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.
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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 be destroyed, have been preserved (para. 18).
(vi) The fisheriesdevelopment component was implementedsatisfactorily. Fisheriesdevelopment and conservationcenters are operational. The fish migration ladder was constructed and its performanceis being monitored. A fisheriesmigration study was completedand has yielded substantialdata that would be useful in managementof fish stocks. To improve villagers' income, a program is in place to provide facilities for
1/ Para. numbers refer to paras. in Part I - Project Implementation Assessment -iii- raising fish. Fishing activities, both downstream of the dam and in the reservoir have been substantial followingproject completion(paras. 19-21).
(vii) EGAT and the Ministryof Public Health (MOPH) implementeda health surveillanceand a health services plan to prevent outbreak or introductionof diseases in the area, and to improve the health, nutrition and sanitationaspects of the affectedpopulation. Fears on schistosomiasisdisease developing in the affected population and the introduction of schistosomamekongi in the host tricula aperta have not materialized. While all the health impactmitigation programs formulatedwere implementedby MOPH, its actions were not well-coordinatedwith EGAT and its documentationwas not readily accessible(paras. 22-24).
Mae Moh Mine Expansion
(viii) The Mae Moh mine expansionproject was completed at a cost of US$41million, comparedto an appraisal estimate of US$46million (para. 47). The annual lignite consumptiontarget of 9.5 million tons had been surpassed in Mae Moh, especiallywith installationof power Units 10 - 13 (1,200 MW out of a total of 2,625 MW at Mae Moh) (para. 27).
(ix) Completionand operation of Units 10 and 11 resulted in a health related incidentin the valley in 1992, when several hundredpeople had to be treated for exposure to high levels of SO: induced by inversion- fumigationeffects. This incidentspurred several measures to curb pollutionlevels in Mae Moh and a decision to progressivelyfit Flue Gas Desulfurisers(FGDs) on Units 4 - 11 by 1998 (paras. 28-29).
(x) With the installationof a real-timeair quality monitoring system and measures put into effect to curb emissions, SO2 levels in the valley have been reduced considerably. Dust and NO, levels are not of significant concern. Water quality in the downstream reservoirs has not achieved acceptable norms. EGAT created three wetlandareas to act as buffers for waters flowing between settlingponds and downstreamwater bodies. The improvementsdue to these have so far been marginal (paras. 30-32).
(xi) Four studieswere completed on air pollution related matters. An air dispersionmodel has been incorporatedinto the air quality monitoring network to facilitate automatic realtime air quality control. The System-WideControl StrategiesStudy and Acidic DepositionStudy concludethat the control strategies being implementedin Mae Moh will result in significantcurbs on SO2 pollutionlevels. The High Terrain Ecology study concludes that the deteriorated state of plant ecology in the high terrain area has been impacted by causes other than high SO2 levels (paras. 33-34). Strengtheningof EnvironmentalInstitutions and Formulationof EmissionStandards
(xii) For a long time, the Government could not obtain grant funding for expert assistance and training for the environmental institutions as envisaged at appraisal. In late 1994, the E7 group of internationalutilities, introducedto the Governmentby the Bank, agreed to provide the Government(without cost) expert assistance and training in various environment-relatedareas. Implementationof this program commencedonly in May 1996 and is expectedto last for about a year (para. 35). The Governmentprovided funds from its budget for environmentalequipment. Emission standardsfor new power plants were issued by the Government in January 1996. In regard to Mae Moh, the Governmenthas issued a 1-hour ambient SO2 standard and has directed EGAT to fit FGDs on all power plants except Unit 1-3 which will be soon retired. Emission standardsfor industry are still under consideration(para. 36).
EconomicEvaluation
(xiii) The Internal Economic Rate of Return (IERR) for EGAT's power developmentplan is 19.2%, compared to the appraisal estimate of 16%; the difference is mainly due to much higher kWh sales. The equalizingdiscount rate for the Pak Mun Hydropowerproject is 12%, which is above the opportunitycost of -iv- capital of 10%, but much lower than the equalizing discount rate of 15.7% at appraisal. The difference results from the much higher than estimatedcost of completing the project (paras. 37-39).
FinancialPerformance
(xiv) EGAT returned a satisfactory financial performance in the FY91-95 period, and was in compliancewith all financial covenantsagreed with the Bank (paras. 40-42).
