to energy consumers in line with the stipulations of the ERC;

(2)to give advice to the ERC on energy consumer protection issues;

(3)to propose corrective and improvement measures regarding energy service provision;

(4)to co-ordinate with energy industry operators to acquire the information related to the petitions of energy consumers with a view to improving service quality and finding solutions to the petitions; and

(5)to perform any other task as may be assigned by the ERC.

Section 100:In the event that an energy consumer is adversely affected by the service provision of a licensee, the energy consumer shall have the right to file a petition to the concerned Regional Energy Consumer Committee.

The petition shall explicitly indicate the facts occurred, and any proof or documentary evidence relevant to the petition shall be furnished therewith.

The criteria and petition procedures shall comply with the regulations prescribed by the ERC. In this connection, a timeframe shall be fixed that the petition deliberation shall be finalized within sixty (60) days as from the date of receipt of the petition, and the parties concerned shall also be given an opportunity to provide facts and present their evidence.

Section 101:In the event that the energy consumer disagrees with the decision of the Regional Energy Consumer Committee, he shall have the right to appeal to the ERC, according to the criteria, procedures and conditions set forth by the ERC.

The appeal decision of the ERC shall be treated as final.

Section 102:In the case where an energy consumer has found that a licensee collects the tariff at a higher rate than that approved by the ERC, or that the licensee unfairly provides services, the energy consumer shall have the right to request information about his service utilization from the licensee, and the licensee must provide the requested information to the energy consumer within thirty (30) days from the date on which a written request is received.

96 In the event that the energy consumer wishes to obtain the information under Clause one hereof in the form of a document with the certification of the information accuracy, the licensee shall accordingly provide him with such a document and the charge for so doing can be imposed on the energy consumer. However, the charge shall not be higher than the actual cost and shall be in line with the criteria, procedures and conditions prescribed by the ERC.

Section 103:In the case where there are reasonable grounds for suspicion that a licensee unjustly or unfairly collects tariffs, the energy consumer shall have the right to submit a petition to the Regional Energy Consumer Committee. The provisions of Section 100 shall apply mutatis mutandis.

DIVISION 5

UTILIZATION OF IMMOVABLE PROPERTY

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Section 104:When it is necessary for a licensee that is a government agency to use immovable property for the purpose of constructing an energy network system or other structures necessary and related to such an activity, including water resources for power generation and constructing a barrage, a diversion dam, a storage dam, a reservoir or any other structure that is a component of the dam or reservoir forhydropower generation, for hydropower development, or for the benefits related to the construction of a hydropower plant, including the switchyard and any other structure that is a component of the hydropower plant, if no agreement is made on the transfer to be otherwise, the expropriation shall be made according to the law on the expropriation of immovable property. In this regard, the Office shall be the expropriation authority and the ownership to the expropriated immovable property shall belong to the state.

The Office shall be tasked with the administration, maintenance, utilization and profit making in relation to the immovable property belonging to the state under Clause one hereof, in accordance with the criteria, procedures and conditions set forth by the ERC.

Section 105:For the benefit of exploration or survey for a location for the construction of an energy network system, a licensee, with the approval of the ERC, shall have the power to enter and temporarily make use or occupy the immovable property of any person, so long as it is not his dwelling place. In this connection, a licensee that is a government agency or the office of another licensee shall make an announcement designating the area to be surveyed by posting up a written notification at the district office, or the minor-district office, the sub-district office and the village headman office, overseeing the area where the immovable property is situated, for a period of no less than seven (7) days. Besides, the licensee shall make an announcement via at least one of the local newspapers which are widely distributed in the locality for no less than three (3) days, notifying the scheduled date, time and duration of the act to be performed, or in accordance with the criteria set forth by the ERC.

The posting of such a notification and the announcement in the newspaper shall be made no less than thirty (30) days prior to the entrance to use or possess of the immovable property.

After having entered the immovable property of any person, if any damage or depreciation of the immovable property or assets occurs, the licensee shall notify the amount of compensation for the damage, in writing, to the owner or occupying person or right holder of the immovable property or assets and shall pay compensation for the damage to the concerned person according to the criteria, procedures and conditions specified by the ERC. In this regard, the compensation amount shall be fairly assessed, including the charge for loss of economic benefits that should have been gained from the use of the concerned property.

The owner or occupying person or right holder of the immovable property or assets may lodge an appeal against the amount of compensation to the ERC within sixty (60) days as from the receipt date of the written notification on the amount of compensation.

97 The ERC shall finalize the deliberation on the appeal within sixty (60) days as from the receipt date of the appeal.

The ERC’s decision on the appeal shall be treated as final.

Section 106:When the licensee has identified the route or the site for the energy network system construction, he shall prepare a drawing illustrating detailed characteristics of the directions and boundary of the energy network system installation for submission to the ERC for consideration and approval, and the ERC shall finalize the consideration within thirty (30) days.

After the ERC has approved the drawing under Clause one hereof, the Office shall make an announcement designating the energy network system boundary by posting notifications at the district office, or the minor-district office, the sub-district office and the village headman office, where the energy network system boundary is located, or by any other means as deemed appropriate by the ERC. In this regard, the licensee shall illustrate the de- marcation of the energy network boundary on the actual site and issue a written notification to the owner or occupying person or right holder of the immovable property that is located within the boundary, or in the associated energy network system sites, pursuant to the criteria, procedures and conditions set forth by the ERC.

The owner or occupying person or right holder of the immovable property may lodge an appeal giving reasons rendering such an act inappropriate to the ERC within thirty (30) days as from the receipt date of the written notification from the licensee.

The ERC shall finalize the deliberation on the appeal within sixty (60) days as from the receipt date of the appeal.

The ERC’s decision on the appeal shall be treated as final.

Section 107:When the announcement on the energy network system boundary under Section 106 has been made, the licensee shall have the power to carry out the following:

(1)To construct the energy network system under, above, along or across the energy network system of another licensee, and the latter shall not be able to oppose the implementation unless it can be proved that the implementation will create technical problems that may disturb his own energy network system installation. In this connection, the other licensee may impose a utilization charge at a reasonable and fair amount.

(2)To construct the energy network system under, above, along or across a state property land. In this regard, the licensee shall abide by the rules and regulations pursuant to the provisions of relevant laws.

(3)To construct the energy network system under, above, along or across the land belonging to any person and to erect or install poles or other equipment in or on the ground of any person where no structures are situated.

(4)To demolish buildings or structures of other persons, or to destroy other things that were constructed or made, or to destroy or cut trunks, branches or roots of trees of other persons, or vegetation in the energy network system boundary.

Section 108:Before the execution under Section 107, the licensee shall take the following actions:

(1)Inform, in writing, the other licensee under Section 107 (1), the owner or occupying person or right holder of the assets under Section 107 (2), (3) or (4). The other licensee, the owner or occupying person or right holder of the assets may lodge a petition opposing the execution, giving reasons rendering the act inappropriate to the ERC for consideration within thirty (30) days as from the receipt date of the written notification. The decision of the ERC shall be treated as final.

(2)Pay for the utilization charge or take any other action under Section 107 (1), or pay compensation to the owner or occupying person or right holder of the assets under Section 107 (2), (3) or (4) according to the criteria, procedures and conditions announced by the ERC, as well as inform, in writing, the owner or occupying person or right holder of the assets of the amount of the utilization charge or compensation. As for a state property land, the ERC shall coordinate with the agency responsible for the administration of that state property land in establishing the relevant criteria, procedures and conditions.

98 (3)In the event that the other licensee, the owner or occupying person or right holder of the assets does not agree to the amount of the utilization charge or compensation under (2), the licensee shall deposit the payment for the utilization charge or compensation according to the criteria, procedures and conditions stipulated by the ERC, and the licensee shall have the right to take action under Section 107, which shall not cause troubles or disturbances or shall not create damaging effect on the environment and shall not depreciate the economic use of the assets. In this connection, such acts shall be undertaken without undue appropriateness.

(4)In the event that the other licensee, the owner or occupying person or right holder of the assets is not satisfied with the amount of the utilization charge or compensation, he shall have the right to appeal to the ERC. The ERC’s decision on the appeal shall be treated as final. In this regard, the criteria, procedures and conditions of the appeal and the appeal procedure shall comply with the regulations stipulated and announced by the ERC.

Section 109:For the purpose of repairing or maintenance of an energy network system, a licensee shall have the power to enter and temporarily make use or occupy the immovable property of any person which is not his dwelling place, as deemed necessary, subject to the following conditions:

(1)Such use or possession is necessary for the inspection or repairing and maintenance of the energy network system or for the prevention of danger or damage which may be caused to the energy network system.

(2)The licensee must notify, in writing, the owner or occupying person or right holder of the immovable property no less than three (3) days in advance.

If any damage to the owner or occupying person or right holder of the immovable property occurs resulting from the execution under Clause one hereof, the licensee shall be liable for the payment in compensation of the damage, according to the criteria, procedures and conditions specified by the ERC. If the amount of compensation cannot be settled, an appeal shall be made to the ERC. The ERC’s decision on the appeal shall be treated as final.

The criteria, procedures and conditions of the appeal and the appeal procedure shall comply with the regulations announced by the ERC.

Section 110:In the case where the equipment of an energy consumer has caused disturbances to the extent that damage may be caused to the energy industry facility, the licensee shall inform that energy consumer, in writing, to change or correct and improve that equipment within a reasonable period of time.

In the event that the energy consumer declines to take action according to the notification and that the use of that equipment still causes disturbances, the licensee can temporarily suspend the service provision to that energy consumer until the latter has taken action pursuant to the notification. In this connection, the licensee shall immediately report the motive for the service suspension to the ERC. When the ERC has been informed of the service suspension, an order shall be issued to confirm or alter that service suspension. The licensee shall abide by the order within thirty (30) days as from the date of issuance of the ERC’s order.

In the case of emergency, the licensee can immediately suspend the service provision without having to send a written notification to the energy consumer to change or correct and improve the equipment causing disturbances. However, the notification shall then be made to the energy consumer and the ERC without delay. When the ERC has been notified, further actions under Clause two hereof shall be undertaken.

Section 111:In the case where the energy network system under Section 107 or the equipment used in the operation of the energy network system has severely caused a disturbance or an obstacle to the economic utilization of the immovable property of its owner, occupying person or right holder due to the change in purpose or method of utilizing the immovable property, and when the owner, occupying person or right holder has lodged a complaint, the licensee shall take action to get rid of that disturbance or obstacle unless that act will severely affect the operation of the licensee or will be extremely difficult in terms of engineering aspects. In such a case, the licensee and the owner, occupying person or right holder shallmake a settlement for the implementation to get rid of that disturbance or obstacle, by specifying the implementation time frame, the party to be liable for the expense incurred and the method of payment for the expense.

99 In the event that the settlement cannot be reached or in the event that the settlement is reached but the execution according to the settlement cannot be materialized, the licensee, the owner, occupying person or right holder shall submit a petition to the ERC to make a final decision.

When the petition is received by the ERC, a copy of the petition shall be sent to the licensee and the owner, occupying person or right holder, whichever is the case, for acknowledgment within thirty (30) days as from the receipt date of the petition. The party receiving the copy of the petition may present his comments in writing to the ERC within fifteen (15) days as from the receipt date of the copy of the petition. When the said period is over, the ERC shall make a decision and shall, without delay, notify the decision to the licensee and the owner, occupying person or right holder. The decision must mention the implementation to get rid of that disturbance or obstacle, the implementation time frame, the party liable for the expense incurred for the implementation and the method of payment for the expense.

When the ERC has made a decision, the licensee or the stakeholders shall have the right to appeal against the decision to the ERC within sixty (60) days as from the date of acknowledgment of the decision.

The ERC’s decision on the appeal shall be treated as final.

The criteria, procedures and conditions of the appeal and the appeal procedure shall comply with the regulations stipulated and announced by the ERC.

Section 112:Within the energy network system boundary as announced under Section 106, no person shall be allowed to construct a building or any structure, to grow any tree or plant, to install anything, to drill or dig a hole, to pile up soil, to discard things or to do anything that may cause danger or may be an obstacle to the energy network system, unless written permission is granted by a competent official, in compliance with the criteria, procedures and conditions stipulated by the ERC.

In considering the permission granting, under Clause one hereof, the competent official shall also listen to the comments of the licensee. If it is viewed that such acts will not affect the energy network system, human beings, animals, vegetation, property or the environment, the competent official shall grant the permission as per the request, which may be affiliated with certain conditions.

In the event that an act under Clause one hereof is carried out without permission or with permission but there is a breach of the permission or conditions affiliated with the permission, the competent official shall have the power to exert the disciplinary measures under the law on administrative procedure.

Section 113:For the benefit of safety, a licensee shall have the power to demolish or cut trunks, branches, roots of trees or any other things that are in the vicinity of, or conceal, cover, spread over or overlie the energy network system area. In so doing, a written notification must be given to the owners or occupying persons of the trees or those things in advance for a reasonable period of time. In case the owners or occupying persons cannot be con- tacted, the licensee shall have the power to take action as deemed necessary and notify the ERC accordingly.

In the execution of the acts under Clause one hereof, if the trees or other things exist before the construction of the energy network system, the licensee shall pay compensation to the owners or occupying persons of the trees or those things. If the settlement on the compensation amount cannot be reached, an appeal shall be made to the ERC, according to the criteria, procedures and conditions set forth by the ERC.

The ERC’s decision on the appeal shall be treated as final.

Section 114:In the case of necessity and urgency, a licensee shall have the power to immediately enter the land or the premise of any person, which is not his dwelling place, at any time in order to inspect, repair or fix up the energy network system. However, if the owner, occupying person or right holder is present at the site, he shall be notified prior to the entrance.

When the act under Clause one hereof has been undertaken, the licensee shall report the matter, without delay, to the ERC.

100 Section 115:In taking actions under Section 113 or Section 114, the licensee shall cautiously avoid damage to other things; however, if any damage occurs, the licensee shall be liable for the damage.

Section 116:When a request from a licensee is received, and if the ERC views that it is necessary to protect the energy network system, a protection zone of the energy network system may be demarcated together with the establishment of prohibitions against certain actions within the said zone, according to the criteria, procedures and conditions set forth by the ERC.

Any construction or action to be undertaken within the protection zone of the energy network system shall have to be permitted by the ERC, and in granting the permission, the ERC shall also take into consideration the protection of related energy network systems.

In the event that any construction or action having been granted permission under Clause two hereof causes any damage, the person responsible for the construction or action shall be liable for the compensation for the damage incurred.

Section 117:No person shall be allowed to damage, destroy, depreciate, negate or do anything that may cause danger to an energy industry facility or an energy network system operator.

For the benefit of this Section, the ERC may establish and announce measures to protect the aforementioned under Clause one hereof, as deemed necessary.

Section 118:In the energy network system boundary and in the protection zone of the energy network system, which are in any river, canal, sea or waterway, no person shall be allowed to drop or drag the anchors, or drag fishing-nets or any animal-catching tools.

When a ship sails across the energy network system boundary, if the anchor is not weighed until it can be seen well above the water, the act shall be regarded as anchor dragging.

DIVISION 6

REDRESS OF DISPUTES AND LODGING OF APPEALS

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Section 119:Unless the dispute settlement or lodging of appeals is stipulated otherwise in a contract, the procedures of dispute settlement or lodging of appeal shall comply with the provisions of this Division.

Section 120:

When a dispute occurs between an energy consumer and a licensee, or between a licensee and another licensee, the following procedures shall apply to the consideration and adjudication on the dispute or to subjugate the argument:

(1)For a dispute between an energy consumer and a licensee, the dispute resolution procedures shall comply with the provision of Section 100.

(2)For a dispute between a licensee and another licensee, the dispute resolution procedures shall comply with the regulations prescribed by the ERC.

Section 121:In the event that any energy consumer, licensee or stakeholder is dissatisfied with any order, regulation, requirement, announcement or code issued by the ERC, the person shall have the right to lodge an appeal to the ERC.

101 The appeal under Clause one hereof shall be submitted to the ERC within thirty (30) days as from the date of receipt of the ERC’s order or from the date on which the ERC issues the regulation, requirement, announcement or code.

The criteria, procedures and conditions of the appeal submission and the appeal consideration procedures shall be in accordance with the regulations set forth by the ERC.

The appeal under Clause two hereof shall not be the cause to suspend the enforcement of the ERC’s order unless the ERC has given an interim instruction to be otherwise before a decision is made on the appeal.

The ERC’s decision on the appeal shall be treated as final.

DIVISION 7

COMPETENT OFFICIALS

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Section 122:For the execution of this Act, the competent officials shall have the authority and duties as follows:

(1)to enter the building or the energy industry facility of a licensee during the time between sunrise and sunset, or during the office hours of that establishment, for the purpose of inspection of the business, accounts, documents or evidence, or relevant information, including any acts of the licensee that may violate or fail to comply with the provisions of this Act or the conditions specified in the license;

(2)to issue a written notification requiring any person’s presence to furnish a statement or ordering the person to submit any document or material for consideration;

(3)to inspect and compile facts, then report to the ERC in the case where the licensee has committed malfeasance or has caused damage arising from the violation of or non-compliance with the provisions of this Act or the conditions specified in the license;

(4)to enter and temporarily make use or occupy the immovable property of any person, which is not his dwelling place, for the benefit of surveying or exploring for a location for an energy network system installation, as stipulated under Section 105, by and with approval of the ERC; and

(5)to enter and carry out the acts affecting the land or assets of other persons, as stipulated under Section 107, Section 109, Section 113, Section 114 and Section 116, by and with approval of the ERC.

