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Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 15744 IMPLEMENTATIONCOMPLETION REPORT THAILAND Public Disclosure Authorized THIRD POWER SYSTEM DEVELOPMENTPROJECT (LOAN 3423-TH) JUNE 18, 1996 Public Disclosure Authorized Infrastructure Operations Division Public Disclosure Authorized Country Department I East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currtncv Unit = Thai Baht (B) US$1 = B25.0 BI = US$0.4 GOVERNMENT FISCAL YEAR October I to September 30 WEIGHTS AND MEASUTRES GWh - gigawatt-hour (1,000.000 kilowatt hours) km - kilometer (0.62 mile) kV - kilovolt ( 1,000 volts) kVA - kilovolt-amilpere(1,000 volt-ampheres) kW - kilowatt (1,000 watts) kWh - kilowatt-hour (1,000 kilowatts) MW - megawatt (1,000 kilowatts) MVA - megavolt-amperes (1.000 kilovolt-amperes) MWh - megawatt-hlour (1.000 kilowatt-hours) m - meter mg - milligram msl - mean sea level MT - metric ton MMT - million metric tons rai - 0.4 acre (0.16 hectare) ug - microgram ABBREVIATIONS CAODFF - Committee on Assistance and OccupationalDevelopment for Fish Farmers CAPAP - Committee for Assistance to Project Affected Persons DHF - Dengue Hemorrhagic Fever DIW - Department of Industrial Works DOF - Department of Fisheries DOH - Department of Health DMR - Department of Mineral Resources EGAT - Electricity Generating Authority of Thailand FIA - Environmental Impact Assessment FGD - Flue Gas Desulfurizer HIM - Health Impact Mitigation ICR - Implementation Completion Report IERR - Internal Economic Rate of Return MEA - Metropolitan Electricity Authority MOPH - Ministrv of Public Health MOSTE - Ministry of Science, Technology and Environment NEB - National Environmental Board NESDB - National Economic and Social Development Board NGO - Non-Governineital Organization NO, - Nitrogen Oxide OEPP - Office of Environmental Policy and Planning PCD - Pollution Control Department PDP - Power Development Plan PEA - Provinicial Electricity Authority PWD - Public Works Department RAP - Resettlement Action Plan ROR - Rate of Return SAR - Staff Appraisal Report SFR - Self-tiianiciing Ratio SO, - Sulfur Dioxide SO, - Sulfur Oxide TSP - Total SuspenededParticulates US AID - US Agency for International Development UISEPA - tS Environniental Protection Agency IMPLEMENTATIONCOMPLETION REPORT THAILAND FOR OFFICIALUSE ONLY THIRD POWERSYSTEM DEVELOPMENT PROJECT (LOAN 3423-TH) TABLE OF CONTENTS Page No. PREFACE ....................................................... i EVALUATION SUMMARY .......................................... ii Part I - Project Implementation Assessment A. Statement/Evaluation of Objectives .1 B. Achievement of Objectives. 3 C. Implementation Record and Major Factors Affecting the Project .... .......... 11 D. Project Sustainability ......................................... 13 E. Bank Performance ...................... 14 F. Borrower Performance ...................... 14 G. Assessment of Overall Outcome ...................... 14 H. Future Operations ....................... 15 1. Key Lessons Learned ....................... 16 Part II - Statistical Tables Table 1 - Summary of Assessments ......... ....................... 18 Table 2 - Related Bank Loans . ................................... 19 Table 3 - Project Timetable ..................................... 19 Table 4 - Loan Disbursement ............. 20 Table 5 - Key Indicators for Project Implementation ...................... 20 Table 6 - Key Indicators for Project Operation ......................... 21 Table 7 - Studies Included in the Project ....... ...................... 21 Table 8A - Project Costs . ....................................... 22 Table 8B - Project Financing ............ ......................... 23 Table 9A - Internal Economic Rate of Return - EGAT's PDP .... ............. 24 Table 9B - Equalizing Discount Rate - Pakmun Hydropower Project .... ......... 25 Table 9C - Economic Internal Rate of Return - Mae Moh Mine Expansion .... ..... 26 Table 10 - Status of Legal Covenants ........ ........................ 27 Table 11 - Bank Resources - Staff Inputs ........ ...................... 31 Table 12 - Bank Resources - Missions ........ ....................... 32 Appendixes A. Mission Aide-Memoire .......................... 33 B. Borrower Contribution to the ICR .......... ................ 36 C. Financial and Economic Analyses ............ ............... 44 D. Pak Mun Hydropower Project .......................... 58 E. Mae Moh Mine Expansion .......................... 