C. Findings, Future Operations,and Lessons Learned
(xv) The overall outcome of the projects completed under the loan is satisfactory and their physical and economic aspects are likely to be sustained. The sustainability of the project in regard to its environmentaland social attributes will depend significantly on: (a) periodic monitoring and evaluating the social and economicconditions of the people affectedby the project and taking remedial steps if necessary; (b) adequately funding and continuingthe fisheries developmentprogram and the fisheries migration study; and (c) adequatelyfunding and continuingthe health impact mitigationprogram. Vigilanceneeds to be exercised in regard to monitoring of the environmentalconditions at the Mae Moh complex. Also, the Bank needs to continue supervisionand monitoringof Pak Mun and Mae Moh for the next few years, to assist in the follow- up programs and in solving problems that may emerge (paras. 50-51).
(xvi) Overall, Bank performancein identificationand preparation is considered to be satisfactory. In regard to high SO, emissions at Mae Moh, the Bank could have insisted on employmentof SO2 reduction technologiesfrom the start. The Bank's performanceduring the implementationphase in supervisionof the project is also consideredto be satisfactory(para. 52). The lack, at start, of: (a) very comprehensivesurveys of all adverseproject impacts;(b) informationdissemination; (c) participationof and consultationwith affected persons; and (c) grievance redress, were significantweaknesses in project preparation. Efforts at rectifying these weaknessesduring project implementationwere not very successful. Still, consideringthat this was its first run-of-the-riverproject, EGAT's performance in planning and preparation of Pak Mun, is rated as satisfactory. Its performance in project implementation is rated as highly satisfactory, considering its institutional,policy and budgetary initiativesand corrective measures taken throughoutproject implementation. While physical implementationof the health impact mitigation component for Pak Mun by MOPH was satisfactory,it was lackingin coordinationaspects. The performanceof the Governmenton securing technical assistance for strengtheningthe environmentalinstitutions could have been faster; however, Government's performance in taking actions after the high SO2 incident at Mae Moh was commendable. The Government spared no efforts in accommodatingthe demandsof persons affected by Pak Mun (paras. 53-54).
(xvii) The main task ahead for the Borrower is to monitor the fisheries developmentwork and studies being implementedby DOF and monitorprogress on the health impact mitigationplan being implementedby MOPH for Pak Mun. With regard to Mae Moh, EGAT needs to expedite installationof the FGDs, monitor SO2 and dust levels and intensify its effort to conduct analysis and evolve strategies to improve the quality of the Mae Moh downstreamwaters (para. 56).
(xviii) Followingare the key lessons learned from this project: (a) changes in project design to reduce its environmental impact are essential for hydropower projects; (b) developing an agreed policy and implementationframework for resettlementand preparing a resettlementaction plan acceptableto the affected groups at the start of the project is essential; (c) involvementof affected persons (and concerned NGOs) in project design is necessaryright from the project concept stage; (d) environmentalimpact mitigationprograms entrusted to governmentagencies other than the Borrower need to have mechanismsfor effectivecoordination; (e) the Bank needs to take a pro-active stance in respondingto issues raised by NGOs and disseminateproject related informationperiodically; (f) a mid-term review is essential for complex projects; (g) funding for all tasks should be identified at appraisal; and (h) where adverse impacts are foreseen, as in the case of the emissionsin Mae Moh, the Bank should insist on control measures from the start (para. 57).
IMPLEMENTATIONCOMPLETION REPORT THAILAND THRD POWERSYSTEM DEVELOPMENT PROJECT (LOAN 3423-TH) PART I. PROJECTIMPLEMENTATION ASSESSMENT
A. Statement/Evaluationof Objectives
Introduction
1. The Bank's relationshipwith EGAT began in 1957 with the financingof a project with the Borrower's predecessor entity, the Yanhee Electricity Authority. Including Loan 3423-TH, the Bank has made a total of 18 loans to EGAT for power and transmission system development. Bank participationhas helped EGAT to develop into a technicallycompetent and efficient power utility. The Bank has been instrumentalin the implementationof adequate overall electricity tariff levels. This has ensured the subsector's financialsoundness and the cost effectivenessof power and transmissionsystem investments. The Bank's involvementhas also assisted in ensuringthat the power subsectorin Thailand is soundlymanaged, and this involvementhas encouragedother lenders to provide investmentfinancing to the subsector on favorable terms. In recent years, EGAT's annual investments in power and transmissionsystem expansionprograms have been relatively large. Power consumptionin Thailand has been growing at a rapid pace on accountof the high economicgrowth rates and increasingaffluence levels experiencedby a large section of the population. Even though the Bank has been making only small contributions to EGAT's investment programs, the impact of Bank involvement has been substantial. Bank advice and assistance have helped the Government address the issues of least-cost investmentplanning, supply- and demand- side managementand resource planning, power subsector restructuring,and privatization.