Having entered the establishment and commenced the inspection under (1), if the inspection is not completed, the competent officials can continue doing their duties after sunset or after the office hours of that establishment, as may be deemed necessary and appropriate.

In executing the duty under (1), the competent officials shall not act in a threatening or searching manner under the crime procedure code.

Section 123:A person affected by the duty execution of the competent officials shall provide facilities to the latter, as appropriate.

Section 124:In executing the duties, a competent official shall produce his identification card to the interested persons.

The identification card of the competent official shall be in the form prescribed and announced by the ERC.

Section 125:In executing the duties under this Act, the Secretary General, the staff members of the Office and the competent officials shall be considered officials under the Criminal Code.

102 Section 126:In the case of an emergency or necessity to maintain the national security or the economic stability, or to protect the public interest, or to maintain peacefulness of the people, the ERC may assign or order a government agency with experience and expertise in the energy industry operation or the competent officials to occupy or utilize the equipment and devices of a licensee to operate the business, or order the licensee or his staff to take any actions until the emergency or necessity dissolves.

In carrying out the implementation under Clause one hereof, the government agency or competent officials shall exercise caution to keep and protect the assets of the licensee in the same manner that an energy industry operator or a person with such a profession should do.

In carrying out the implementation under Clause one hereof, if any damage occurs to the licensee, the latter shall have the right to claim compensation for the damage from the Office, according to the criteria, procedures and conditions prescribed by the ERC.

DIVISION 8

DISCIPLINARY PROCEDURES

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Section 127:In the case where it is evident to the ERC that there is a violation or a breach of Section 53, Section 55, Section 58, Section 63, Section 70, Section 71, Section 73, Section 74, Section 79, Section 80, Section 85, Section 86, Section 87, Section 89, Section 92, Section 96 (Clause one) or Section 102, the ERC shall have the power to order the licensee to act or refrain from the act, or to improve or rectify the act, within a specified period of time.

Section 128:In the case where the licensee violates or fails to comply with the ERC’s order under Section 56, Sec- tion 57, Section 61, Section 62, Section 68 (2), Section 72 (Clause two), Section 82, Section 83 (Clause two), Section 84 (Clause two) or Section 127, and where the period for lodging an appeal under Section 121 has elapsed, or in the case where an appeal is submitted under Section 121 but the ERC has passed a resolution overriding the appeal, and when the ERC has issued a warning notification to the licensee but still no compliance with the order is made, the ERC shall consider determining an administrative fine, which shall not exceed five hundred thousand (500,000) Baht per day, taking into account the degree of severity of the violation or breach of the order as well.

In the case where no payment of the administrative fine is made, the enforcement of disciplinary procedures shall be made pursuant to Part 8: Disciplinary Procedures, Division 2: Administrative Orders, under the Administrative Procedure Act, B.E. 2539 (1996).

In the event that the licensee still ignores to rectify the operation or violates the license suspension order, or in the event that serious damage affecting the public interest arises, the ERC shall have the power to suspend or revoke his license, as the case may be.

DIVISION 9

PUNISHMENT

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Section 129:Whoever violates Section 20 shall be punished with imprisonment of not exceeding one (1) year or a fine of not exceeding one million (1,000,000) Baht, or both.

Section 130:Whoever obstructs or fails to comply with the order of the ERC, the sub-committee or the person appointed by the ERC under Section 24 and exercising their authority under Section 25, or of the competent officials exercising their authority under Section 122, shall be punished with imprisonment of not exceeding one (1) year or a fine of not exceeding one million (1,000,000) Baht, or both.

103 Section 131:Whoever refuses to facilitate the competent officials pursuant to Section 122 and Section 123 shall be punished with imprisonment of not exceeding six (6) months or a fine of not exceeding ten thousand (10,000) Baht, or both.

Section 132:Any person who misrepresents or provides distorted information to the ERC, the sub-committee or the person appointed by the ERC under Section 24, and hence damage caused to the Office, energy consumers, licensees or other persons, shall be punished with imprisonment of not exceeding six (6) months or a fine of not exceeding five hundred thousand (500,000) Baht, or both.

Section 133:Whoever violates Section 47 (Clause one) or Section 59 (Clause one) shall be punished with imprisonment of not exceeding two (2) years or a fine of not exceeding ten million (10,000,000) Baht, or both.

In addition to the punishment under Clause one hereof, the violator of Section 47 (Clause one) shall be subject to a fine of not exceeding twenty thousand (20,000) Baht per day so long as the violation still continues.

Section 134:Whoever does not comply with the ERC’s order issued under Section 127, arising from the violation of Section 96 (Clause one), shall be punished with imprisonment of not exceeding one (1) month or a fine of not exceeding twenty thousand (20,000) Baht per day so long as the violation still continues.

Section 135:Whoever violates Section 61 (1), Section 76 (Clause one) or Section 84 (Clause two) shall be punished with imprisonment of not exceeding two (2) years or a fine of not exceeding four million (4,000,000) Baht, or both.

Section 136:Any licensee to be a standard testing and certifying entity, who commits the act under Section 77 (2), shall be punished with imprisonment of not exceeding two (2) years or a fine of not exceeding four million (4,000,000) Baht, or both.

Section 137:Whoever violates Section 116 (Clause two) or Section 117 shall be punished with imprisonment of not exceeding ten (10) years or a fine of not exceeding ten million (10,000,000) Baht, or both.

Section 138:Whoever violates Section 118 shall be punished with imprisonment of not exceeding six (6) months or a fine of not exceeding ten thousand (10,000) Baht, or both.

If such an act has caused destruction, damage, depreciation or negation to the energy network system, the person who commits the act shall be punished with imprisonment of not exceeding two (2) years or a fine of not exceeding two hundred thousand (200,000) Baht, or both.

Section 139:Whoever clandestinely uses the services of a licensee without legitimate rights, which causes damage to the licensee, shall be punished with imprisonment of not exceeding three (3) years or a fine of not exceeding three hundred thousand (300,000) Baht, or both.

Section 140:For any offenses under Section 131, Section 132, Section 134 or Section 138 (Clause one), the ERC shall have the power to settle the case. For this purpose, the ERC may appoint a sub-committee to settle the case in its place and may establish the settlement criteria or set up any conditions for the duty execution of the sub- committee.

In the case where an offense is evident to the inquiry officials and the offender consents to settle the case, the inquiry officials shall expeditiously refer the case to the ERC for further consideration of the settlement.

When the offender has paid the fine imposed on him through the settlement, the case shall be deemed to have been settled under the Criminal Procedure Code.

Section 141:In the event that the person who has committed an offense and who shall be punished under this Act is a juristic entity, the managing director, the manager or any person responsible for the operation of that juristic entity shall also be punished pursuant to the provision dealing with that offense, unless he can prove that he has no part in or consent to the commission of the offense.

104 TRANSITIONAL PROVISIONS

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Section 142:At the initial term, the selection of the ERC shall be completed within one hundred and twenty (120) days as from the effective date of this Act.

The National Energy Policy Council shall temporarily assume charge of the ERC until His Majesty the King graciously appoints the ERC under this Act.

Section 143:The Director General of the Energy Policy and Planning Office shall assume charge of the Secretary General, and the Energy Policy and Planning Office shall assume charge of the Office until the Secretary General is appointed and the Office established under this Act.

Section 144:For the purpose of enhancing efficient operation of the Office, the Minister, by and with the cabinet approval, may designate the governmentment of the civil servants, government staff members or employees from government departments, local government affairs bureau or other government agencies to assist with the work of the Office on a temporary basis, while obtaining a salary from their respective offices of recruitment but being under the Secretary General’s supervision.

Section 145:The civil servants, government staff members and employees of the Ministry of Energy’s Office of the Permanent Secretary, the Department of Mineral Fuels, the Department of Energy Business, the Department of Alternative Energy Development and Efficiency, and the Energy Policy and Planning Office, who voluntarily wish to be staff members or employees of the Office, shall exert the right by submitting a written notification of their wish to their respective supervisors within one hundred and eighty (180) days as from the date this Act comes into force.

The assignment and appointment of the staff members and employees of the Office under Clause one hereof to any posts in the Office shall be in accordance with the manpower, qualifications and salary scale or engagement fees, prescribed by the ERC.

The assignment and appointment of the civil servants under this Section shall be regarded as the discharge from the government service because the government has terminated or dissolved the posts under the law on government pension or the law on government pension fund, as the case may be.

The assignment and appointment of the employees under this Section shall be regarded as the discharge from the job because the government has dissolved the posts or discontinued the engagement, with no offense, and shall be eligible for the gratuity under the Ministry of Finance’s regulations on employees’ gratuity.

Section 146:As from the effective date of this Act, the energy industry operation of the Electricity Generating Authority of Thailand (EGAT), the Metropolitan Electricity Authority (MEA), the Provincial Electricity Authority (PEA) and the PTT Public Company Limited (PTT) shall be able to continue until a license under this Act is respectively granted.

During the energy industry operation under Clause one hereof, the EGAT, MEA, PEA and PTT shall have to comply with the law on the Electricity Generating Authority of Thailand, the law on the Metropolitan Electricity Authority, the law on the Provincial Electricity Authority and the Royal Decree Describing Powers, Rights and Benefits of the PTT Public Company Limited, whichever is the case.

Section 147:All the powers, rights and benefits that the EGAT, MEA and PEA are entitled to under the law on the Electricity Generating Authority of Thailand, the law on the Metropolitan Electricity Authority and the law on the Provincial Electricity Authority shall remain insofar as they do not contradict or contravene this Act.

Section 148:The provisions regarding the execution so as to acquire the immovable property by expropriation, entrusted to the EGAT, MEA and PEA under the law on the Electricity Generating Authority of Thailand, the law on the Metropolitan Electricity Authority and the law on the Provincial Electricity Authority, shall remain in force.

105 Section 149:In order that the energy industry operation of the PTT could continue in accordance with Section 146, the provision of Section 26 (Clause four) of the State Enterprise Corporatization Act, B.E. 2542 (1999), shall not be enforceable on the PTT until the PTT is granted a license under this Act, and during such a duration, the Royal Decree Describing Powers, Rights and Benefits of the PTT Public Company Limited, B.E. 2544 (2001), amended up to the Royal Decree Describing Powers, Rights and Benefits of the PTT Public Company Limited, No. 2, B.E. 2550 (2007) shall remain in force.

Section 150:Within one hundred and eighty (180) days as from the effective date of the ERC’s regulations under Section 50, the ERC shall grant a license for energy industry operation under this Act to the EGAT, MEA, PEA and PTT according to the characteristics and categories of their business operation, the scope of service provision, including the existing rights related to the provision of electricity or natural gas services, as far as the responsibilities of the EGAT, MEA, PEA and PTT are concerned as at the date on which this Act comes into force.

In granting a license under Clause one hereof, the ERC shall specify the conditions of the business operation of the EGAT, MEA, PEA and PTT, taking into account the existing rights and commitments of the energy industry operators and the existing benefits that energy consumers have obtained from the services, including the development to improve the service quality and efficiency, with a view to achieving the objectives of this Act.

Section 151:Within one hundred and eighty (180) days as from the effective date of the ERC’s regulations under Section 50, the ERC shall grant a license for energy industry operation under this Act to the energy industry operators involving with the development of natural gas resources in the Joint Development Area, under the law on Thailand-Malaysia Joint Development Authority, and providing natural gas transmission services via pipelines through the natural gas transmission system to Malaysia, who have operated the business prior to the enforcement date of this Act and who are considered energy industry operators requiring a license under this Act. In granting such a license, consideration must be given to the existing agreements and terms of contracts that the energy industry operators have already committed when this Act comes into force, and this shall not affect the rights or benefits of the contract partners under the mentioned contracts.

Section 152:With regard to the energy industry operation undertaken by other government agencies, apart from the EGAT, MEA, PEA and PTT, the provisions of Section 146 and Section 150 shall apply mutatis mutandis.

Section 153:The power system interconnection or the power network system connection that the EGAT, MEA and PEA have approved prior to the effective date of this Act shall be able to proceed and shall be regarded as the energy network system connection which must comply with this Act.

The areas of petroleum pipeline transmission systems that have been announced prior to the date this Act comes into force shall be regarded as the energy network system areas under this Act.

Section 154:Apart from the EGAT, MEA, PEA, PTT and other government agencies under Section 152, any energy industry operator who has operated the business prior to the effective date of this Act and who is regarded as an energy industry operator requiring a license under this Act shall be able to continue his energy industry operation and shall apply for a license according to Clause two hereof.

The energy industry operator under Clause one hereof shall have to apply for a license under this Act within sixty (60) days as from the date on which the ERC’s regulations under Section 50 take effect, and when the application for such alicense has been submitted, he shall be able to continue his operation until an order declining the license granting is received from the ERC.

In the event that the energy industry operator has been granted a license from another government agency prior to the effective date of this Act, in issuing the license under Clause two hereof, the ERC shall take into consideration his existing rights and commitments, and the existing benefits that energy consumers have obtained from the services, including the development to improve the service quality and efficiency, with a view to achieving the objectives of this Act.

106 The energy industry operation of the energy industry operator under Clause one and Clause two hereof shall comply with any permission granted under the Revolutionary Decree No. 58, dated 26 January 1972, the law on energy development and promotion, the law on the Electricity Generating Authority of Thailand, the law on factories, or other laws related to the energy industry operation, until a license under Clause two hereof is granted.

Section 155:The EGAT, MEA, PEA, PTT, the Department of Mineral Fuels, the Department of Energy Business, the Department of Alternative Energy Development and Efficiency, the Energy Policy and Planning Office and other government agencies being charged with permission granting and monitoring, or with the control of the energy industry operation, shall furnish the ERC with information pertinent to the energy industry operation according to the criteria, procedures, conditions and time frame specified and announced by the ERC.

Countersigned by General Surayud Chulanont Prime Minister ______

Remarks: The rationale behind the enactment of this Act is that, since the energy industry is vital to the social and economic structure as well as the environment of the country, it is essential to restructure the energy industry management by distinctly separating the policy-making, regulation and operating functions of the energy industry from each other. In order to enhance greater participation and roles of the private sector, communities as well as the general public so that the energy industry operation would be efficient, secure, adequate and extensive, with reasonable prices and standardized quality, to respond to the domestic demand and sustainable development of the country in terms of social, economic and environmental aspects pursuant to the principles of Sufficiency Economy Philosophy, it is deemed necessary that the Energy Regulatory Commission be established to regulate the energy industry. To this effect, the ERC shall be designated to prevent abusive use of monopoly power and to protect energy consumers and those adversely affected from the energy industry operation. Besides, in order that the ERC could execute their authority and duties efficiently, it is deemed appropriate to have the Office of the Energy Regulatory Commis- sion established, being a state agency with the status of a juristic entity, to function as the Secretariat to the ERC. It is, therefore, essential to enact this Act.

107 Annex 5-2:

Regulation of the Energy Regulatory Commission

on the Power Development Fund, B.E. 2553 (2010)

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By virtue of Section 11(10), Section 44, Section 95, Section 96 and Section 97 of the Energy Industry Act, B.E. 2550 (2007), which contains certain provisions restricting the rights and liberty of an individual which is endorsed by Section 29, conjoined with Section 33, Section 41, Section 42 and Section 43 of the Constitution of the Kingdom of Thailand through the enactment of law, the Energy Regulatory Commission hereby issues the Regulation as follows:

Article 1: This Regulation is called the “Regulation of the Energy Regulatory Commission on the Power Develop- ment Fund, B.E. 2553 (2010).”

Article 2: This Regulation shall come into force on the day after the date of its publication in the Government Gazette.

Article 3: This Regulation shall apply to the receipt, disbursement, keeping, management, sending and spending of the money of the Fund.

Article 4: In this Regulation,

“ERC” means the Energy Regulatory Commission;

“OERC” means the Office of the Energy Regulatory Commission;

“Secretary of OERC” means the Secretary-General of the Office of the Energy Regulatory Commission; and

“Fund” means the Power Development Fund set forth in the Energy Industry Act, B.E. 2550 (2007).

Article 5: The Chairman of the ERC shall have the care and charge of the execution of this Regulation and shall construe any problem relating to the implementation of this Regulation.

Division 1 Management and Supervision of the Fund

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Article 6: In the operation of the Fund to achieve the objectives set forth in the Energy Industry Act, B.E. 2550 (2007), the ERC shall have the following authority and duties:

1. formulate the policy and supervise the operation of the Fund;

2. regulate the spending of the fund to ensure efficiency;

3. approve and allocate the money of the Fund according to its objectives;

4. approve the utilization of the Fund;

5. appoint a Community Development Committee in the Surrounding Area of a Power Plant to manage the money of the Fund which is allocated under Section 97(3) in such area;

108 6. appoint a sub-committee to assist the ERC in the screening of programs and projects, as well as the evaluation of projects;

7. establish the framework of the monitoring and evaluation of the operation of the Fund; and

8. undertake any other task as assigned to achieve the objectives of the Fund.