79 Map IBRD No. 2276CR This docunent has a restricteddistribution and rnaybe usedby recipientsonly in the performance of their official duties. Its contents maynot otherwise be disclosedwiLhout World Bank authorization. -_- IMPLEMENTATIONCOMPLETION REPORT THAILAND THIRD POWERSYSTEM DEVELOPMENT PROJECT (LOAN 3423-TH) Preface This is an Implementation Completion Report (ICR) for the Third Power System Development Project for which Loan 3423-TH in the amount of US$54 million equivalent was approved on December 10, 1991. The loan was closed on March 31, 1995. It was fully disbursed, and the last disbursement took place on March 1, 1995. Under the supervision of Darayes Mehta (Principal Power Engineer, Infrastructure Operations Division, East Asia and Pacific Region I), the ICR was prepared by Brahm D. Prasher (Consultant) on the basis of an ICR mission and drawing upon the project completion reports of: (a) Robert Dwyer (Consultant, Fisheries); (b) Sanatasiri Sornmani (Consultant, Health); and (c) Maninder Gill (Resettlement Specialist, ASTHR). The report was reviewed by J. Shivakumar, (Chief, Infrastructure Operations Division, East Asia and Pacific Region I) and Walter Schwermer (Project Adviser, East Asia and Pacific Region I). The Borrower, the Electricity Generating Authority of Thailand (EGAT), provided comments which are included as Appendices to the ICR, and prepared a Borrower's Evaluation Report in accordance with ICR guidelines. Preparation of the ICR was begun during the ICR Mission in February 1996. The ICR is based on the Staff Appraisal Report (SAR), the Loan and Guarantee Agreements, supervision reports, correspondence between the Bank and EGAT, internal Bank memoranda and other material in the project files. The Borrower contributed to the preparation of the ICR by providing most of the financial, performance, and investment data for the project and supplementing the Bank's information on the project implementation and operational experience. -ii- IMPLEMENTATIONCOMPLETION REPORT THAILAND THIRDPOWER SYSTEM DEVELOPMENT PROJECT (LOAN 3423-TH) EvaluationSummary A. Introduction (i) The loan of US$54 million for the project was approved by the Board on December 10, 1991, over a year after its appraisal. From its very inception this project was contentiouson environmentaland social grounds (para. 2).Y'. Pak Mun was strongly opposed by the Thai NGO, Project for Ecological Recovery (PER), an NGO opposed to the constructionof dams per se; internationalNGOs essentiallyechoed the sentimentsof PER. (paras. 3-4). In regard to Mae Moh, the Bank was concerned with the high level of SO2 emissionsfrom the power plant and wanted EGAT to install SOQcontrol technologieson the large power units at Mae Moh, but acceded to EGAT's request to defer a decision on this issue till EGAT had completed studies on Acid Rain and High Terrain Ecology (para. 5). The project's main objectives were to assist in optimizing investment decisions and to help meet the growth in power demand, and to strengthen the environmentalcapabilities of the power and mining sectors (para. 6). The Bank also expected that appropriate emissionstandards would be evolved for power and industry, during project implementation(para. 8). B. ImplementationExperience and Results (ii) Overall, the project objectiveshave been substantiallyachieved (para. 10). Pak Mun HydropowerProject (iii) Pak Mun was completed at a cost of US$233 million against an appraisal estimate of US$178 million; the cost was very adversely impacted by the Gulf war in 1990-91. This could not have been predicted at appraisaland is considereda force majeure affectingthe project. Resettlementand environmental costs at US$32.3 million were about US$10 million higher than appraisal estimates, primarily because of larger compensat.onpackages provided to curb protests and accommodate affected people through more diverse resettlementoptions (para. 48). (iv) Resettlementand compensationof affected persons has been carried out satisfactorily. The absence of comprehensive surveys of all adverse project impacts at appraisal, necessitated substantial upgrading of the resettlementand compensationpolicies, leading to higher mitigation costs. Efforts at: (a) information dissemination;(b) participation of and consultation with affected persons; and (c) grievance redress, all lacking at the start, were strengthened as implementationprogressed. However, it was not possible to foster a participatoryprocess of consultationwith the NGOs (paras. 12-17). (v) The constructionsite was reclaimedand stabilizedwhen the project was completed, and run-offs of wastes were well-containedduring constructionto prevent adverse impact on the river. The facilitiesat Kaeng Tana National Park were improved according to appraisal plans, and both, the Kaeng Tana and the Kaeng Saphue rapids, which the NGOs expected would