The Project- Background,Scope and Issues
2. The loan of US$54 million for the Third Power System Development Project was approved by the Board on December 10, 1991, after extensive reviews, over a year after project appraisal in September 1990. From its very inception this project was contentiouson environmental and social grounds in regard to both its components, the Pak Mun Hydropower project and the Mae Moh Mine Expansionproject.
3. The Pak Mun Hydropower project went through extensive review and evaluation, including assessmentof environmental,resettlement and ecological impacts, beginning in 1982 before the project was approved by the Cabinet of Ministers in May 1990. The project scope was progressivelymodified and downsizedto minimize ecological, environmentaland resettlementimpacts. The approved project involved the constructionof a dam 5.5 km upstream from the confluenceof the Mun River with the Mekong River, and its operation at completionwas specified to allow a maximum water level of 108 m msl (meters above mean sea level). This level would allow the river to rise to no more than the level it attained to the top of its banks in the flood season. The storage capacity of the dam thus consists essentially of the existing river channel. The original design of 1982 ( which provided for a water retention level at 113 m msl and a dam located at Kaeng Tana Rapids)maximized power output at about twice the present generation capacity. To minimizeenvironmental and aesthetic impact, the dam was moved 1.5 km upstream to preserve the Kaeng Tana Rapids which serve as a major tourist attractionfor the area. The operating regime of the dam was also altered to preserve the -2- upstream Kaeng Saphue Rapids by limiting the water level at the dam to 106 m msl during the dry season. These changes also considerablyreduced estimates of the number of people that would be displacedfrom about 20,000 in 1982 to about 1,500 (248 families) at appraisal.
4. The Pak Mun Hydropower project 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. The NGOs opposed the project on the grounds that it would: (a) displace several thousand persons; (b) destroy the national park and the rapids that were of tourist interest; (c) destroy the fisheries of the Mun and the Mekong rivers; and (d) lead to the outbreak of Schistosomiasisin the project area. In the period between appraisal and Board presentation, several presentationswere made to the Bank by scientistsmustered by PER on the fisheries and health aspects of Pak Mun, and some Bank's Executive Directors visited the Pak Mun site during the Bank's annual meeting held in Bangkokin 1991, before the operationwas presented to the Board for approval. The project was approved by the Executive Directors after lengthy debate and the Board directed that: (a) the project be closely supervised; (b) a mid-term report be produced; and (c) the Governmentappoint an EnvironmentalImpact Monitoring and Evaluation Committeeto oversee the implementationof the environmentalimpact mitigationand resettlementplans.
5. In regard to the Mae Moh Mine Expansion component, the Bank's most significant concern was the high level of SO2emissions that would emerge with the expansionof power generation and the effects it would have on the health of the people and the surrounding ecology, especially on high terrain which experiencedvery high ambient SO2 levels. The Bank wanted EGAT to install SO2 control technologieson the large power units at Mae Moh, but acceded to EGAT's request to defer a decision on this issue (as ambient SO2 levels in the Mae Moh valley were within permissible levels) till EGAT had completed ongoing studies on Acid Rain and High Terrain Ecology, and established the least-costsolution for S02 control. Other less serious concerns for Mae Moh were in regard to levels of NO, and dust and water quality.