Article 7: The OERC shall support the operation of the ERC as follows:

1. create an annual plan, and income and expense estimates for activities under Section 97;

2. receive, disburse, keep and manage the money of the Fund;

3. issue notifications for the submission of project proposals for activities under Section 97(4) and (5) according to the criteria, procedures and conditions prescribed by the ERC;

4. study, analyze and provide opinions on program and project proposals for activities under Section 97;

5. compile and analyze information for the monitoring and evaluation of the spending of the Fund;

6. provide reports on the undertakings and spending of the Fund, including financial reports to the ERC;

7. publicize and disseminate the undertakings of the Fund; and

8. undertake any other task as assigned by the ERC.

Division 2

Sending, Receiving, and Keeping the Money of the Fund

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Article 8: The OERC shall open a current deposit account, a savings account or a fixed deposit account for the activities of the Fund.

Article 9: An electricity industry licensee shall send the contributions to the Fund at the time and rate as prescribed by the ERC.

Article 10: For the contributions from an electricity generation licensee, the OERC shall allocate such contributions for expenses under Article 97(3) in the ratio of 95% and the rest of 5% shall be allocated for the expenses under Article 97(6).

Article 11: The contributions from other electricity industry licensees shall be allocated for expenses under Sec- tion 97(1), (4), (5) and (6) as prescribed by the ERC.

Article 12: After the deduction of expenses as prescribed by the ERC, the OERC shall send to the Fund the administrative fines collected from electricity industry licensees under Section 128 and the fines from offense cases settled by the ERC under Section 140.

Article 13: The fines that the Fund receives under Article 12 shall be allocated for expenses under Section 97(6) except those received from cases of non-compliance with Section 87 paragraph 2 which shall be allocated for compensation under Section 97(2).

Article 14: The interests or other benefits incurred from money or assets of the Fund shall be allocated for the management expenses of the Fund or as prescribed by the ERC.

Article 15: In case of money or assets donated to the Fund with specific purposes for activities under Section 97, the OERC shall comply with such purposes of the donator.

If the purpose is not specified, the ERC shall allocate them for activities under Section 97.

109 In this connection, the receipt of such money and assets shall be without conditions or obligations, or shall not incur any unreasonable management expenses of the Fund.

Article 16: Upon receiving donated money or assets, the OERC shall issue a receipt or an invoice document to the donator.

Division 3

Disbursement and Spending of the Money of the Fund

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Part 1

Disbursement of the Money of the Fund

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Article 17: The Secretary of the OERC or a person designated by the Secretary of the OERC shall have the authority to disburse money from the accounts of the Fund under Article 8 to be used for activities under Section 97 within the budget of an annual plan approved by the ERC. The installments shall be paid quarterly or in accordance with the operation plan, as the case may be.

Article 18: The disbursement from the accounts under Article 17 shall be operated by transferring money of the Fund to the bank account or issuing a check in the name of the receiver, as the case may be.

Article 19: The OERC shall disburse the money of the Fund as follows:

(1) for money to be used for activities under Section 97(1), an electricity distribution licensee approved by the ERC shall inform the OERC in writing the details of his bank account;

(2) for money to be used for activities under Section 97(2), an electricity industry licensee approved by the ERC to compensate energy consumers who are required to pay more expensive tariff based on the automatic tariff adjustment formula shall inform the OERC in writing the details of his bank account;

(3) for money to be used for activities under Section 97(3), the OERC shall transfer money quarterly according to the annual budget plan to a bank account according to the regulations prescribed by the ERC;

(4) for money to be used for activities under Section 97(4) and (5), a receiver shall submit a request in writing to withdraw money from the OERC when it is due or approaching the payment date. The following documents shall be submitted:

(a) the resolution of the ERC approving a project under Section 97(4) or (5);

(b) an approved budget plan or a budget plan that is approved for changes, or an estimate of the annual expenses, as the case may be;

(d) other documents as required by the OERC.

In this connection, the program changes and the extension of the operation time that differ from the project details already approved by the ERC shall first be submitted to the ERC for approval; and

(5) expenses for activities under Section 97(6) shall be paid when the annual operation plan is approved by the ERC and is due.

Article 20: A copy of the pay-in slip or transfer bank report, and a confirmation of receipt or receipt shall be used as evidence of payment.

110

Part 2

Spending of the Money of the Fund

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Article 21: A receiver under Section 97(1) and a receiver who is to compensate energy consumers who are required to pay more expensive tariff based on the automatic tariff adjustment formula under Section 97(2) shall submit reports of their expenditure for the OERC’s acknowledgement.

Article 22: The spending of the Fund allocated for activities under Section 97(3) (4) and (5) shall be in accordance with the regulations prescribed by the ERC.

Article 23: The OERC shall spend the money allocated for activities under Section 97(6) according to the annual plan approved by the ERC, which consists of the following items;

(1) management expenses of the Fund;

(2) money reserved in case of emergency to provide initial remedy or alleviation for damage caused by the operation of a power plant; and

(3) subsidy for the development or rehabilitation of a locality that is affected by the operation of a power plant which has been allocated insufficient fund for the development or rehabilitation of the locality.

Article 24: Upon the completion of a project which has been allocated the money under Section 97(4) and (5), a receiver shall close the bank accounts and transfer the remaining money, together with interests, to the OERC within 60 days from the date on which the project completes.

Division 4

Accounting

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Article 25: The OERC shall keep accounts of the Fund according to the international standard and separate the Fund’s account from the OERC’s account.

Article 26: The OERC shall arrange an internal audit of the finance, accounting and inventory of the Fund, and shall report the audit outcome to the ERC at least once a year.

Article 27: The OERC shall prepare a report on the spending of the Fund and an annual financial budget for the consideration of the Office of the Auditor General of Thailand within 120 days from the end of the OESC’s fiscal year. After the Office of the Auditor General of Thailand grants approval, the OERC shall report to the ERC.

Article 28: If a receiver of the Fund is a government agency, the ownership of the acquired assets shall belong to the receiver.

A receiver, who is not a government agency, shall proceed in accordance with the regulations prescribed by the ERC.

Article 29: In terms of finance, accounting, inventory, internal audit and the preparation of an annual report, the OERC shall comply with the regulations and rules prescribed by the ERC on such matters, or if applied, mutatis mutandis.

Division 5

111 Utilization of the Fund

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Article 30: The OERC shall utilize the Fund for further benefits as follows:

(1) deposit money in a bank;

(2) purchase government bonds or state enterprise bonds; and

(3) transaction apart from (1) and (2), shall be approved by the ERC.

Transitional Provision

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Article 31: The Electricity Generating Authority of Thailand, as an electricity industry licensee, shall send the remaining money of the Power Development Fund in the surrounding area of a power plant, together with interests (if any), to the Fund within 10 working days from the date on which the OERC issues a notification. The Electricity Generating Authority of Thailand shall categorize the above-said money according to the types of electricity industry licensees and the amount, so that the money shall be allocated for expenses under Section 97(3) for a locality where an electricity generation licensee has an operation.

Given on the 12th of November B.E. 2553 (2010) Direk Lawansiri

Chairman of the Energy Regulatory Commission

112 Annex 5-3:

Notification of the Energy Regulatory Commission on an Electricity Generation Licensee’s Sending of Contributions to the Power Development Fund, B.E. 2553 (2010) ______

By the virtue of Article 9 of the Regulation of the Energy Regulatory Commission on the Power Development Fund, B.E. 2553 (2010), the Energy Regulatory Commission hereby issues the Notification as follows:

Article 1: This Notification is called the “Notification of the Energy Regulatory Commission on an Electricity Gen- eration Licensee’s Sending of Contributions to the Power Development Fund, B.E. 2553 (2010).”

Article 2: This Notification shall come into force on the day after the date of its publication in the Government Gazette.

Article 3: In this Notification,

“Fund” means the Power Development Fund;

“Fund Regulation” means the Regulation of the Energy Regulatory Commission on the Power Development Fund, B.E. 2553 (2010);

“Electricity Generation Licensee” means a person who has been granted a license for the electricity generation system; and

“Electric Power Used in the Station Service Generation System” means the electric power used for generating and/ or supporting the station service in a power plant, e.g. machines or equipment used in the electricity generation, including the fuel management system, the pollution control system, or the environmental quality management system, etc;

Article 4: An electricity generation licensee shall be categorized into two types:

(1) A new licensee means a person who shall be granted a license to construct or operate a power plant as from the day when the Fund Regulation has come into force; and (2) A current licensee means a person who has been granted a license to construct or operate a power plant before the day when the Fund Regulation has come into force.

Article 5: A licensee shall send contributions to the Fund in two phases as follows:

(1) During the construction of a power plant: from the starting date of the construction in accordance with the contractor agreement and as specified in the license until the commercial operation date (COD), the contributions shall be sent annually by the first five official working days. For the first year, the licensee shall send the contributions within five days as from the starting date of the construction of the power plant. The contributions shall be calculated based on the estimated capacity installed in the power plant at the rate of fifty thousand baht per megawatt per year. For an incomplete year, the contributions shall be calculated in proportion to the operating months but no less than fifty thousand baht per year; and (2) During the electricity generation: from the starting date of the COD, the contributions shall be sent monthly within forty-five days after the last day of each month. They shall be calculated based on the total electricity generated for distribution and self consumption, and shall not include the electric power used monthly in the station service. The contributions shall be calculated based on the types of fuel sources as follows:

113

Fuel Satang / Monthly Unit Generated

Natural gas 1.0

Fuel oil, diesel oil 1.5

Coal, lignite 2.0

Renewable energy: wind and solar power 1.0

Renewable energy: hydropower 2.0

Other types of renewable energy: biogas, biomass 1.0 gas, leftover products, municipal solid waste, etc.

Article 6: A new licensee shall send the contributions under Article 5(1) and (2) while a current licensee shall send only the contributions under Article 5(2). If the current licensee increases the electricity generation by constructing a new building or power plant, he shall send the contributions under Article 5(1).

Article 7: A licensee shall send a report to the OERC within the 10th day of each month. The report shall consist of the information as follows:

(1) The total number of the electricity units (kWh) in the generation system classified by the following purposes: a. Distribution to EGAT - b. EGAT customers Distribution to non c. Self-c onsumptionin the buildingsor plant s which are considered as part of the industry(if any) d. (Consumption in the station service (if any; (2) The total number ofelectricityunit sk) W h) inthe generation systemclassified by the types of fuel sources; and (3) The contributions which shall be sent to the Fund. If there is an update of the information, a licensee shall immediately update the report next month. In case of a change in the contributions, the licensee shall update it next month. Article 8: For the payment method, the licensee shall follow the guidelines of the OERC. Article 9: At the initial period of executing this Notification, the OERC shall collect the contributions from current licensees as from the month following the month when the Fund Regulation has come into force. Article 10: The Chairman of the ERC shall have the care and charge of the execution of this Regulation and shall construe any problem relating to the implementation of this Regulation.

Given on the 15th of November B.E. 2553 (2010) Direk Lavansiri Chairman of the Energy Regulatory Commission

Annex 5-4:

114 Regulation of the Energy Regulatory Commission on the Power Development Fund for Development or Rehabilitation of the Localities Af- fected by the Operation of a Power Plant, B.E. 2553 (2010)

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By virtue of Section 24, Section 95, Section 96 and Section 97 of the Energy Industry Act, B.E. 2550 (2007) which contains certain provisions restricting the rights and liberty of an individual which is endorsed by Section 29, conjoined with Section 33, Section 41, Section 42 and Section 43, of the Constitution of the Kingdom of Thailand through the enactment of law, the Energy Regulatory Commission hereby lays down the Regulation as follows:

Article 1: This Regulation is called the “Regulation of the Energy Regulatory Commission on the Power Develop- ment Fund for Development or Rehabilitation of the Localities Affected by the Operation of a Power Plant, B.E. 2553 (2010).”

Article 2: This Regulation shall come into force on the day after the date of its publication in the Government Gazette.

Article 3: In this Regulation,

“Money of the Power Development Fund in the area under the notice” means the proceeds obtained under the Regulation of the Energy Regulatory Commission on the Power Development Fund, B.E. 2553 (2010) for payment to develop or rehabilitate the localities affected by the operation of a power plant in accordance with Section 97 (3). The proceeds shall be kept separately for each power plant and shall incorporate the name of the power plant, or the name of the sub-district, or the name of the district, or the name of the province in which the power plant is located;

“Rehabilitate” means make localities affected by the operation of a power plant grow and sustain growth;

“Locality” means an area and a community that are affected by the operation of a power plant and that are entitled to support from the Power Development Fund;

“Area under the notice” means an area that the OERC identifies as an area that is entitled to support from the Power Development Fund under Section 97 (3);

“Power plant” means a building and/or a premise that is used for generating electricity that has obtained an electricity generation license in accordance with regulations issued by the ERC;

“ERC” means the Energy Regulatory Commission;

“OERC” means the Office of the Energy Regulatory Commission;

“CDC-PP” means a Community Development Committee in the Surrounding Area of a Power Plant;

“CDC-SPP” means a Community Development Committee in the Surrounding Area of a Sub-district Power Plant;

“Village” means a village under the law on local administration or a community established in accordance with the law;

“Sub-district” means a sub-district under the law on local administration or a ‘kwang’ under the law on Bangkok Metropolitan administration or an administrative area named otherwise according to the law governing the administration of such area, and includes a group communities in adjacent areas as prescribed by the OERC;

“Community project” means a project which applies for funding from the Power Development Fund for activities under Section 97 (3);

115 “Expense budget” means the maximum amount of money that is allowed to be paid or indebted for the prescribed objective and time limit; and

“Fiscal year” means the fiscal year of the OERC.

Article 4: The Chairman of the ERC shall have the care and charge of the execution of this Regulation and shall construe any problem relating to the implementation of this Regulation.

Division 1

General Provisions

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Article 5: The area under the notice shall be considered from the power generating plan of each power plant to include surrounding sub-districts which are within the following distances of the center of the power plant:

(1) five kilometers for a power plant generating more than five billion kWh of electricity per year;

(2) three kilometers for a power plant generating more than 100 million kWh of electricity per year but not exceeding five billion kWh per year; and

(3) one kilometer for a power plant generating no more than 100 million kWh of electricity per year.

In case where the community development fund in the surrounding area of an existing power plant generates more than 100 million kWh of electricity per year, the existing surrounding area within five kilometers of the power plant shall be considered as the area under the notice.

In case there is an overlap of areas under the notice due to the proximity of the power plants, the areas under the notice may be combined. In such case, priority consideration shall be given for the benefits of the development of the area under the notice.

The area under the notice may include sub-districts on the different criteria provided above if there is academic research on the impact of the power plant which has had a hearing from the people in the area, or is a residential area or a workplace developed by a government agency or the power plant operator to support the people who have to relocate their residence or workplaces due to the construction or the operation of the power plant. They shall be treated as if they were villages in the sub-district of the area from which the people relocate, once the relocation is consented by the ERC.

The OERC, with the consent of the ERC, shall issue a notification indicating the area under the notice.

Article 6: The management of the fund in the area under the notice consists of three types:

(1) Type-A Fund, for an area which has been allocated development fund for a full scale management, and generates more than five billion kWh of electricity per year or has an income of 50 million baht or more per year;

(2) Type-B Fund, for an area which has been allocated development fund for a medium-scale management, and generates no more than five billion kWh of electricity per year, and has an income of more than one million baht but no more than 50 million baht per year; and

(3)Type-C Fund, for an area which has been allocated a small amount of development fund and should be managed within a limit, and generates no more than 100 million kWh of electricity per year, and has an income of no more than one million baht per year.

The OERC, with the consent of the ERC, shall issue a notification.

Article 7: The management of the fund in the area under the notice for Type-A and Type-B Funds shall consist of:

116 (1)money or assets obtained from the allocation of the Power Development Fund;

(2) CDC-PP;

(3) fund allocation and project approval;

(4) inventory management;

(5) finance and accounting;

(6) monitoring, follow-up and evaluation; and

(7) public relations.

For Type-A Fund, a CDC-SPP shall be established to allow the people in the area under the notice to participate in the management of the Power Development Fund.

For Type-C Fund, the OERC shall select no more than three representatives from the municipality or the sub- district administrative organization of the area under the notice as the authority who considers and approves community projects for the development and rehabilitation of the locality as prescribed by the ERC.

Article 8: Guidelines for the management of the Power Development Fund in the area under the notice are as follows:

(1) decentralize management power to the community in order to achieve effective management, good governance, transparency and accountability;

(2) promote and support community projects by the community for the community, with an emphasis on the community participation in order to improve the quality of life and to develop the community’s potentials in accordance with the Principle of Sufficiency Economy, and to build a good welfare system for the people and the community for their better livings;

(3) promote and support cooperation and knowledge sharing among communities within the area under the notice in order to create networks and integration of works with various sectors such as local administrative organizations, government agencies, community organizations, schools and religious places, etc.;

(4) promote and support networks of information, education, management, monitoring, public relations, development of information system among the Power Development Funds in all levels of the area under the notice to achieve sustainable development;

(5)provide compensation to remedy those who are directly affected by the operation of a power plant in terms of health, occupation and environment; and

(6) promote and support rehabilitation of nature and environment, social surveillance and environmental wellbeing.

Division 2

Office of the Energy Regulatory Commission,

Community Development Committee in the Surrounding Area of a Power Plant, and Community Development Committee in the Surrounding Area of a Sub-district Power Plant

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Part 1

117 Office of the Energy Regulatory Commission

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Article 9: In managing the Power Development Fund in the area under the notice, the OERC shall have the following authority and duties:

(1) issue a notification to indicate an area under the notice and the type of management of the Power Develop- ment Fund in the area under the notice;

(2)set objectives and formulate action plans, both in short and long terms, of the Power Development Fund for undertakings under Section 97 (3);

(3) estimate annual income of the Power Development Fund in each area and inform the Power Development Fund in each area under the notice of the estimates;

(4)support the formulation of an annual work plan, a strategic plan and a budget plan of the CDC-PP in each area under the notice in order to submit them to the ERC for approval and public announcement;

(5) support the setting up of a financial and accounting system, monitoring, follow-up, evaluation and public relations in each area under the notice;

(6)promote and support training and capacity building of the CDC-PP and the CDC-SPP and those involved in the management of the Power Development Fund;

(7)promote activities of the Power Development Fund in each area among all the stakeholders and the public;

(8)support the drafting of regulations, orders, criteria, guidelines and practices of the CDC-PP in each area under the notice and propose to the ERC for approval;

(9) receive complaints concerning the management of the Power Management Fund in each area under the notice and gather facts for the ERC’s consideration; and

(10)assign the CDC-PP to undertake any other action to achieve the objectives of the Power Development Fund.

Part 2

Community Development Committee in the Surrounding Area of a Power Plant

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Article 10: For the management of Type-A and Type-B Power Development Funds in the area under the notice, the OERC shall set up a CDC-PP with no less than 15 members but no more than 35 members as prescribed by the ERC. The CDC-PP shall comprise representatives from the general public, representatives from the government sector and experts, with the representatives from the general public constituting at least two-thirds of the total number of the members and no more than three experts.

118 Article 11: The CDC-PP shall have the following authority and duties:

(1) prescribe a beneficiary area of the Power Development Fund that is different from the area under the notice with the ERC’s consent;

(2)formulate and propose a strategic plan, an annual work plan and a budget plan for the development and rehabilitation of the locality to the ERC for approval, and notify the public of such plans;

(3) promote and support an empirical survey on the impact of the operation of a power plant, and receive opinions of the people in the locality in order to propose modifications to the area affected by the operation of a power plant to the ERC for approval;

(4) promote a survey on people’s needs and carry out annual surveys on the impact of the operation of the power plant for the purpose of formulating community projects;

(5) consider and approve community projects for the development and rehabilitation of the locality;

(6) provide contracts or agreed community projects and use the fund to support the undertakings of the community projects according to the work plan or the budget period;

(7)supervise, keep account of and report the financial status of the Power Development Fund in the area under the notice to the OERC quarterly and annually in accordance with the regulations, methods and forms prescribed by the ERC;

(8) follow up, monitor and evaluate the undertakings of the community projects and report the results of the community projects to the OERC;

(9) hire and appoint an auditor;

(10)convene a CDC-PP meeting at least once every three months in order to manage the Power Development Fund in the area under the notice, to follow up on the community projects, and keep minutes of the meeting for records;

(11)hire assistants to assist the Power Development Fund’s management in the area under the notice as required and appropriate, and hire a third party to monitor, follow up and evaluate the projects as appropriate according to the ERC’s prescribed rules;

(12)publicize or disseminate the information relating to the Power Development Fund in the area under the notice and the results of its undertakings to the public;

(13)promote and support the participation of various sectors in the area under the notice, as well as the networks of cooperation among the CDC-PPs of other areas under the notice;

(14)appoint a sub-committee to consider or undertake any activity as assigned by the CDC-PP;

(15)supervise and perform its work in accordance with the regulations, orders, criteria, guidelines and methods prescribed by the ERC;

(16)in case where the regulations prescribed by the ERC do not cover the undertakings of the CDC-PP in the area under the notice due to special characteristics of such area, the CDC-PP shall propose additional relevant regulations for the ERC’s consideration as necessary within the criteria and guidelines prescribed by the ERC; and

(17)undertake any other task as assigned by the ERC or the OERC to achieve the objectives of the management of the Power Development Fund in the area under the notice within the prescribed laws, regulations, notifications, orders and methods.

Article 12: The representatives from the general public on the CDC-PP shall be selected by the following methods:

119 (1)selection of village representatives by convening a village assembly in all villages within each sub-district to select village representatives. There shall be the equal number of representatives from each village; and

(2)selection of sub-district representatives to serve as CDC-PP members by allowing the village representatives under (1) to present their visions in the selection process of the sub-district representatives;

The selection shall be in accordance with the ERC’s prescribed rules.

Article 13: Committee members selected from the representatives from the general public shall have the qualifications and shall not hold any disqualifications as follows:

(1)have Thai nationality;

(2)must be between 25 and 70 years old;

(3) have at least completed compulsory education or its equivalent as certified by the Ministry of Education;

(4) have their names in the house registration in the area under the notice for at least one year consecutively up to the date of the appointment;

(5) must not be a Member of the Parliament or an assistant to a Member of the Parliament, a Member of the Sen- ate, a government official with a fixed position or salary, a political officer or a person who holds a political post, a member of a local assembly, a local administrator or an advisor to a political party;

(6) must not be insane or mentally disordered;

(7) must not be addicted to narcotic drugs;

(8) must not be and have never been bankrupt;

(9) must not be adjudged incompetent or quasi-incompetent;

(10) must not be sentenced to imprisonment by a final court judgment and in custody by a court warrant;

(11) have never been sentenced to imprisonment for two years or more and have been released for less than five years on the date of being nominated, except that it is an offense committed through negligence or contra- vention;

(12) have never been dismissed, discharged or removed from service of a government agency, a state enterprise or a private entity on the grounds of dishonesty, serious malfeasance, or quasi-corruption and quasi- disciplinary misconduct; and

(13) must not be a stakeholder in a contract party of the Power Development Fund.

Article 14: The provincial governor shall select representatives from the central authorities which perform their function in the province, regional or local authorities in the area under the notice, members of the local councils, local administrators or chiefs of sub-districts or villages in the area under the notice who have experiences in community, social, economic, environmental, agricultural, health or industrial developments as committee members representing the government sector by the required number as prescribed by the ERC.

Article 15: The following persons shall be committee members representing the government sector, ex officio:

(1)no more than two representatives from the Ministry of Energy as designated by the Ministry of Energy; and

(2)one representative from the OERC of the area in which the power plant in located, or a person assigned by the OERC.

Article 16: The selected committee members representing the general public and the committee members representing the government sector shall convene a meeting to propose and appoint the required number of experts as prescribed by the ERC.

120 Article 17:The experts shall have the qualifications and shall not hold any disqualifications as follows:

(1)have Thai nationality;

(2)must be between 35 and 70 years old;

(3)possess knowledge, expertise, and experiences in areas of society, health, energy, environment, community economy, education, finance, or communication;

(4)have their names in the house registration in the province in which the power plant in located;

(5)must not be a Member of the Parliament or an assistant to a Member of the Parliament, a Member of the Sen- ate, a political officer or a person who holds a political post, a member of a local assembly, a local administrator or an advisor to a political party;

(6)must not be insane or mentally disordered;

(7)must not be addicted to narcotic drugs;

(8) must not be and have never been bankrupt;

(9)must not be adjudged incompetent or quasi-incompetent;

(10) must not be sentenced to imprisonment by a final court judgment and in custody by a court warrant;

(13) must not be a stakeholder in a contract party of the Power Development Fund.

Article 18: Upon the completion of the screening of the CDC-PP from all sectors, the Secretary-General of the OERC shall submit a full list of the nominated CDC-PP to the ERC for consideration in appointing chairman, no more than two vice-chairmen, and other positions in the committee.

The representative of the OERC in the area in which the power plant is located or a person assigned by the OERC shall be a member and the secretariat of the CDC-PP.

The representative of the power plant in the area under the notice shall be the assistant secretariat of the CDC-PP.

Article 19: CDC-PP members shall hold office for a term of four years from the date of the appointment and shall not hold office for more than two consecutive terms. This Article does not apply to committee members representing the government sector.

At the initial term, after two years, half of the committee members who represent the general public shall be discharged from office by drawing lots. Such a discharge shall be regarded as the completion of the office term. The drawing of the lots shall be held in advance as appropriate.

The CDC-PP members who leave office after the completion of theirs terms shall continue performing their duties until the new CDC-PP members are appointed.

In order to allow the CDC-PP to work continuously, the screening of the new set of the committee members shall be made from the same sectors in advance as appropriate, before the outgoing CDC-PP members complete their terms.

121 In case where a CDC-PP member leaves office before the completion of his term, there shall be the screening and appointment of a replacement from the same sector within forty-five days of the date of the vacancy. The appointed committee member who replaces the outgoing committee member shall be in office for the remaining term of the one he replaces.

In case where the remaining term of a CDC-PP member is less than ninety days, there may not be the screening and appointment of a new committee member to fill the vacancy. In such case, the CDC-PP shall comprise the remaining committee members.

When a CDC-PP member leaves office, he shall transfer his work to the newly appointed committee member by the methods prescribed by the ERC.

Article 20: In addition to leaving office upon completion of the term, a CDC-PP member shall retire from office upon:

(1)death;

(2) resignation;

(3)a committee member who represents the general public transfers his name out of the house registration in the area under the notice for more than 90 days;

(4)lack of qualifications or having any disqualification for being a CDC-PP member;

(5) missing three consecutive meetings without reasonable grounds;

(6) dismissal by the order of the Chairman of the ERC in accordance with the resolution of the ERC or of the two third-majority resolution of the OERC, which proposes to the ERC to consider the dismissal on the grounds of serious malfeasance, dishonesty, or of being a stakeholder in a contract concluded with the Power Develop- ment Fund, or incapacity; and

(7) proposals by the authorities empowered under Article 14 or Article 15 to change the committee members representing the government sector.

Article 21: The Chairman of the CDC-PP shall be empowered to carry out any activity of the Power Development Fund in the area under the notice which involves outsiders.

The Chairman of the CDC-PP may delegate the activity under the first paragraph as prescribed by the ERC.

Article 22: The convening of a meeting shall be done by the Chairman of the CDC-PP or at least one-third of the CDC-PP members.

The quorum of the CDC-PP meeting is half of the total existing committee members. The committee members representing the general public must constitute at least half of the attending committee members.

If the Chairman cannot perform his function, the Vice-Chairman shall act as the chairman of the meeting. If the Chairman and the Vice-Chairman cannot perform their functions, the meeting shall appoint a committee member as the chairman of the meeting.

The decision of the meeting shall be made by a simple majority with each committee member entitled to one vote. If the votes are equal, the chairman of the meeting shall cast the presiding vote.

The decision of the meeting shall be done openly unless the majority of the meeting endorses a secret vote.

The committee members and the secretariat or the assistant secretariat shall issue a meeting invitation to the CDC-PP at least five days in advance and shall take minutes of the meeting and submit the minutes to the CDC-PP.

122 Part 3

Community Development Committee in the Surrounding Area of a Sub-district Power Plant

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Article 23: For managing Type-A Power Development Fund in the area under the notice, the CDC-PP shall be empowered to establish a CDC-SPP for each area.

The Chairman of the CDC-PP shall make an order establishing the CDC-SPP and announce it to the public and report to the OERC.

Article 24: Each CDC-SPP shall have the required number of committee members, but no less than seven members, as prescribed by the CDC-PP comprising of:

(1) a number of CDC-SPP members representing the general public, equal to the number of the villages in the sub- district, which constitute no less than two-thirds of the total number of the CDC-SPP; and

(2) other CDC-SPP members such as sub-district or village chiefs, representatives of schools, community organizations, communities, youth councils, religious places, and members of the press, which constitute no more than one-third of the total number of the CDC-SPP;

For the initial term, in order to allow an expeditious appointment of the CDC-SPP, the ERC shall set the required number of the CDC-SPP members by no less than seven.

Article 25: The CDC-SPP shall have the following authority and duties:

(1) survey the needs of the people in the area and the impact of the operation of the power plant for the making of a community project;

(2) set up a master plan for sustainable development for the community or the sub-district;

(3) promote and support a community project and make a proposal to use the Power Development Fund by convening a sub-district or village assembly;

(4) screen community projects before submitting proposals to the CDC-PP;

(5) convene CDC-SPP meetings at least once every three months in order to follow up and evaluate the community projects that are sponsored by the Power Development Fund and make a progress report every three months or when the community project is completed;

(6) promote the dissemination of knowledge about the Power Development Fund to the people in the area under the notice and publicize information relating to the Fund and its activities to the press, people and organizations in the area under the notice;

(7) receive complaints, find a basic solution and report to the CDC-PP; and

(8) carry out any other task as assigned by the CDC-PP in order to achieve the objectives of the Power Develop- ment Fund in the area under the notice.

Article 26: The CDC-SPP members representing the general public shall be screened by the OERC or an authority requested by the OERC by convening a village assembly in every village in the sub-district of the area under the notice in order to screen one village representative.

Article 27: Other CDC-SPP members shall be screened by the OERC or an authority requested by the OERC by convening a sub-district assembly.

123 Article 28: The CDC-SPP members representing the general public shall have the qualifications as follows:

(1) have Thai nationality;

(2) must be between 25 and 70 years old;

(3) have at least completed compulsory education or its equivalent as certified by the Ministry of Education;

(4) have their names in the house registration in the area under the notice for at least one year consecutively up to the date of the appointment;

(6) must not be insane or mentally disordered;

(7) must not be addicted to narcotic drugs;

(8) must not be and have never been bankrupt;

(9) must not be adjudged incompetent or quasi-incompetent;

(10) must not be sentenced to imprisonment by a final court judgment and in custody by a court warrant;

(13) must not be a stakeholder in a contract party of the Power Development Fund.

Article 29: Other CDC-SPP members shall have the qualifications as follows:

(1) have Thai nationality;

(2) must be at least 25 years old, except representatives of youth groups or youth councils who must be at least 18 years old, and not more than 70 years old;

(3) possess knowledge and capacity to develop the community in the area surrounding the power plant;

(4) have their names in the house registration in the area under the notice for at least one year consecutively up to the date of the appointment;

(5) must not be a Member of the Parliament, a Member of the Senate or a political officer;

(6) must not hold any position in a political party;

(7) must not be insane or mentally disordered;

(8) must not be addicted to narcotic drugs;

(9) must not be and have never been bankrupt;

(10) must not be adjudged incompetent or quasi-incompetent;

(11) must not be sentenced to imprisonment by a final court judgment and in custody by a court warrant;

124 (12) have never been sentenced to imprisonment for two years or more and have been released for less than five years on the date of being nominated, except that it is an offense committed through negligence or contra- vention;

(13)have never been dismissed, discharged or removed from service of a government agency, a state enterprise or a private entity on the grounds of dishonesty, serious malfeasance, or quasi-corruption and quasi-disciplinary misconduct; and

(14) must not be a stakeholder in a contract party of the Power Development Fund.

Article 30: Upon the completion of the appointment of the CDC-SPP members from all sectors, a meeting shall be convened to elect the chairman, the vice-chairman and the secretariat from the CDC-SPP members.

Article 31: CDC-SPP members shall hold office for a term of two years from the date of the appointment and shall not hold office for more than two consecutive terms.

The CDC-SPP members who leave office after the completion of their terms shall continue performing their duties until the new CDC-SPP members are appointed.

In order to allow the CDC-SPP committee to work continuously, the screening of the new set of the committee members shall be made from the same sectors in advance as appropriate, before the outgoing CDC-SPP members complete their terms.

In case where a CDC-SPP member leaves office before the completion of his term, there shall be the selection and appointment of a replacement from the same sector within forty-five days of the date of the vacancy. The appointed committee member who replaces the outgoing CDC-SPP member shall be in office for the remaining term of the one he replaces.

In case where the remaining term of the CDC-SPP is less than ninety days, there may not be the appointment of a committee member to fill the vacancy. In such case, the CDC-SPP shall comprise the remaining committee members.

Article 32: In addition to leaving office upon completion of the term, a CDC-SPP member shall retire from office upon:

(1)death;

(2) resignation;

(3) transfer of his name out of the house registration in the area under the notice for more than 90 days;

(4) lack of qualifications or having any disqualification for being a CDC-SPP member;

(5) missing three consecutive meetings without reasonable grounds; and

(6) dismissal by the order of the Chairman of the CDC-PP in accordance with a two third-majority resolution of the CDC-SPP proposing on the grounds of serious malfeasance, dishonesty, or incapacity;

Article 33: The convening of a meeting shall be done by the Chairman of the CDC-SPP or at least one-third of the CDC-SPP members.

The quorum of the CDC-SPP meeting is half of the total existing committee members.

If the Chairman of the CDC-SPP cannot perform his functions, the Vice-Chairman of the CDC-SPP shall act as the chairman of the meeting. If the Chairman and the Vice-Chairman cannot perform their functions, the meeting shall appoint a committee member as the chairman of the meeting.

The decision of the meeting shall be made by a simple majority with each committee member entitled to one vote. If the votes are equal, the chairman of the meeting shall cast the presiding vote.

125 The decision of the meeting shall be done openly unless the majority of the meeting endorses a secret vote.

At the request of the Chairman of the CDC-SPP or at least one-third of the committee members, the secretariat shall issue a meeting invitation to the CDC-PP at least five days in advance and take minutes of the meeting and submit the minutes to the CDC-SPP.

A CDC-SPP member may not appoint a representative to attend a meeting on his behalf.