6. As stated in the SAR, the purpose of the project was to assist in financing a two year (FY91-92)time-slice of EGAT's investmentprogram, which at appraisalwas estimated to cost a total of US$2.9 billion. The main objectives of the Bank loan were: (a) to assist EGAT in optimizing its investmentdecisions and to help meet the growth in power demand over the mediumterm at least cost; and (b) to strengthenthe environmentalcapabilities of the power and mining sectors. At appraisal, the subprojectsselected for implementationunder the operationcomprised of the following parts:
Part A - which would be executed by EGAT and partially financed from the Bank loan, would comprise subprojectsfrom EGAT's FY91-92 investmentplan, including:(a) the Pak Mun Hydropower project; (b) the Second Stage of the Mae Moh Mine Expansionproject for power Units 8 and 9; and (c) procurementand installationof an environmentalmonitoring network at Mae Moh; and
Part B - which would be carried out by the Governmentand financed from bilateral sources and Government budget, would comprise technical assistance, training and procurement of environmental monitoring equipment for the National Environmental Board (NEB), the Department of Industrial Works (DIW), the Department of Mineral Resources (DMR), and the Public Works Department (PWD). -3- 7. The project required EGAT to take measures to mitigate the environmentalimpacts of the Pak Mun Hydropower project, including: (a) preservation of the national park; (b) development of fisheries and the conduct of a study on fish migration;(c) developmentand implementationof a health impact mitigation program; (d) resettlementand compensationof affected persons; and (e) monitoring and evaluation of the program. The Mae Moh mine expansion component required EGAT to take measures to: (a) control dust levels; (b) evaluate options and formulate a strategy to control NO, and S02 levels, includingconduct of studies on Acid Rain and High Terrain Ecology; and (c) reduce the pollutionof water discharged from Mae Moh.
8. Procurement of significant technical assistance and equipment was included in the componentto strengthenthe capabilitiesof NEB, DIW, DMR, and PWD in the environmentalarea. This was considered important, so that these agencies could discharge their functions adequately in managing, monitoring and regulating the environment. The Bank expected that specific steps and a time frame would be evolved during project implementationfor the establishment of appropriate emission standardsfor power and industry. During loan negotiations,the Governmentexplained that it did not wish to obtain a loan from the Bank for funds required to implementthis program, estimatedat US$5.7 million, and that it would seek bilateral sources to obtain grant funding for technicalassistance and use its own sources for equipmentacquisition.
9. EGAT and the Governmentalso agreed to certain covenants to ensure a strong financial position and continued viability of the subsector. The agreements required the Borrower to maintain minimum financial performance parameters, such as maintenanceof certain self-financingratios, debt loads, relative levels of short and medium term debt, and fuel adjustmentprovisions for electric charges (Part II, Table 10). The financial covenantsrequired EGAT to operate its lignite mine operations as separateaccounting and profit centers, to maintain separate accounts and financial statementseach year for its lignite operations, to set the transfer price for lignite according to a formula agreed with the Bank, and to maintain certain financial performance standards for the mine operations (Part II, Table 10).
B. Achievementof Objectives
10. Overall, the project objectives have been substantially achieved, as discussed in the followingparagraphs and dealt with in greater details in the appendices. AppendicesD and E provide a comprehensivepicture of the Pak Mun and Mae Moh components, respectively.
Pak Mun Hydropower Project (see Appendix D for details)
Power GenerationPotential
11. With the completion of the Pak Mun Hydropower project, EGAT added a total of 136 MW (4 x 34 MW) of peaking capacity in the northeast of Thailand, a region of the country where power demand is twice the availableproduction capacity. This region derives a significantportion of its electricity through imports over long transmissionlines from the northern and central parts of the country and from neighboring Laos. In recent years, it has often experienced black-outs due to disruptionsand instabilityover the long transmissionsystem. In the first full year of operation (FY95) following impoundment,the dam generated a total of 216 GWh of electricity. During the first four -4- monthsof FY96, 141 GWhof electricity was generated, compared to production of 79 GWh in the corresponding period in FY95. This indicates that the annual generation potential of 280 GWh estimatedat appraisal is realistic, and this generationlevel is expectedto be equalled or surpassed soon.
Resettlementand Compensation(see paras. 3 - 15 of AppendixD)
12. EGAT has complied fully with the provisionsof the agreements with the Bank. All land acquisition,resettlement, and compensationfor houses and farmlandhave been completed on terms and with options which have been more diverse and generous than those formulated at appraisal. The absence of comprehensivesurveys of all adverse project impacts during the early stages of project preparation, necessitated substantial upgrading of the resettlement and compensation policies. The resettlement entitlements were thus continuouslyaugmented to mitigate the diverse and unforeseen nature of project impacts and to meet the demands of the affected persons, often expressed through confrontation. Relaxation of eligibility criteria and the increasing compensation and resettlement entitlementscaused discontentamong householdswhich were either not or just peripherally affected.