Division 3

Management of the Power Development Fund in the area under the notice

______

Part 1

Management of the Power Development Fund in the Area under the Notice

______

Article 34: The ERC shall allocate no less than 95 per cent of a licensee’ contributions to the Power Development Fund to be used in the activities of the Fund in each of the area in which the power plant of the licensee is located.

For the money in excess of the allocation in the first paragraph, the OERC shall:

(1)reserve for usage in an emergency to provide initial remedy or alleviation for damage caused by the operation of a power plant as the ERC finds appropriate;

(2) subsidize development or rehabilitation of a locality that is affected by the operation of a power plant which has been allocated insufficient fund for the development or rehabilitation of the locality. The amount of the subsidy allocated to each locality shall be determined by the ERC; and

(3) use for the management of the Power Development Fund.

Article 35: The CDC-PP shall submit an annual work plan to the governor of the province in which the power plant is located to give his opinion within 15 working days. If the said period is lapsed, the CDC-PP shall submit the annual work plan to the ERC for approval. The annual work plan shall comprise:

(1) a strategic plan and a framework of fund allocation of the Power Development Fund in the area under the notice;

(2) findings of a survey on the needs of the people in the area under the notice;

(3) findings of a study, an evaluation or a research on the impact of the operation of a power plant;

(4) an annual operation plan; and

(5) an estimate of the administrative expenses;

The CDC-PP shall follow the manual issued by the OERC.

Article 36: Annual administrative expenses of the Power Development Fund in an area under the notice shall be proportionate to the amount of the fund allocated in the fiscal year for each area under the notice as follows:

Calculation of annual administrative expenses

126 Net money in Administrative Maximum cumu- Rate (per- Money allocated (baht) each step expenses in each lative adminis- cent) (baht) step trative expenses

1-5,000,000 5,000,000 15 750,000 750,000

5,000,001 – 10,000,000 5,000,000 12.5 625,000 1,375,000

10,000,001 – 50,000,000 40,000,000 10 4,000,000 5,375,000

50,000,001 – 100,000,000 50,000,000 7.5 3,750,000 9,125,000

100,000,001 – 150,000,000 50,000,000 5 2,500,000 11,625,000

amount ex- 150,000,000 onward ceeding 2.5 150,000,000

Article 37: Administrative expenses of the Power Development Fund in an area under the notice shall be in accordance with the guidelines and criteria prescribed by the ERC and shall not exceed the amount prescribed under Article 36.

Article 38: The determination of the allocation of the Power Development Fund in an area under the notice by the CDC-PP shall aim to develop or rehabilitate the locality affected by the operation of a power plant in various aspects in accordance with the criteria prescribed by the ERC.

Part 2

Management of Type-A and Type-B Funds

______

Article 39: For Type-A Fund, consideration to support a community project shall follow the procedure and methods as follows:

(1) the CDC-SPP shall convene a sub-district assembly or a village assembly to survey the needs of the people, and integrate village-level and sub-district-level community development plans;

(2) the proposer of a community project shall submit a project paperwork, in the format indicated by the OERC, to the CDC-SPP in the area under the notice;

(3) the CDC-SPP shall screen the community projects in accordance with the screening criteria prescribed by the ERC; and

(4) the CDC-PP shall consider and approve the community projects in accordance with the criteria prescribed by the ERC;

Article 40: For Type-B Fund, consideration to support a community project shall follow the procedure and methods as follows:

(1) the CDC-PP shall convene a sub-district assembly or a village assembly to survey the needs of the people, and integrate village-level and sub-district-level community development plans;

127 (2) the proposer of a community project shall submit a project paperwork, in the format indicated by the OERC, to the CDC-PP in the area under the notice; and

(3) the CDC-PP shall consider and approve the community projects in accordance with the criteria prescribed by the ERC;

Article 41: A community project shall not be a project which proposes to use the fund in a way which is likely to cause corruption or seeks political benefits. It shall not take up the budget of the local administration or the government authorities which have already supported such kind of project. It shall not use the fund in a way that will not achieve the development under this Regulation.

Article 42: The CDC-PP shall notify the project proposer of the decision on the community project in writing with its justifications within 30 days of the consideration of the community project.

Article 43: In case of an emergency, in which a delay may cause damage to the area under the notice or the area of the beneficiary in Article 11 (1), the CDC-PP may approve assistance within the approved annual budget and shall report to the OERC immediately.

Article 44: Modification, addition, or amendment of the annual work plan shall be considered in the CDC-PP meetings and shall be submitted to the governor of the province in which the power plant is located to give his opinion within 15 working days. If the said period is lapsed, the CDC-PP shall propose the annual work plan to the ERC for approval.

Article 45: The expenses of a project that has a budgetary implication in the Power Development Fund in the area under the notice for more than one year shall not exceed twenty per cent of the next fiscal year.

Article 46: In proposing and considering a community project, the cost estimate shall be done according to the criteria prescribed by the ERC. If the ERC has not set out the criteria for the cost estimate, the criteria shall be in accordance with the Government’s criteria of the cost estimate mutatis mutandis. If there are no Government’s criteria of the cost estimate, the CDC-PP shall determine the cost estimate for each area as appropriate and report to the OERC.

Article 47: Upon approval of a community project, the Chairman of the CDC-PP shall conclude a contract or an agreement with the beneficiary of the Power Development Fund in the area under the notice or with the contractor or the seller as the case may be.

The Chairman of the CDC-PP may delegate the power in the first paragraph in accordance with rules prescribed by the ERC.

Article 48: The conclusion of the contract or the agreement shall at least consist of the documents as follows:

(1) the resolution of the CDC-PP approving the project along with details;

(2) models or pictures or details of the items;

(3) details of the beneficiary of the Power Development Fund in the area under the notice, the contractor and the seller;

(4) a budget plan or a work plan; and

(5) other documents required by the CDC-PP.

Article 49: The beneficiary of the Power Development Fund in the area under the notice shall submit a letter requesting installments for the community project along with the following documents:

(1) a copy of the contract or the agreement of the community project;

(2) a copy of a bank account book;

128 (3) a report on the examination of work installments (in case of requesting more than one installment, except in cases of advance payment); and

(4) photographs of work or activities (in case of requesting more than one installment, except in cases of advance payment).

Article 50: For payment from the Power Development Fund in the area under the notice, the Chairman of the CDC-PP or a person designated by the Chairman of the CDC-PP, shall be the authority who approves the payment, and signs the receipts of payment or the fund requesting forms, and shall use the fund within the annual budget approved by the ERC through the methods as follows:

(1) for payment through a bank, transfer money to the creditor or the beneficiary;

(2) for payment by check, issue a check in the name of the creditor or the beneficiary and cross out the words “or the bearer”; and

(3) for an order of cash payment, issue a check in the name of the responsible officer and cross out the words “or the bearer.”

There shall be evidence of payment for every payment for subsequent auditing.

Article 51: The receiver of the Power Development Fund in the area under the notice shall submit a note notifying the receiving of the fund.

Article 52: The receiver of the Power Development Fund in the area under the notice shall make a sign or any symbol, with the shape, size and form prescribed by the ERC, to demonstrate that the community project receives financial support from the Power Development Fund in the area under the notice.

Part 3

Management of Type-C Funds

______

Article 53: For the management of Type-C Power Development Fund in the area under the notice, the receiver of the fund shall be a government agency and shall perform the following undertakings:

(1) a representative from the municipality or the sub-district administrative organization shall announce the making of a community project through a sub-district assembly and make a budget plan of each project within the framework of the annual work plan approved by the ERC;

(2) the OERC shall approve payment from the Power Development Fund in the area under the notice to the receiver in accordance with the payment plan so that the project be carried out to achieve its objectives; and

(3) the receiver of fund in the area under the notice shall gather information and report on the progress of the community project to the OERC at least twice a year or when the project is completed.

Division 4

Finance, Accounting, Inventory and Audit

______

129 Article 54: The OERC shall transfer the money of the Power Development Fund in the area under the notice quarterly based on the annual work plan, the budget plan and the needs of the management of the Power Develop- ment Fund in the area under the notice.

Article 55: There shall be a separate account of the Power Development Fund in each area under the notice. Fi- nancial and accounting documents shall be made in accordance with the forms prescribed by the OERC. The OERC may appoint a person to audit and evaluate the management of the Power Development Fund in the area under the notice and the undertakings of the CDC-PP as appropriate. In such case, the CDC-PP has a duty to facilitate the work of the auditor at all times.

Article 56: In the management of the money of the Power Development Fund in the area under the notice, which has been allocated for activities of the Fund in the area, a report shall be made to the ERC on the progress, financial status, quarterly and annual results of the work, with the financial accounts and balance of the Power Devel- opment Fund in the area under the notice within 60 days of the end of the fiscal year. If a report cannot be made, the OERC shall temporarily suspend the transfer of the Power Development Fund in the area under the notice.

Article 57: In the management of Type-A and Type-B Funds, there shall be an internal audit on the finance, accounting and inventory, and report the results of the audit to the ERC at least once a year. There shall also be an account audit and budget certification by a qualified auditor.

Article 58: The CDC-PP shall open a savings account and a current deposit account with a bank or a financial institution with the account name “Power Development Fund in the area under the notice and specify, at the end, the name of the power plant or the sub-district or the district or the province in which the power plant is located”.

Article 59: In opening a bank account, there shall be four authorized persons for payment i.e. the Chairman of the CDC-PP or the Vice-Chairman of the CDC-PP, and two additional CDC-PP members.

The order of payment shall require two out of the four signatories i.e. either the Chairman or the Vice-Chairman of the CDC-PP co-signing with one of the two CDC-PP members.

Article 60: A person shall be responsible for the finance, keeping account of the Power Development Fund in the area under the noticem and shall keep an amount of cash, not exceeding 50,000 baht, for administrative expenses.

Article 61: For advance payment, the borrowing shall not be made more than seven days prior to the undertaking and shall be cleared within 30 days after the completion of the undertaking.

Article 62: The inventory management of the Power Development Fund in the area under the notice shall be in accordance with the regulations prescribed by the ERC.

Division 5

Follow - up and Evaluation

______

Article 63: The CDC-SPP or the CDC-PP shall convene an assembly at the village or community levels, and at the sub-district or group communities levels every three months in order to monitor and evaluate community projects.

Article 64: The receiver of the community project shall have a duty to report the progress according to the work plan to the CDC-SPP or CDC-PP meeting, and inform the CDC-SPP or the CDC-PP of the summary of the project upon completion of the project.

Article 65: The CDC-PP shall make a progress report and evaluate the undertaking and the approved community project quarterly for the OERC’s consideration in the transfer of the money to the area under the notice.

130 Article 66: The OERC and the CDC-PP shall jointly make a database of community projects for the follow-up and evaluation of the success of the community projects and shall coordinate to update the database for common usage.

Article 67: In case where there is a dispute or conflict during the undertaking of the project, the CDC-PP shall convene a meeting to resolve the issue and assign one or more members of the CDC-PP to carry out the resolution of the CDC-PP and find a solution to the dispute or the conflict soonest.

Article 68: When there shall be grounds to acknowledge that a project will not yield benefit or that a project will not succeed, the OERC may request the CDC-PP to clarify the facts or rectify or suspend the damaging act.

Article 69: In case where there is a complaint of the corrupt usage of the Power Development Fund in the area under the notice, the OERC shall request the CDC-PP to present facts to the ERC for consideration.

Division 6

Publicizing the Power Development Fund

______

Article 70: In the management of the fund in the area under the notice, the Power Development Fund shall be publicized to the public throughout the area under the notice in order to promote understanding and access to the Power Development Fund in the area under the notice in accordance with the guidelines on publicizing community projects as prescribed by the OERC.

Article 71: The CDC-PP shall publicize the results of the community projects through the media or various activities such as newsletters, community radios, personal media, local newspapers, electronic media, announcement trucks, project signs, and press conferences on the success of community projects.

Division 7

Transition Provisions

______

Article 72: The OERC shall appoint the first CDC-PP within 150 days of the date on which this Regulation comes into force, except in case of a power plant that commences its construction after this Regulation comes into force, the appointment shall be made within 150 days of the date on which the power plant commences its contributions to the Power Development Fund.

Article 73: In absence of regulations, rules, criteria referred to in this Regulation, similar regulations, rules, criteria applied to government agencies or local government agencies shall be applied upon the prior consent of the ERC.

Given on the 28th of December B.E. 2553 (2010)

131 Direk Lavansiri Chairman of the Energy Regulatory Commission

132 Annex 5-5:

Notification of the Energy Regulatory Commission on the Screening of the Community Development Committee in the Surrounding Area of a Power Plant, B.E. 2554 (2011) ______

For the purpose of screening the Community Development Committee in the Surrounding Area of a Power Plant under Article 10 of the Regulation of the Energy Regulatory Commission on the Power Development Fund for Development or Rehabilitation of the Localities Affected by the Operation of a Power Plant, B.E. 2553 (2010), the Energy Regulatory Commission hereby issues the Notification as follows:

Article 1: This Notification is called the “Notification of the Energy Regulatory Commission of Thailand on the Screening of the Community Development Committee in the Surrounding Area of a Power Plant, B.E. 2554 (2011).”

Article 2: This Notification shall come into force on the day after the date of its publication.

Article 3: In this Notification,

“ERC” means the Energy Regulatory Commission;

“OERC” means the Office of the Energy Regulatory Commission;

“CDC-PP” means a Community Development Committee in the Surrounding Area of a Power Plant; and

“Village Committee” means a village committee that is established under the Local Administration Act, B.E. 2547 (1914) and its amendments, and also means a community committee that is established under other notifications or laws.

Article 4: The OERC shall advertise the screening of representatives from the general public to serve as the CDC- PP members.

Article 5: The screening of representatives from the general public to serve as the CDC-PP members shall be as follows:

(1) The OERC shall request the cooperation of the district chief officer or his equivalent in the area under the notice to support the Village Committee in convening a community assembly to screen one representative from each village. The screening shall be executed within 30 days as from the date on which the Village Committee has been notified by the district chief officer or his equivalent, and the advertising shall be made no less than 15 days in advance.

Upon the completion of a village representative, the Village Committee shall submit the name of the selected person together with the certificate of qualifications to the district chief officer or his equivalent in the area under the notice, and the OERC. The Village Committee shall also publicize the results of the screening process to the local people in accordance with the normal practices of the Village Committee.

(2) Upon receiving the nominations of the village representatives from all the villages in a sub-district, the district chief officer or his equivalent shall convene a meeting of those representatives so that they shall select among themselves the required number of sub-district representatives as prescribed by the ERC.

133 Upon the completion of the selection of the sub-district representatives, the district chief officer or his equivalent in the area under the notice shall submit the names of the selected persons together with the certificates of qualifications to the OERC and shall publicize the results of the selection process to the local people.

Article 6: The OERC shall coordinate with the governor of the province in which the power plant is located and the Ministry of Energy to screen the required number of representatives from the government sector to serve as the CDC-PP members as prescribed by the ERC.

Article 7: The representatives from the general public and the government sector who are selected as the CDC-PP members shall convene a meeting to nominate and elect the required number of experts as prescribed by the ERC.

Article 8: Upon the completion of the screening of the CDC-PP from all sectors, the Secretary-General of the OERC shall submit a full list of the nominated CDC-PP to the ERC for consideration in appointing one chairman, no more than two vice-chairmen, and other positions in the committee.

Article 9: The Chairman of the ERC shall have the care and charge of the execution of this Notification and shall construe any problem relating to the implementation of this Notification.

Given on the 29th of April B.E. 2554 (2011) Direk Lavansiri

Chairman of the Energy Regulatory Commission

134 Annex 5-6:

Notification of the Energy Regulatory Commission on the Screening of the Community Development Committee in the Surrounding Area of a Sub-district Power Plant, B.E. 2554 (2011) ______

Article 2: This Notification shall come into force on the day after the date of its publication.

Article 3: In this Notification,

“ERC” means the Energy Regulatory Commission;

“OERC” means the Office of the Energy Regulatory Commission;

“CDC-PP” means a Community Development Committee in the Surrounding Area of a Power Plant; and

Article 4: The OERC shall advertise the screening of representatives from the general public to serve as the CDC- PP members.

Article 5: The screening of representatives from the general public to serve as the CDC-PP members shall be as follows:

The OERC shall request the cooperation of the district chief officer or his equivalent in the area under the notice to support the Village Committee in convening a community assembly to screen one representative from each village. The screening shall be executed within 30 days as from the date on which the Village Committee has been notified by the district chief officer or his equivalent, and the advertising shall be made no less than 15 days in advance.

Upon receiving the nominations of the village representatives from all the villages in a sub-district, the district chief officer or his equivalent shall convene a meeting of those representatives so that they shall select among themselves the required number of sub-district representatives as prescribed by the ERC.

135 Upon the completion of the selection of the sub-district representatives, the district chief officer or his equivalent in the area under the notice shall submit the names of the selected persons together with the certificates of qualifications to the OERC and shall publicize the results of the selection process to the local people.

Article 9: The Chairman of the ERC shall have the care and charge of the execution of this Notification and shall construe any problem relating to the implementation of this Notification.

Given on the 29th of April B.E. 2554 (2011) Direk Lavansiri Chairman of the Energy Regulatory Commission

136 Annex 5-7:

Notification of the Energy Regulatory Commission on the Screening of the Community Development Committee in the Sur- rounding Area of a Sub-district Power Plant, B.E. 2554 (2011) ______

For the purpose of screening the Community Development Committee in the Surrounding Area of a Sub-district Power Plant under Article 26 and Article 27 of the Regulation of the Energy Regulatory Commission on the Power Development Fund for Development or Rehabilitation of the Localities Affected by the Operation of a Power Plant, B.E. 2553 (2010), the Energy Regulatory Commission hereby issues the Notification as follows:

Article 2: This Notification shall come into force on the day after the date of its publication.

Article 3: In this Notification,

“ERC” means the Energy Regulatory Commission;

“OERC” means the Office of the Energy Regulatory Commission;

“CDC-PP” means a Community Development Committee in the Surrounding Area of a Power Plant;

“CDC-SPP” means a Community Development Committee in the Surrounding Area of a Sub-district Power Plant; and

Article 4: For the screening of the CDC-SPP, the OERC shall request the cooperation of the district chief officer or his equivalent the area under the notice to support the Village Committee in convening a community assembly to screen representatives from the general public and other sectors, as follows:

(1) For representatives from the general public to serve as the CDC-SPP members, the Village Committee shall convene a village assembly to screen one representative from each village. The screening shall be executed within 30 days as from the date on which the Village Committee has been notified by the district chief officer or his equivalent, and the advertising shall be made no less than 15 days in advance.

Upon the completion of the screening of a village representative, the Village Committee shall submit the name of the selected person together with the certificate of qualifications to the district chief officer or his equivalent, and the OERC. The Village Committee shall also publicize the results of the screening process to the local people in accordance with the normal practices of the Village Committee.

(2) For representatives from other sectors to serve as the CDC-SPP members, the Village Committee shall advertise the screening of those representatives in the methods prescribed by the OERC, and shall submit the names of the candidates together with the certificates of qualifications to the district chief officer or his equivalent for further action.

137 Article 5: Upon receiving the names of the CDC-SPP candidates from all the villages in a sub-district, the district chief officer or his equivalent shall convene a meeting of the village representatives from the general public to select representatives from other sectors.

In the event that the CDC-SPP members from other sectors cannot be screened under the first paragraph, the village representatives from the general public shall nominate and select the required number of representatives from other sectors to serve as the CDC-SPP members.

Article 6: Upon the completion of the screening of the sub-district representatives on the CDC-SPP, the district chief officer or his equivalent in the area under the notice shall submit the names of the selected persons from the general public and other sectors together with the certificates of qualifications to the OERC, and shall also publicize the results of the screening process to the local people.

Article 7: Upon the completion of the screening of the CDC-PP from all sectors, the OERC shall convene a meeting and elect chairman, vice-chairman and secretary of the CDC-SPP, and shall submit the names of the nominated CDC-SPP to the CDC-PP for appointment.

Article 8: The Chairman of the ERC shall have the care and charge of the execution of this Notification and shall construe any problem relating to the implementation of this Notification.

Given on the 29th of April B.E. 2554 (2011)

Direk Lavansiri

Chairman of the Energy Regulatory Commission

138 Annex 6: Workshop Report of the National Multi-Stakeholder Workshop in September 2001

Workshop Report

Exploring Benefit Sharing Mechanisms for Mekong hydropower Supported by the MRC Initiative on Sustainable Hydropower

National Multi-Stakeholder Workshop Thailand

Monday 5th September to Tuesday 6th Sept, 2011 Pathumwan Princess Hotel, Bangkok, Thailand

1. Overview

The Mekong National Workshops on benefit sharing mechanisms (BSM) are held as part of ISH Output 4.1 C (Bene- fit-Sharing Mechanisms Elaborated at Regional, National and Community Levels and Network Established). Out- put 4.1c is one of the five priority Outputs in the approved 2011 Work Plan for the MRC Initiative on Sustainable Hydropower (ISH).

The BSM national workshops in all four MRC Member Countries also represent a first step to implement the MRC Basin Development Strategy (BDS) activity designated as ISH13, “Benefit-sharing options for hydropower on tributaries evaluated and reported”. The BDS was approved at the MRC Council level in January 2011. ISH13, which is part of the BDS, is to be completed by 2013 in an ISH-led process. For practical purpose ISH13 will be implemented as part of ISH Output 4.1c.

Broadly, Output 4.1c aims to: § Support awareness raising, information sharing and dialogue among MRC Member Counties on benefit sharing mechanisms for hydropower projects. § Foster a common understanding of the evolving experience with benefit sharing among NMCS, line agencies and MRC stakeholders. § Provide a platform to enable Member Countries to cooperate in drawing lessons from experience today, not only from the Mekong and wider Asian Region, but also from the growing pool of world-wide experience on this theme. As indicated in the approved ISH Work Plan for 2011, one first step in Output 4.1c was to prepare a Knowledge Base (KB) which gathers together key information and documents on benefit sharing for hydropower. The KB is intended to provide easy access to information on BSM for NMCS and their stakeholders and was prepared in five volumes. As explained in the Workshop, Volume 1 provides a review and synthesis of basic concepts and approaches that are followed to introduce benefit sharing mechanisms in both developing and developed countries situations. It offers a guide to the contents and the use of other Volumes that comprise the BSM knowledge base. Based on initial discussions with NMCS after the KB was prepared, it was decided to hold a series of national workshops to kick off the discussion of the BSM information. This was to help to bring everybody to a common understanding, or starting point. Objectives of the first National BSM workshops were therefore broadly to:

139 1. Introduce key concepts of Benefit Sharing to NMCS and stakeholders from line Ministries who would be interested parties, or involved in deciding BSM approaches at national-to-local levels, or otherwise involved in implementing any agreed strategies; 2. Provide an opportunity to discuss the basic definitions and mechanism for benefit sharing among different government agencies and MRC stakeholders in a process that is facilitated by NMCS, with regard to their role; 3. Review examples of BSM from national and international locations, and especially to gain some information and insights on current experience in each Member Country in relation to what is accepted as good practice and what to build on; and 4. To collect NMCS views on the next steps for Output 4.1c, including the preparation of a multi-year road map, or activity plan to follow in the 2012-2015 time frame.

A further aim is to seek views of NMCS and other workshop participants on the scope, tasks and deliverables for ISH13, “Benefit-sharing options for hydropower on tributaries evaluated and reported”, and to clearly set out as- sumptions for implementing ISH13 in 2012. After the 4 National workshops are held in the Sept-Oct 2011 timeframe, the ISH Team will prepare an outline of the multi-year plan to define options for ongoing MRC support to Member Countries on the BSM theme. Howev- er, it is important to note that the detailed 5-year plan can only be prepared after two activities; namely: 1. Firstly, after the ISH Technical Review Group (TRG) meeting is held. The TRG will provide an opportunity to bring the four NMCS together to discuss and agree upon the multi-year approach, and 2. Secondly, after the regional level BSM workshop is held. In that workshop NMCS will obtain insights from BSM practitioners from other regions in the world. MRC Development Partners and MRC Regional stakeholders will also have an opportunity to input.

It is anticipated that the BSM Regional workshop will be held in conjunction with the MRC ECSHD partnership that consists of the Asian Development Bank (ADB), MRC, and WWF – possibly in partnership with the World Bank.

2. Workshop Agenda and Participation

Annex 1 of this Report shows the provisional Workshop agenda. The agenda was flexibly adjusted over the one and a half days of the workshop to reflect the progress in each Session, and also to reflect the interests of the workshop participants in each Session.

TNMC opened the Thailand National workshop stating the objectives and welcomed 30? participants. Following the TNMC opening, Satit Phiromchai, MRCS Director of Planning explained the MRC context for introducing benefit sharing at regional, national and local levels in the Mekong. He also explained the key role that benefit sharing plays in the MRC Basin Development Strategy recently endorsed by the four Member Countries at the MRC Coun- cil level (in January 2011). Voradeth Phonekeo, MRCS Manager of the Initiative on Sustainable Hydropower (ISH) then reviewed the work currently underway and planned under the multi-year ISH Output 4.1c, that is called “Benefit-Sharing Mechanisms Elaborated at Regional, National and Community Levels and Network Established”. He further explained the importance of benefit sharing for the achievement of sustainable outcomes with hydropower in the Mekong context. Following these introduction sessions, the ISH Team with support from Larry Haas (former Policy and Strategy Consultant for the ISH), Simon Krohn (recently appointed CTA for the ISH) and Piseth Chea (new riparian Officer for the ISH) made a series of presentations to support open discussions and to facilitate the exchange of views among participants on the various session topics.

140

3. Presentations and Discussions

In addition to the introduction session, where the BSM Knowledge Base was reviewed, five main presentation and discussion sessions were delivered, namely: Session 1: From Concept to Good Practice - An Overview Session 2: Interactive Discussion on 10 Frequently Asked Questions (FAQ) Session 3: Overview of Mekong and International Experience Key Lessons / Messages for Mekong BSM Session 4: Group Discussion 0f BSM Questionnaire Session 5: Perspectives on the ISH Work Plan 2011-2015: Each Session was based on information contained in Volume 1 of the KB, which was systematically compiled by the ISH Team and given to NMCS. Four presentations on the KB contents were previously translated into the Thai language by TNMC and made available to Workshop participants, along with a Thai language version of Volume 1 of the KB. Copies of the PowerPoint Presentations for the main workshop sessions based on the translated presentations are provided as Annex 3 of this workshop report, for the convenience of the reader.

PDF and PowerPoint copies of the presentations may also be obtained from the ISH Officers. Further, it is expected that a generic version of the national Workshop Presentations will be made available to all MRC Stake- holders on the ISH web pages of the MRC website, at a later date.

3.1 The Main Presentations The first presentation by the ISH Team introduced the Workshop participants to the BSM Knowledge Base (KB). As noted in the ISH Work Plan, preparation of the KB was a first step to implement ISH Output 4.1c, “Benefit-Sharing Mechanisms Elaborated at Regional, National and Community Levels”.

The contents of the 5 KB Volumes were described, namely:

§ Volume I: Summary and Guide to the Knowledge Base § Volume II: Compilation of Articles and Reports § Volume III Compilation of PowerPoint Presentations § Volume IV: Compilation of Case Studies from around the World § Volume IV: Examples of Legislation and Regulations

A key point was the KB would be updated periodically by the ISH, as more information becomes available from the various activities supported by Output 4.1c, including the regional BSM workshop and the BSM study tour (s).

3.2 Other Discussion and Issues Raised Apart from discussion of BSM concepts and practices, a number of issues were raised by participants that were specific to the Thailand situation. Among these were:

141 1. Knowledge Base terminology – The TNMC Chairperson introduced a discussion on the meaning and definition of the BSM Knowledge Base, and how that fit in the MRC work. § In discussion it was noted that some participants were not familiar with the term knowledge base. § The ISH Team provided a brief explanation of a knowledge base as simply a database for knowledge management, providing the means for collection, organization, and retrieval of knowledge (as described in the footnote). 62 § It was discussed that another term could be used such as “information resource”, or an “electronic li- brary”. ISH noted that other NMCS will be asked for views on the KB terminology. If appropriate, during the update of the KB, the terminology can be revised. 2. Status of Community Development Funds (CDFs) for power projects in Thailand – The status of Thai- land’s CDFs, reportedly established in 2007 in power sector was noted as important to verify because it represented one mechanism for benefit sharing. § The review of BSM experience that ISH provided in Volume 1 of the KB showed that Thailand had introduced CDFs on power projects in 2007, reportedly including CDFs for existing hydropower projects. The CDFs were based on a Cabinet Decision. § Representative of the Energy Regulatory Commission (ERC) of Thailand 63 who attended the Workshop noted that recently that CFDs had been changed to, or absorbed under new Power Development Funds.

§ The pamphlets that the ECR provided to Workshop participants indicated that Thailand’s PDF contained provisions to “develop and rehabilitate communities affected by Power Projects”.

§ There was some general discussion among participants about the status of implementation of this CDF > PDF policy in Thailand, as well as on the need for guidelines to implement that policy for hydropower projects, which are different from thermal projects. § The ISH Team noted that further information on the current policy direction would be assessed as part of subsequent work by the National BSM Consultant for Thailand in completing the BSM Questionnaire and status review. It was also emphasized that multi-stakeholder views on the CDF > PDF were needed because of the strong and divergent views that were encountered on Thailand’s experience.

3. BSM experience in other non-power sectors - There was discussion on the value of drawing lessons on BSM implementation from all resource sectors, not only the power sector, and also to consider this in light of the (future) multi-sector role of river basin organizations in Thailand. § In the KB Presentations, the ISH Team noted and described how BSM practice was evolving in a number of resource development and management sectors including the forestry, mining, petroleum, plant genetic resource and commercial agriculture sectors.

62 One definition is simply “ A knowledge base (abbreviated KB, kb) is a special kind of database for knowledge management, providing the means for the computerized collection, organization, and retrieval of knowledge. Also a collection of data representing related experiences, their results are related to their problems and solutions.” http://en.wikipedia.org/wiki/Knowledge_base. The World Commission on Dams for example constructed a knowledge base as part of its work that culminated in the Report of the Commission. The WCD knowledge base is considered one of the most comprehensive reviews of literature on and experience with large dams and their alternatives. http://www.unep.org/dams/Documents/default.asp?DocumentID=356&ArticleID=4207 63 http://www.erc.gov.ph/

142 § There was some discussion on the potential role RBOs may play in future in integrating and coordinating BSM activities in a watershed context or sub-basin area level. § It particular it was discussed that BSM may be a topic that could help launch, or start RBCs/RBO’s, recognizing that (i) RBC/RBOs are nascent organizations in the Mekong, and (ii) BSM is something concrete RBCs/RBOs could do. 4. Consideration of a BSM Pilot Project and criteria for selecting a pilot. § TNMC requested that ISH (and MRCS) develop and provide criteria to select a pilot project for BSM trials in Thailand. § In subsequent discussions with the proposed National BSM consultant, it was noted that four initial criteria for selecting a pilot project may include: i. Relevance and suitability to serve as a model for BSM on existing hydropower projects in Thailand (MRC ISH Work Plan and MRC BDS Strategy ISH13 Activity). ii. Ability to leverage existing national funds or Development Partner Funds to implement a pilot. iii. Local capacity to implement the pilot; and iv. Reflection of the scoring criteria in RSAT on the BSM Topic. In addition to the potential to use MRC Programme Funds, the potential leveraging of existing Thailand CDF / PDF funds for implementing the full pilot may be explored and considered. This was connected also to the notion of providing “guidelines” using partnership approaches, which also links to ISH13. 5. Timing of local area workshop on BSM .

§ There was discussion that TNMC would like to start as soon as possible with the local are workshops on BSM and the related activities to formulate a pilot project.

§ October 2011 was indicated as a possible start, by TNMC. § One task for the National BSM Consultant would be to boil down and translate the material so it would target that audience. 6. Caution on the use of BSM to promote hydropower projects - One participant cautioned it was important not to use BSM to promote hydropower, or to be perceived to be doing that, recognizing the sensitive nature and polarization of views on hydropower in Thailand. § The ISH Team noted that this was perception that some stakeholders felt to be valid, and was covered in Volume 1 of the KB. § If participants felt it important, this issue can be addressed further by ISH by adding an FAQ to raise the profile and highlight the nature of the concern, and to also respond to the question to inform discussions in a multi-stakeholder setting. § On this issue, the ISH Team noted that:

o It was important to explain clearly that international experience was BSM must apply equally to existing hydropower projects, as well as any potential new projects.

o It was important to explain and also demonstrate the ISH Output 4.1c was designed to promoting the adoption BSM as a generic management tool, not as a vehicle to promote new hydropower projects.

o Thailand, likely would be primarily interested in BSM for existing hydropower projects on Me- kong tributaries in Thailand (ISH13 objectives agreed at the Council level in the BDS).

143 o Existing hydropower projects are one focus for deployment of the Power Development Funds (PDF) in Thailand, as workshop participant were informed by documents provided by Partici- pants (representative of the Energy Regulatory Commission (ERC) of Thailand), and

o It was very important to make clear the perspective was that any government decisions on whether to develop new hydropower projects, or not, must be made independent of BSM considerations. Separate discussions were also held with the proposed Thailand National BSM consultant on their tasks according to the TOR provided in Volume 1 of the KB.

4. Workshop Outcome

The TNMC Chairperson for the Workshop noted that, broadly, the BSM Workshop was very successful in meeting the initial objectives set for it. In this respect also: § The Workshop provided a first opportunity for many participants to collectively hear about BSM experience with hydropower in the Mekong and in other regions, and openly discuss its relevance to the Thai- land and wider MRC situation. There were different views articulated.

§ Because BSM is a complex issue, more workshops would be needed over time. Workshops at the local- area level and for nascent river basin organizations (RBOs) were especially seen by TNMC as important to have. § A BSM pilot project in Thailand would help to facilitate understanding of the mechanisms required for successful implement benefit sharing at local, or project levels.

§ There was also a general understanding of the distinction between transboundary benefit sharing approaches (called for n the MRC facilitated discussions under the BDS) and national-to-local benefit forms of BSM, where national policies / laws / regulation are needed – as discussed more in-depth in the workshop.

§ The need to provide background information and awareness on transboundary forms of benefit sharing, as called for by the MRC basin development strategy activities was acknowledged.