13. Resettlementand compensationof 1,067 families, whose homes and/or farmlandshad been affected by the Pak Mun Hydropower project, has been completed satisfactorily. This number of households is higher than the number of 984 households estimated in 1990. In addition to these, compensation has been paid to: (a) 226 families who were inconvenienced by noise from the constructionactivities; (b) 445 families that had their houses above the flood level; and (c) 83 families in the free board zone (between 108 and 108.5 m msl) who opted to relocate. The final expenditurefor resettlement and compensation, including development of infrastructure, was Baht 491.5 million (US$19.7million) against an original budget provision of Baht 295.7 million (US$11.8million).
14. In April 1994, a few hundred villagers and some NGOs demonstratedagainst the project in Bangkokto demand compensationbased on impact on fisheries income. As the base line data on fishermen in the Pak Mun project area was not adequate,the Governmenthad to set up a successionof mechanismsand committeesto determine impact on fishermen. The last committeeorganized to make the determinationprovided compensationto 2,932 households; some 3,000 additional cases claiming allegedimpact on fishingincome are being investigatedby the committeeand a resolutionof this matter is expected soon.
15. EGAT provided significant infrastructure in communitiesaffected by the project. New communitycenters, temples, paved roads and bridges, and health facilities were provided in place of old ones at a cost of Baht 103.7 million (US$4.1 million).
InstitutionalArrangements for Implementation(see paras. 16 - 27 of AppendixD) InformationDissemination, Participation and GrievanceRedress
16. Institutionalarrangements for planning and implementationwere satisfactory. As agreed with the Bank, the Governmentappointed a high level committeeto oversee the implementationof the environmental impact mitigation an resettlement plans. The program was managed through the appointmentof a large number of committees,some with participationof affected villagersand NGOs, to formulatethe resettlementand compensationprograms and oversee their implementation. Efforts at: (a) information dissemination;(b) participation of and consultation with affected persons; and (c) grievance redress were lacking at start and were strengthenedonly as implementationprogressed. A socio-economicsurvey of the project affected persons was carried out by an independent external -5- agency after project completion. An independentexternal monitoring agency is being appointed for periodic follow-upmonitoring in the future.
ConsultationsBetween NGOs, EGAT and the Government
17. It has not been possible to foster through the project a participatory process of consultationsbetween the prominentThai NGOs on one hand and EGAT and the Governmenton the other. The NGO movementagainst constructionof dams in Thailand, in particular, and on the Mekong River, in general, was focusedon the Pak Mun Hydropowerproject. The NGOs contendedthat EGAT refused to give them informationand as a result they considered it futile to discuss project issues with EGAT. During the mid-term review the NGOs refused to participate in a round table conference organized by EGAT and the Government at Bank's request. The mid-term review mission recommendedthat the Governmentmake additional efforts to reopen the dialoguebetween the project authorities, the NGOs and itself and endeavor to convert the adversarial relationshipon the Pak Mun project into a productivealliance. This did not materializeduring the remainderof the implementation period, as the NGOs did not change their stance.
EnvironmentalImpact Mitigation (see paras. 28 - 30 of AppendixD)
18. EGAT complied with all the provisions of the environmentalmitigation plan for the project. The constructionsite was reclaimed and stabilized when the project was completed, and run- offs of wastes were well contained during constructionto prevent adverse impact on the river. The facilities at Kaeng Tana National Park were improved according to appraisal plans. Both the Kaeng Tana and the Kaeng Saphue rapids have been preserved.
Fisheries Development(see paras. 31 - 45 of AppendixD)
19. The fisheries developmentcomponent of the project has been implementedsatisfactorily. Fisheries development and conservation centers have been completed, and this year will be in full operation with stocking activities in the dam storage areas. The fisheries development unit, which manages the operation of the fish ladder, conducts education and training of local residents in aquaculture, and in future will conduct studies and research on fish migration/abundancein the river. To improve the lives and incomestream of villagers and householdsin the project area, EGAT and the Departmentof Fisheries (DOF) evolved a program to provide householdsaffected by the dam with fish culture ponds, backyard cement ponds, cement and earthenponds at schools, and large rice field culture ponds. Fishingactivities following project completion, both downstreamof the dam and in the reservoir have been substantial.
20. DOF and EGAT jointly conductedstudies in two phases on fish populationsand migratory patterns in the Mun River and adjacent areas upstream and downstreamof the Mekong River close to the confluenceof the two rivers. A total of 109 and 93 fish species were found in the Mun and Mekong rivers, respectively, and 32 species were found exclusivelyin the Mun River. The Mun and Mekong had 53 and 45 fish species of commercial value, respectively, and between the two only four rare species. The results and insights gained from the Phase I study were used to design the Phase II study conductedbetween October 1993 and September 1994. The objective of the Phase II study was to assess species richness, composition,size distributionand abundanceof economicallyimportant fish species, and to gain further insight into the movement and migratory patterns of fish in the Mun and Mekong rivers. The results of this study were in line with results obtained under Phase I. A total of -6- 123 fish species representing29 families were found in the Mun and Mekong locations. Of these, 40 species of fish are consideredto be comrnerciallyimportant, while 20 represent ornamental varieties. With regard to spawning and rnigration/movementpatterns, the characteristicsfor each species vary. Spawning and migration occurs throughoutthe year, dependingon the species. There is evidence that some fish descend the Mun for feeding, and others go up the Mun from the Mekong for this purpose. Together with data collectedon fish abundance and distribution in the Mun River in the early 1980's during the EnvironmentalImpact Assessment(EIA) for this project and data availablesince then from other sources, the Phase I and II studieswill be useful in evaluatingthe effect of the dam on fish life in the rivers in future.
21. A fish ladder has been constructed based on experience and design of the ladder at the Phayao dam. Operation of the fish ladder by DOF, optimization of its operation, and studies to determine its effectivenessin fish migration are being supported by funds provided by EGAT since the completionof the dam. Basedon data and experienceto date from operationof the ladder, particularly over the two major migration seasons (May-June and October-November,1995), about 60 species of fish native to the river can migrate over the ladder. A total of 1,200 fish migratingup the ladder have been tagged, and results and analysis from the Phase I migration data are due by late 1996. This will be followed by Phase HImigration studies commencing in May 1996 which will yield data and results on fish migration and abundancein 1997.
Health Impact Mitigation
Work Program of EGAT and the MOPH (see paras. 46 - 60 and 63 - 65 of Appendix D)
22. EGAT and the Ministry of Public Health (MOPH) instituted a health surveillance and a health services plan to prevent outbreak or introduction of diseases/infectionsin the area, and to improve the health, nutrition and sanitationaspects of the affected population. EGAT implementeda satisfactoryhealth services and surveillanceprogram to monitor health and prevent outbreak of diseases among villagers affectedby the project and migrant workers. The surveillancedata collected indicated that the project area did not encounter diseases and infectionsthat were out of line with the experience in that region of the country. In the case of some infectionsand diseases, the rates were lower in the project area compared to adjacent areas in the region, even though this is not due to the dam, since impoundment occurred not too long ago. Fears on schistosomiasis disease among the affected populationand the introductionof infectionsof schistosomamekongi in the host tricula aperta have not materialized.
23. Under the health impact mitigationplans, the MOPH was given an important and much larger role than that of EGAT in conductingprograms for disease surveillance, training, strengthening local health capabilities in the area, establishing primary health centers, improving nutrition and environmentalsanitation, and other health related measures. While all the health impact mitigation programs formulatedwere implementedby MOPH, its actions were not well-coordinatedwith EGAT and its documentationwas not readily accessible(a significantweakness in entrusting implementationto a Government agency when the Borrower has no control over its performance). The health and surveillanceprograms being implementedby MOPH until 1994 have been encumberedby coordination, managementand supervisionproblems. The programs had not been well coordinatedand not enough information was available on the achievementsof the MOPH effort. Recommnendationsmade by the Bank during the mid-term review in 1993, and subsequentlyin 1994, on improvingthe managementand coordinationaspects of the programs were not fully implemented. -7-
24. In 1995, a new committee to supervise, coordinate, and execute the programs was organized with specific funding for each of the tasks. However, no informationis availableyet on the results of recent efforts to strengthen the health impact mitigation plan which is supposed to continue until 1998.
ResearchWork by Mahidol University
25. The faculty of tropical medicine conducted research work on the ability of Neotricula aperta to colonize in the man-made reservoir in Sirindhorn. The research work was also extended to determine if schistosomiasisinfection is present in people and animalsaround this man-madereservoir. The study found no Neotricula aperta in potential habitats, and there is no infection of schistosomna mekongi in humans, domestic animals and wild rodents in this area. The mid-term review mission in 1993 observed that further study is required to find out why Neotricula aperta does not colonize the man-madereservoir. This issue does not appear to have been pursued.