§ It was also understood that the tasks to implement ISH13 (Benefit-sharing options for hydropower on tributaries evaluated and reported) which fed the BDS process needed to receive priority in the ISH 2012 work plan for Output 4.1c. Among the immediate priorities that TNMC requested the MRC to also consider were: 1. Support for some initial local area workshops in Thailand on benefit sharing, and in particular, to focus on awareness raising and the role of RBC/RBOs, 2. Support for the development of a BSM pilot project for Thailand, and 3. Support for further translation of key documents on BSM to Thai language including a simplification of the concepts to support TNMC discussion with its stakeholders at the local level, including NGO and CSO groups. It was noted that tasks for the National BSM consultant set out in the draft TOR as Annex 1 of the KB (Volume 1) were appropriate, but could be expanded. Additional tasks for the National Consultant may be to: § Facilitate discussion of criteria for selection of a pilot project for BSM in Thailand, and § Facilitate discussions with the TNMC and the Thailand national stakeholders on (i) local area workshops, and (ii) formulation of pilot project.

144 TNMC expressed the view that MRCS budgets could be used for a BSM Pilot Project. MRCS representatives noted that require discussion later. The practical concern was to implement BSM pilots on hydropower projects in all four countries in a comprehensive way. There was not sufficient money in the current MRC budgets (ISH or otherwise) to do that. One way forward therefore was to explore the opportunity to leverage existing funds that currently available within Member Countries for benefit sharing related activities, as well as the possibility of obtaining additional funding from MRC Development Partners active in the Member Countries. The example of ADB co-financing RSAT trials in Lao PDR as part of an existing project to support the Nam Ngum RBO was cited.

5. Follow-Up and Immediate Next Steps

Activities proposed for the ISH 2012-2015 Work Plan: In general, it was proposed by the ISH Team that next steps will basically follow (i) the existing ISH Work Plan for Output 4.1c, and (ii) proposed ISH13 activities. Among these tasks include: 1. Completing the initial set of national BSM Workshops: § National workshop in Viet Nam on the 8-9th Sept § Lao PDR will be in Vang Vieng Province 6-7 Oct 2011. § Cambodia will be 10-11 Oct 2011 in Siem Reap Province. 2. Organizing the 4-County TRG meeting to scope out common activities for 2012 and outline the multi-year approach for implementation of ISH4.1c (Benefit-Sharing Mechanisms Elaborated at Regional, National and Community Levels and Network Established) 2011-2015. 3. Organizing Holding the BSM Regional Workshop (Q1 2012) and the national and international Study tour (2012). 4. Completing the ISH13 component by 2013.

Next steps specifically with Thailand -

For facilitating on-going cooperation among TNMC, Thailand national line agencies and MRCS:

1. ISH would prepare a short report on the TNMC-led BSM Workshop outcomes. 2. MRCS together with TNMC would engage Thailand’s BSM national consultant to undertake the tasks included in the National Consultant Terms of Reference. 3. As part of that, the ISH Team and National BSM Consultant would propose criteria for the selection of a pilot project. The National BSM Consultant would also be tasked to scope out the required materials and logistics to hold a local area BSM workshop - likely to be associated with the design of a pilot project in a selected sub- basin. 4. Obtain TNMC reaction to proposed tasks to implement ISH13 in 2012, which is covered by a separate document and activity plan ISH is circulating to NMCS. 5. ISH would advise TNMC and all NMCS on outcomes of the four national BSM workshops when they are completed (Sept and October).

6. Subject to NMCS agreement, a further step would be to hold the Technical Review Group meeting. The TRG Meeting would: § Enable the NMCS to discuss together the roadmap and outline for the multi-year plan for MRCS support on BSM matters (structured under ISH Output 4.1c), and

145 § Exchange views on the implementation of specific tasks in the ISH Work Plan like the regional BSM workshop and study tour, and potentially pilot projects.

146 Annex 7: National Workshop Report of the National Multi-Stakeholder Workshop in January 2013

National Workshop Report

Benefit sharing options for hydropower on Mekong tributaries Supported by the MRC Initiative on Sustainable Hydropower National Multi-Stakeholder Workshop, Thailand

Monday 28th January to Tuesday 29th January, 2013 Centara Grand Hotel, Udon Thani, Thailand

1. Overview

ISH13 calls for “Benefit-sharing options for hydropower on tributaries evaluated and reported” by 2013, as a key input to the Basin Development Strategy. As discussed in the first national BSM workshops held in Sept-Oct of 2011, people have different ideas about what terms like “options”, “evaluated” and “reported” actually mean.

Three main objectives of the national workshops are: 1. To raise awareness of the benefit sharing options for Mekong tributary hydropower, as well as the Basin De- velopment Strategy’s (BDS) direction concerning benefit sharing; 2. To provide a forum for structured discussion of the BSM options, and to solicit creative ideas and multi- stakeholder views on enhancing the National Papers; and 3. To ensure the workshop results inform ISH13 reporting, and otherwise help to catalyze national and MRC dialogue on introducing and improving benefit sharing mechanisms on existing and proposed Mekong hydropower, going forward.

2. Workshop Agenda and Participation

This Report shows the workshop result. The agenda was flexibly adjusted over the one and a half days of the workshop to reflect the progress in each Session, and also to reflect the interests of the workshop participants in each Session. TNMC opened the Thailand National workshop stating the objectives and welcomed 54 participants (Table Annex 7-1). Following the TNMC opening, Ms. Pakawan, Director, Bureau of Mekong Basin Management, Department of Water Resource explained the MRC context for introducing benefit sharing at regional, national and local levels in the Mekong. She also explained the key role that benefit sharing plays in the MRC Basin Development Strategy recently endorsed by the four Member Countries at the MRC Council level (in January 2011). Voradeth Phonekeo, MRCS Manager of the Initiative on Sustainable Hydropower (ISH) then reviewed the work currently underway and planned under the multi-year ISH Output 4.1c, that is called “Benefit-Sharing Mechanisms Elaborated at Regional, National and Community Levels and Network Established”. He further explained the importance of benefit sharing for the achievement of sustainable outcomes with hydropower in the Mekong context.

147 Following these introduction sessions, the ISH Team with support from Larry Haas (former Policy and Strategy Consultant for the ISH), Simon Krohn (recently appointed CTA for the ISH) and Piseth Chea (new riparian Officer for the ISH) made a series of presentations to support open discussions and to facilitate the exchange of views among participants on the various session topics.

Table Annex 7-1: List of participant names

No. Name Representative 1 Ms. Pakawan Chufamanee Director, Bureau of Mekong Basin Management, De- partment of Water Resource 2 Ms. Ratda Suhataikul Bureau of Mekong Basin Management, Department of Water Resource 3 Mr. Nipon Munmuangsean Agriculture Water User Representative 4 Ms. Siriporn Taweedech Irrigation engineering, Royal Irrigation Department 5 Mr. Sompon Sunairattanaporn Royal Irrigation Department 6. Mr. Samruad Inban Vice President, Nakhonpanom University 7. Mr. Pongsak Maneekul Lecturer, Nakhonpanom University 8. Ms. Buspakorn Kantiteerakawee Office of Water Resources, Division 4, Khon khan 9. Mr. Pongston Potjanasit Office of Water Resources, Division 5, Nakhon Ratchasima 10. Mr. Manop Thailor Office of Water Resources, Division 1, Chiengrai 11. Mr. Yanyong Sricharoen WWF, Nakhon Panom 12. Ms. Nutchaya Menchaisong OBEC, MOE 13. Ms. Suwannee Arunchokchai Office of the National Economic and Social Develop- ment Board 14. Ms. Natthakarn Sriyapan Department of International Organizations 15. Mr. Chavalit Jiravichailit Department of Alternative Energy Development and Efficiency. 16. Ms. Pinida Leelapanang Pollution Control Department 17. Mr. Chattasak Yingthanarat Nuclear Engineering, Office of Atom for Peace 18. Ms. Chanathip Chaiyanukit Arts Regional office of Finearts, Khon Khan 19. Ms. Natthakarn Prasertsung Lecturer, Faculty of Science and Engineering, Kasetsart University, Chalermphrakiat Sakon Nakhon Province Campus 20. Ms. Supalak Saphiracheewin Lecturer, Faculty of Science and Engineering, Kasetsart University, Chalermphrakiat Sakon Nakhon Province Campus 21. Ms. Mingkwan Thornsirikul Office of Natural Resources and Environmental Policy and Planning 22. Mr. Charan Thepauyphon Office of Natural Resources and Environmental Policy and Planning 23. Mr. Wirote Lewcharoenthrap Meteorological Department 24. Ms. Supitchanon Anuwan Public Health Technical Office, Nakhon Phanom 25. Ms. Wassana Rittaphai Department of Labour Protection and Welfare, Udon Thani 26. Mr. Piman Wongapai Center for Social Development Unit 71, Department of Social Development and Welfare, Udon Thani 27. Mr. Anna Sukluam EGAT 28. Mr. Prapon Kaewrinkwa Energy Regulatory Commission Regional, Office Direc-

148 No. Name Representative tor, Ubon Ratchathani 29. Mr. Taweesook Namwongsa Energy Regulatory Commission, Director, Regional Office, Khon Khan 30. Mr. Burapath Phothong Energy Regulatory Commission Regional Office, Na- khon Ratchasima 31. Mr. 081-879 0401 Energy Regulatory Commission Regional Office, Na- khon Ratchasima 32. Mr. Songprakorn Choopean Marine Department 33. Mr. Nara Pinkam Office of Water Resources, Division 3, Nong Khai 34. Mr. Pasutar Komolmal Instructor, Sakonnakhon Rajabhat University 35. Mr. Amnat Phonmart Department of Disaster Prevention and Mitigation 36. Ms. Renu Sirimongkonthaworn Department of Fishery 37. Mr. Naret Kamrisu Subdistrict Administrative Organization, Nakhon Panom 38. Dr. Jongkol Pimwatee Chi watershed 39. Mr. Ittipon Kamsuk Nong Khai 40. Mr. Channarong Wongsa Leoi 41. Mr. Phakphum Pubpamat Udon Thani 42. Mr. Thitaporn Wongtami Leoi watershed 43. Ms. Arree Radores Leoi watershed 44. Mr. Rumpai Kaewsa Leoi watershed 45. Mr. Prasert Aonmeekun Leoi watershed 46. Mr. Panom Songkaew Leoi watershed 47. Ms. Jarunee Saikam Leoi watershed 48. Mr. Theingthip Areewong Tourism Authority of Thailand, Udon Thani 49 Mr. Suriya Kotamee Nakhon Phanom 50 Ms. Wassana Sitirin Assistant to the National ISH Coordinator, Department of Water Resources 51 Mr. Voradeth Phonekeo MRCS Manager of the Initiative on Sustainable Hydro- power (ISH) 52 Mr. Larry Haas International Consultant 53 Mr. Simon Krohn 54 Dr. Wichai Pantanahiran National Consultant

Table Annex 7-2: Programme for National BSM Options Workshops for Mekong Tributar- ies Evaluated Programme

Day -1: 28 January 2013

8:30 -9:00 Registration TNMC Secretariat team

9:00 - 9:10 Welcome Remarks TNMCS

9:10 - 9:20 Round Table self-identification by All Participants All Participants

9:20 - 9:40 Overview of the Workshop - over the 2 days: NC: Wichai

9:40-9:50 Presentation: Review of the BSM Road Map (2011- Voradeth Phonekeo

149 Programme 2015) and 12 Steps to implement ISH13.

9:50:-10:00 Presentation: Q&A: Benefit Sharing as a Strategic Voradeth Phonekeo Priority in the MRC Basin Development Strategy (BDS)

and how ISH13 work feeds the BDS Process.

10:00:10:15 Open Session for Participants Comment and State- All Participants ments: To allow participants the space: Facilitated by TNMCS Chair § To identify issues / aspects they want to discuss the most in the Workshop § To make initial comments on expectations for the Workshop § To bring any relevant information to share with other workshop participants.

10:15- 10:30 Presentation and Discussion: Short overview of the Wichai format / content of the National Working Papers:

§ Tributary System Profiles

§ Hydropower Status on the Tributaries

§ Options identification and selection

§ BSM Options Evaluation and Grouping

§ Complexities to consider concerning national-to- local options of tributary hydropower.

10:30-10:45 Coffee Break

10:45- 11:05 Presentation and Q&A: Quick profile of Tributary sys- Presentation by NC tems and hydropower status on Thailand tributaries

relevant to considering NTL BSM options:

§ Tributaries with existing hydropower schemes.

§ Based on the Tributary Profile templates prepared for ISH13.

11:05- 11:35 Orientation and discussion: A short review of the Presentation by NC BSM Concept and Practice to help orient workshop par-

ticipants for discussions to follow:

§ Short presentation based on a material presented in the first Thailand national BSM workshop § Concerning the types of BSM and MRC Programme work to date on the BSM theme

11:35 - 12:00 National Working Paper Presentation 1 and Q&A: NC Presenting Identification and selection of BSM Options for Tribu- tary systems in the Working Paper concerning: § NTL Type 1: Sharing of monetary benefits - 7 op-

150 Programme tions evaluated § NTL Type 2: Facilitating non-monetary benefits - 8 options evaluated § NTL Type 3: Equitable access to project services – 7 options evaluated § NTL Type 4: Optimizing indirect and additional benefits – 7 options evaluated

12:00 - 13:00 Lunch

13:00 -13:30 National Working Paper Presentation 2 and Q&A: NC Team Presenting Methods used to Evaluate Options in the Working Pa- NMCS Facilitating per. IC as Technical Resource for § Value and Preference dimensions for the evalua- Q&A tion § Sub criteria and ranking (An elaboration of the Value and Preference dimensions for the evaluation.

§ Sub-criteria, qualitative scoring /ranking and grouping of options.

13:30 -14:30 National Working Paper Presentation 3 and Q&A: NC Presenting Preliminary Evaluation Results and Recommendations NMCS Facilitating § An elaboration of preliminary evaluation results IC as Technical Resource for showing plotting of options by value and prefer- Q&A ence dimensions and grouping of options into categories

§ An interpretation of the preliminary results

§ Summary recommendations

14:30 -14:45 Coffee Break

14:45 – 15:00 Briefing on the Aims of sessions and Q&A NC and Chairperson leading

14:45 – 16:30 Result discussion? All participants NC and Chairperson

16:30-16:40 Wrap up of Day 1 NC

Day 2 : 29 January 2013

8:30 -8:45 Discussion of the Tasks for Day 2 TMCS and NC

8:45 – 10:15 Pilot Project discussion All participants

10:15 – 10:30 Coffee Break

151 Programme

10:30 -12:00 Pilot Project discussion (continue) All Participants NC and IC supporting

12:00 - 13:00 Lunch

13:00 -14:00 Conclusion of the Workshop Outcome and Next TMCS supported by NC Steps

14:00 Closing remark TMCS

Mr. Voradeth presented the topic “Review of the BSM Road Map (2011-2015) and 12 Steps to implement ISH13” and the topic of “Benefit Sharing as a Strategic Priority in the MRC Basin Development Strategy (BDS) and how ISH13 work feeds the BDS Process”. Those topics include the information as following:

• The workshop objectives and contents including the establishment of a National Benefit-Sharing Working Group, the development of an options paper, possibility for testing, considerations by decision-makers for the selection of options and considerations for the implementation of recommended options.

• The Benefit Sharing is a Strategic Priority in the MRC Basin Development Strategy (BDS) and two strategic priority of ISH13 work are used to feeds the BDS Process including: § Strategic Priority 3: Improve the sustainability of (Mekong) hydropower development,

§ Strategic Priority 5: Seek options for sharing the potential benefits and risks of development opportunities.

• Strategic Priority 3: Improve the sustainability of (Mekong) hydropower development covers § Benefit Sharing is an important tool (or set of measures) to equitably share the benefits of sustainable development in the Mekong River basin § To take advantage of all the opportunities to achieve sustainable forms of hydropower development and management in Mekong Tributaries, and § To maximize the spread of the resource utilization benefits across the economy and within tributary basins, while catalyzing broader-based growth and supporting social equity policies.

• Strategic Priority 5: Seek options for sharing the potential benefits and risks of development opportunities § The government may consider the options evaluated in ISH13 along with other options when it decides on a policy about benefit sharing for Mekong tributary hydropower The BSM Road Map (2011-2015) presented to the ISH should cover as following steps: § Finalize ISH13 Activity Plan and TOR § Form BSM Consultant Teams and Resources § Prepare detailed guidance for NC Teams § NC review and NMCS feedback on Guidance Note § Prepare Country Working Papers for each MRC Member Country § NMCS hold National Workshop on BSM Options § Prepare Country Review Papers (based on Workshop Outcomes) § Prepare MRCS Regional Synthesis Paper on ISH13 and

152 § ISH Reports into BDS Process.

Figure Annex 7-1-1 Figure Annex 7-1-2

Figure Annex 7-1-3 Figure Annex 7-1-4

Figure Annex 7-1-5 Figure Annex 7-1-6

153 Figure Annex 7-1-7 Figure Annex 7-1-8

Figure Annex 7-1 Voradeth’s presentation

Mr. Hasse presented the the road from concept to good practice, the backgound of Thailand national BSM workshop, 12-Steps to implement ISH13 task, and example of Vietnam BSM workshop (Figure Annex 7-2 Hasse presentation).