Waste Water Plant for the City of Ubon and PibulmangsaharnDistrict
26. At appraisal, waste water from the city of Ubol and Pibulmangsaharndistrict several kilometersupstream to the dam site had been released into the Mun River withoutbeing treated, despite the fact that these areas are highly populated. To improve the health of the river and reduce the potential for serious infectionof the river/reservoir, a waste water treatment plant was planned for the city and district, especially as it was also expected that impoundmentof the dam would increase the populationand number of communitiesdownstream. A wastewater treatment facility is being built at Ubon with a processing capacity of 22,000 cu m/day. The treatment system consists of a two-lagoon aerated stabilization/settlingpond. Wastewaterwill be collectedfrom interceptors from present outfalls into the Mun River of individual collectionmains from different districts in the city of Ubon. The system is expected to reduce the BOD loads to the river, when all the collectors in the district are connectedto the treatment facility.
Mae Moh Mine Expansion (see AppendixE for details)
Physical Targets
27. To ensure that power Units 8 and 9 at Mae Moh being readied for operationhad adequate supply of fuel, EGAT needed to reconfigure and extend the first lignite handling system. The first lignite handling systemhad hitherto been used to convey lignite to the stockyardsfrom the northeast pit. Under the loan, an extension was designed and the conveyancesystem was rerouted to operate between the northwesternpit and the stockyard. In terms of the plans, the northeast pit was well provided with other lignite conveyancesystems. The acquisition of auxiliary equipment to support these operations was also completedsatisfactorily, even though some of the auxiliary equipmentwas procured after loan closing (Table 8A, Part I). The annual lignite consumptiontarget of 9.5 million tons had been surpassed in Mae Moh, especiallywith installationof power Units 10 - 13 (1,200 MW out of a total of 2,625 MW at Mae Moh).
EnvironmentalImpact of High SO2 Emissions (see paras. 2 - 9 of Appendix E)
28. Completionand operation of Units 10 and 11 resulted in a health related incident in the valley in 1992, when several hundred people had to be treated for exposure to high levels of SO0 -8- induced by inversion-fumigationeffects in the valley during the cool season. Power generation in the cool season has been scaled back since then to avoid adverse health effects in the valley. Several other interim and long term measures have also been instituted to mitigate impact and solve the emission problems in the valley.
29. Environmentalmonitoring equipment planned for procurementunder the project and other programs, togetherwith environmentalstudies initiatedor progressing during implementationof Loans 3138-TH and 3423-TH, assumeda higher degree of importancein evolving permanentsolutions for the emissionproblems in Mae Moh. Environmentalequipment planned for acquisition, contributed by the US EnvironmentalProtection Agency (US EPA), and obtained on loan from other agencies of the Governmentwas used to strengthen the monitoring network, to alert power plant managementduring hazardous meteorological conditions, and to predict ground level SO2 levels with the aid of the dispersionmodel developedwith US EPA assistance.
Ambient Air Quality (see paras. 10 - 12 of Appendix E)
30. With the installation of a real-time air quality monitoring system and measures put into effect to curb emissions, SO2 levels in the valley have been reduced considerably. For calendar year 1994, the 24-hr SO2 standard established for Thailand has been essentially complied with. The 1-hour interim standard established for Mae Moh has been complied with for 99.8% of the annual hours at the locations which are most likely to show the highest SO2 concentrations. Occasionally, the interim 1- hour standard at one or more monitoring sites has been exceeded during the cool season. The NO,, levels in the valley are well below the 1-hr standard, and there are no compliance problems on this issue.
31. The 24-hr air quality standard with regard to total suspended particulate levels (TSP) has been exceeded significantly and frequently close to and around the mining operations in the 1993 and 1994 periods. The frequency of the violations in locations away from the mining and power plant operations is relatively small, and the violations generally occur for less than 15 % of the annual number of hours.