Figure Annex 7-2-1 Figure Annex 7-2-2

Figure Annex 7-2-3 Figure Annex 7-2-4

Figure Annex 7-2-5 Figure Annex 7-2-6

154

Figure Annex 7-2-7 Figure Annex 7-2-8

Figure Annex 7-2-9 Figure Annex 7-2-10

Figure Annex 7-2-11 Figure Annex 7-2-12

Figure Annex 7-2-13 Figure Annex 7-2-14

155

Figure Annex 7-2-15 Figure Annex 7-2-16

Figure Annex 7-2-17 Figure Annex 7-2-18

Figure Annex 7-2: Haas presentation

Dr. Wichai reviewed tributary system profiles and hydropower status on the tributaries and methodology and results from option evaluation of BSM in Mekong tributary. • Three tributaries were reviewed (Figure Annex 7-3-1 to Figure Annex 7-3-6) including Mun, Chi and Nam Kam. • The Chi river system is 830 km that is longer than Mun (726 km) and Nam Kam (203.21 km). However, the watershed size of Mun (71,060 Sq.km.) is larger than Chi (49,477Sq.km.) and Nam Kam (3,495.10 Sq.km.). • The population in Mun (10.692,000 habitants) is higher than Chi (6,542,858 habitants) and Nam Kam (1,834,809 habitants). However, Chi shows the population around 5 km. from the river (2,097,229 habitants) higher than Mun (1,742,471 habitants) and Nam Kam (1,834,809 habitants). The population around power plant shows the same as the population around 5 km. from the river. The population around power plant in Chi (243,839 habitants with 34 Tambons) is higher than Mun (95,932 habitants with 9 Tambons) and Nam Kam (35,474 habitants with 4 Tambons). Those results show that the population in Chi river stay closer to the river than Mun and Nam Kam. • Mun tributary has three hydropower plants including Ubol Ratana, Chulabhorn and Nam Pong. Total In- stalled Capacity is 802.36 MW. Chi tributary has three hydropower plants including Sirindhorn, Pak Mun and Lam Takhong. Total Installed Capacity is 672 MW. Nam Kam tributary has one hydropower plant namely Nam Pung. Total Installed Capacity is 6 MW.

The methodology and results from option evaluation of BSM in Mekong tributary were discussed (Figure Annex 7- 3-9 to Figure Annex 7-3-12) as following: • Identification and selection of BSM Options for Tributary systems in Thailand was done by working group, then four type of National to local were selected (Figure Annex 7-3-7 to Figure Annex 7-3-26) including: § NTL Type 1: Sharing of monetary benefits (7 options evaluated) § NTL Type 2: Facilitating non-monetary benefits (8 options evaluated)

156 § NTL Type 3: Equitable access to project services (7 options evaluated) § NTL Type 4: Optimizing indirect and additional benefits (7 options evaluated)

Qualitative Evaluation Criteria of two indicators for evaluation (sub-criteria under them) were used including: • Value Added Indicator means contribution of option / measure to sustainable development and management of the Tributary sub-basin – plus wider Mekong basin (to the extent seen as relevant) including Eco- nomic Advancement, Environment Protection, Social Advancement, Flexibility to adapt over time (intergenerational), Special focus – e.g. supporting Poverty Alleviation or electrification targets and Combine sustainability contribution rating. • Stakeholder Preference indicator means simple averaging (or weighted averaging) of the relative preference for the option based on perspectives / views different stakeholder interests including National Gov- ernment Line Ministries, Power and Energy, National Government Line Ministries (Water Resource and Envi- ronment), Provincial, Municipal Government levels and Civil Society or Community NGO Representative, Hy- dropower Operators and Developers and River Basin Organizations (RBCs / RBOs). • Five sub-criterion were scored for all options to evaluate Value, namely: 1. Social Advancement: contribution to poverty reduction & social advancement in the sub-basin (consistency govt policies) – 20% weight 2. Environmental Protection: contribution to environment protection aims in the sub-basin (consistency govt policies) – 20% weight 3. Economic stimulus: help to economic stimulus of sub-basin and local areas (consistency govt policies) – 20% weight 4. Intergenerational equity/flexibility: Potential to build in flexibility to adapt / modify the measure overtime as priorities and development conditions change – 20% weight 5. Practicality & Capacity to implement – 20% weight • Five sub-criterion were used to score all options to evaluate Preference, namely: 1. National Level Government Line Agencies, a non representative sample)– 20% weight 2. Provincial Level Government, a non representative sample – 20% weight 3. River Basin Organization – 20% weight 4. Civil Society, a non representative sample – 20% weight 5. Hydropower Developers / Operators, a non representative sample – 20% weight

NTL Generic Type 1: Sharing Monetary Benefits of Hydropower (Figure Annex-7-15-17) Observation / Comment on the result: § The options form a group of similar (moderate to high) Value and high Preference. § The most preferred option was to prioritize implementation of the exising Power Development Fund for hydropower projects in Mekong tributaries: (Option 1-1). § Option 1-7, “Set and finance targets for local income improvement for people living in the area of projects” received a high score. It showed that this option should be considered as the recommendation to the PDF activity. § Other options suggested for research or further study that showed high Preference are noted in the Table below. Among them are the highest Preference option of involving RBC/RBOs in basin level revenue sharing (Option 1-5), and consideration of a provincial share (Option 1-4). § Option 1-6, “Municipal/provincial authorities collect or receive taxes, fees, etc., for land or water used by hydropower projects” received a moderate Value score but high Preference score. It showed that this option and reasonable measures may be exploited to raise revenue for local benefit sharing.

NTL Generic Type 2: Optimizing Non-Monetary Benefits (including facilitating local resource access) (Figure Annex-7-18-20) Observations on the result: (on Options for NTL type 2)

157 § Currently there are some forms of non-monetary benefit sharing around existing hydropower in the Thai- land’s Mekong Tributaries.64 § Vocational training for new livelihoods, job skills, and income diversification based on natural resource access changes due to hydropower (Option 2-6) and Ensure training for women, youth, vulnerable groups and ethnic groups regarding local resource access (Option 2-7) Ensure the local people have the priority to access the resource (Option 2-8) options provide the high positive impact to all aspects including social advancement, environmental protection, economic stimulus, intergenerational equity, practical and capacity to implement. § Training options may be considered to be high priority for the local community and should be integrated into NTL-1 for consideration of the proposed project. § The option 2-8 is considered as high priority (local resource access). However, as these existing dams range from 58 years to over 12 years for the Lam Ta Khong that may not be a big issue. Thus it is suggested a field survey may be done to make sure the local resource access is not creating problems and if it is take appropriate steps. § The remaining option have moderate to high Value and high Preference. This suggests that a “package” of measures may be appropriate with a systematic way to ensure all options are explored by the local communities.

NTL Generic Type 3: Ensuring Equitable Access to Electricity Services (Figure Annex-7-21-23) Observations on the Result: NTL Type 3 § Most options for ensuring equitable access to electricity services showed high Value and Preference and may be considered during PDF implementation. § While it is important to note the electrification ratio (% of households connected to the power grid) is actually high (e.g. above 97%), the PDF makes provision for this kind of support if Community Committees consider it important. § The lowest ranked option in Value (3-6) was the “Provide tariff subsidy for communities in the area of hydropower projects for a given period of time”. Since the Thai tributary projects were built from 12 to 50 years ago, it suggests Thailand has passed the point where household electricity affordability at low consumption levels is a problem in the notified areas. § The other options suggest the PDF may be used to support measures if there is any unfairness for power consumers in the notified area and it is proven so. § This suggests considering a “package of measures” with a systematic way to ensure that all options are explored by local communities using the PDF mechanism.

NTL Generic Type 4: Optimizing Additional and Indirect Benefits (Figure Annex-7-24-26) Observations on the result for NTL type 4 options: § All measures to improve and enhance additional and indirect benefits showed a similar pattern of high Value and Preference (see the cluster in Plot 4). § The single highest rank measure by Value and Preference was Option 4-1, “Introduce guidance to optimize local use and socio-economic benefit from project access roads (e.g. in selecting road alignments and road surfacing, road construction standards).” § This suggests that a comprehensive approach to benefit sharing would ensure that all practical and reasonable measures are exploited fully during project construction and operation § In the case of the existing tributary dams completed from 12-50 years ago these additional benefits will already be part of the local economy. Any additional benefits on top, would now come from the PDF and related measures. § The reader is referred to Template 3a in the Appendices for summary information on options.

64 These include issuing permits, permissions consistent with applicable law and removing barriers such as for community forest access, access to land for aquaculture, permits to fish in reservoirs, etc.,

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Figure Annex 7-3-1 Figure Annex 7-3-2

Figure Annex 7-3-3 Figure Annex 7-3-4

Figure Annex 7-3-5 Figure Annex 7-3-6

Figure Annex 7-3-7 Figure Annex 7-3-8

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Figure Annex 7-3-9 Figure Annex 7-3-10

Figure Annex 7-3-11 Figure Annex 7-3-12

Figure Annex 7-3-13 Figure Annex 7-3-14

Figure Annex 7-3-15 Figure Annex 7-3-16

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Figure Annex 7-3-17 Figure Annex 7-3-18

Figure Annex 7-3-19 Figure Annex 7-3-20

Figure Annex 7-3-21 Figure Annex 7-3-22

Figure Annex 7-3-23 Figure Annex 7-3-24

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Figure Annex 7-3-25 Figure Annex 7-3-26

Figure Annex 7-3: Wichai`s presentation

Donna Brown from the RSAT project (Rapid Sustainability Assessment Tool) explained about RSAT project that can contribute to the ISH project. The topic covered the following: Why a basin wide sustainability assessment tool ?

• Mekong context: dynamic development of multiple projects at different stages in a basin

• Need for a rapid tool to address basin wide issues, beyond individual projects

• Provide a basis for dialogue – develop common language and understanding of issues between key stakeholders

• To support the MRC Basin Development Strategy strategic objectives

• Complement existing more data intensive tools (SEA, CIA, EIA,) and the IHA Protocol Strategic priorities for Basin Management

• Establish basin objectives and management strategies for water related sectors

• Strengthen basin management processes

• Implement a targeted IWRM capacity building programme

• RSAT fit with the MRC Basin Development Strategy RSAT Topics • TOPIC 1: Economic contribution • TOPIC 2: Social and cultural well-being • TOPIC 3: Biodiversity and natural resource management • TOPIC 4: Options assessment and demonstrated need • TOPIC 5: Multiple project siting, design and operations • TOPIC 6: Sharing hydropower benefits and burdens • TOPIC 7: Downstream flows • TOPIC 8: Fish passage and fisheries management • TOPIC 9: Erosion and sedimentation • TOPIC 10: Infrastructure safety • TOPIC 11: Communication and stakeholder engagement

162 • TOPIC 12: Institutional setting

Key principles of RSAT • River basin integrative approach to planning and management

• Basin wide baseline data as a basis for decision making

• International cooperation and mechanisms

• Cross sectoral integrated planning

• Basin wide ecosystem integrity

• Good governance at all levels – local to international

• Sharing benefits and burdens of hydropower

• Engineering innovations – system level design

• Stakeholder access to planning and decision making processes

• Co-ordination between different HP operators

Characteristics of RSAT • Basin wide dialogue approach within a structured sustainability framework • Participatory assessment methods • Rapid and easy to use for a range of stakeholders • Suitable for non-technical users • Uses available secondary data • Flexible to meet different objectives • Builds understanding of different stakeholder interests and provides a basis for ongoing dialogue • Designed to support MRC Basin Development Strategy and strategic priorities

Recommendations from Thailand • A mechanism to assess future and existing projects; • To assess the risk to assist in decision making for project development; • RSAT is a tool for learning among participants who come from different areas; • RSAT can be applied in various organisations for planning purposes, • RSAT could be a prototype of assessment of projects that impact on communities; • Government sector should use RSAT for large projects; • RSAT can be used for decision making and participation, it is important for the basin plan development; and • RSAT can be used to have a private organization and government authority work together and also have the centre organisation assess the project.

What does RSAT consist of?

• A framework for basin wide hydropower sustainability

• 12 Topics and 32 criteria

• Qualitative performance statements

163 • SWOT analysis

• Scoring system

• User guidance

3. Presentations and Discussions Pilot project was discussed on the location of the pilot project methodology and budget. Two areas were proposed for pilot projects including Lam Ta Khlong and Loei. There were a lot of representative from Loei watershed, then the pilot project design could be discussed into the detail of pilot project (Table Annex 7-3).

• Loei watershed should be considered as the area of pilot project. The project should have three phase namely scoping, Implementation and Evaluation & Turn into Guidelines phases

• The scoping phase of Loei area should have five activities including (1) Consultation for 3 times, (2) update ISH13 evaluation, (3) modify for pilot, (4) project implementation plan (PIP) and (5) Financing. Timing for this phase should take 6 months. The budget source will be supported by RSAT/BSM. The output of this phase is Inception report.

• The second phase is project Implementation. The activity of this phase covered community driving plan and BSM for hydropower and Irrigation. The budget will depend on PIP and financing plan from the scooping phase. This phase will take 1 to 2 years. The output of this phase is Project Implementation Report.

• The second phase is evaluation and turn into guidelines. This phase should answer the quest of the following: (1) How it go?, (2) Is it a good model? And (3) Can be used by another watershed?. The budget source will be supported by RSAT/BSM. This phase will take 6 months. The output of this phase is evaluation report and guidelines.

Table Annex 7-3: Pilot project design based on group discussion

Activity Budget Phase Pilot Project 1 Pilot Project 2 Timing Report source Lam Ta Khlong ? Loei ?

1. Scoping (Re- 1. Consultation 3 times RSAT/BSM 6 months Inception view the ex- budgeting report 2. Update ISH13 evalua- isting data) tion 3. Modify for pilot 4. Project implementa-

164 tion Plan (PIP) 5. Financing

2. Implementa- PDF money?? Community Driving Plan Depend on 1-2 yrs Project tion PIP and Imple- BSM for Hydropower financing mentation Irrigation plan Reporting 3. Evaluation & How it go (RSAT/BSM 6 months Evaluation Turn into budgeting) Report & Is it a good model Guidelines Guidelines Can be used by another watershed.

165 4. The criteria for project area selection PowerPoint slides prepared by IC to support discussion of criteria to identify a BSM pilot project for Thailand, which the Chair requested, are noted in the following - along with the expected revenue the PDF will generate – when local communities make proposals to the regional ERC office.

Table Annex7-4 from the Paper shows annual amount the PDF will provide for local revenue sharing on the seven existing tributary hydropower projects is $US 0.6 million / yr, or about 18 million Baht per year, the largest amount coming from the Lam Takhong River (8.01 million baht). ii It was discussed that the Lam Takhong’s PDF payout may double, if and when the second 500 MW stage of pumped storage project is implemented, or increase significantly, as the annual PDF payout depends on energy generation (GWh) not installed capacity (MW).

TableTable Annex 4-1: 7 -E 4:stimation Estimation of the ofRevenue the Revenue generated generated for the PDF for by theThailand’s PDF by Seven Tha i-Mekong land’s Seven Mekongtributary hydropowertributary hydropower projects projects

Power Development Fund Mean Install Annual Revenue Com Date Annual CODE Project Name capacity (average) (Year) Energy (MW) (GWh) $US 000's Million (Baht)

T001 Chulabhorn 1972 40 59 38.1 1.18

T002 HuaiKum 1982 1.2 2 1.3 0.04

T003 Nam Pung 1965 6.3 17 11 0.34

T004 Pak Mun 1994 136 280 180.9 5.61

T005 Sirindhorn 1971 36 90 58.1 1.8

T006 UbolRatana 1966 25.2 56 36.2 1.12

Lam Ta Khong T007 2001 500 400 258.4 8.01 Pumped Storage

Total 744.7 904 600 18.1

Note: Com Date = the commercial operation date, Exchange rate 1US$ = 31.0 Baht

Initial criteria to select a Pilot Project may include? 1. Relevance and suitability – as a model for BSM on existing hydropower projects in Thai- land + other Member Countries 2. Ability to attract money - to do a pilot: 3. Local capacity and interest: to implement the pilot 4. RSAT Assessment? What RSAT shows – consensus? 5. Scale: large or small enough?

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Potential Pilot Project Funding – Partnership approach: • MRC Programme Funds? - technical / guidance support • PDF money? – for measures in Law to implement • Donor support? - MRC Donor Partners?

5. Conclusion of the workshop

• Most of the participants agreed with the proposed options of NTL 1- NTL 4.

• Some participants disagreed with operation of options. It should go more into detail of each option. However, the participants agreed to work on discussion in the pilot project.

• It was agreed that two pilot projects should be started including Lam Ta Khlong and Loei watersheds. The pilot project in Loei can be discussed in project detail.

• However, the Lam Ta Khlong project area was dropped for RSAT project from the EGAT, Then the pilot project area has tobe chosen by using the criteria in 4.

Endnotes:

i For example qualitative indicators of the area of rice paddy (proportion of irrigated and rainfed); and other agriculture areas such as swidden, field crops or pantations. ii The Lam Takhong dam is an embankment dam on the Lam Takhong River between Pak Chona and Si Khiu districts in Nakhon Ratchasima province. The dam was originally constructed in 1974 for irrigation and water iisupply but after 2 The Lam Takhong dam is an embankment dam on the Lam Takhong River between Pak Chona and Si Khiu 002, its water storage also serves as the lower reservoir for the 500 MW Lam Takhong districts in Nakhon Ratchasima province. The dam was originally constructed in 1974 for irrigation and water supply but after 2002, its water storage also serves as the lower reservoir for the 500 MW Lam Takhong Pumped Storage Power Plant, which is Thailand's first power plant of that type.

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