Water Quality (see paras. 13 - 17 of Appendix E)
32. Water quality in the downstream reservoirs, which ultimately receive the waters from the mine-sumps, overburden areas, power plant effluent, and diversion channels, has not achieved acceptable norms during the implementation of this project. Even though the overall loading of the total solid dissolved content is high but acceptable, the conductivity, total sulfate, alkalinity and hardness levels are high and exceed Thailand's standards. The calcium and sulfate levels in downstream reservoirs generally exceed the drinking water quality standards, and in the case of sulfate the level is about 50 to 100% higher than the standard for much of the year. EGAT completed the creation of three wetland areas to act as buffer and bio-processing medium for waters flowing between settling ponds and downstream water bodies. The improvements in total dissolved solid content are marginal and sulphate content levels also appear to be largely unaffected. No conclusions on the effectiveness of wetlands can be drawn at this time. The quality of waters at Mae Moh is satisfactory with regard to heavy, trace and toxic metal species. For the most part, none are present in measurable levels or levels approaching environmental quality standards for surface or industrial waters. -9- EnvironmentalStudies (see paras. 18 - 24 of AppendixE)
33. A total of four studies, described in detail in Appendix E, have been completed on air pollution related matters during implementationof the project. With the joint effort of EGAT, the Pollution Control Department(PCD) and the US EPA, an air dispersion model for the Mae Moh area was developed/completedin the USA in 1994. This model has been incorporated into the air quality monitoring network to provide automaticrealtime reading-outsof air quality at various locations based on overall meteorological conditions in the valley. A study on system-wide strategies to control emissions from coal based units in Mae Mo and other locations was also completed in 1994. The results from these modellingand technologystrategy evaluationsdo confirm that Fuel Gas Desulfurisers (FGDs) planned/selectedfor installationby EGAT on Units 4 - 11 in Mae Moh are least cost and effective in meeting air quality compliancerequirements on SOQlevels in the Mae Moh valley.
34. The Acidic DepositionStudy completed in 1994 states that emissions from the Mae Moh power units have a high influence on sulfate deposition rates in Northern Thailand. The deposition rates in large areas in the Mae Moh valley and surrounding regions, particularlydownwind, are several times higher than levels which would initiate mitigationand strict control measures in sensitive areas over North America. Results of the modelling effort in this study do point to reductions in sulphate depositionsto levels consideredacceptable, with completionof control measures being implementedon the power plant units in Mae Moh. The High Terrain Ecology study states that the high terrain forest ecology in the Mae Moh area has been negatively impacted and the structure and functions of the ecosystemsexist in a deterioratedstate. The primary influencesfor this deteriorationhave been human disturbance, forest fires, and mining activities. The study concludes that the effects of SO2 emissions on plants, soil fauna, water quality, wild-lifeand geologicrock structure have been insignificant.
Strengtheningof EnviromnentalInstitutions (see paras. 25 - 30 of AppendixE)
35. The Governmentallocated US$4.8 million to procure air pollution monitoring equipment for PCD and DMR in 1994; until recently, DIW had not received funds for equipmentplanned for it. Because of limitedcapability and failure to allocate funds .o procure expertise to write a good proposal for applying for grant funding, the Government was unsuccessfulprior to 1994 in obtaining grant fundingfor expert assistance and training. In 1994, the Bank provided a small grant to PCD to assist in preparation of detailed workplans for the training component. In late 1994, the E7 group of internationalutilities, introducedto the Government by the Bank, agreed to provide the Government (without cost) expert assistance and training in various environment-relatedareas. Implementationof this program commencedonly in May 1996 and is expected to last for about a year.
Emission Standards for Power and Industry (see paras. 31 - 32 of AppendixE)
36. During negotiationsof the loan the Bank stressed the importance of establishinga time- frame for the establishmentof emission standards for power plants and industries. Emissionstandards for new power plants were issued by the Government in January 1996. In regard to Mae Moh, the Governmenthas issued a 1-hour ambientSO 2 standard and has directed EGAT to fit FGDs on all power plants except Unit 1 - 3 which will be soon retired. Emission standards for industry are still under consideration. In 1995, NEB modified/evolvedsome new ambientair quality standardswhich relate to the power subsector. A new 1-hr standard (780 ug/cu m) was establishedfor SO,, and the Carbon Monoxide 1-hr standard was reduced from 50 mg/cu m to 32 mg/cu m. There were no changes made in the standardfor NO,. The 24-hr TSP standard remains the same as before at 330 ug/cu m; however, -10- the Governmentintroduced a new standard on particulateswith diameter of less than 10 microns, which previously did not exist. The 24-hr ambient air quality standard for particulatesbelow 10 microns has been set at 120 ug/cu m.
Economic Analysis (see AppendixC, SectionC for details)
37. To reconfirmthe appropriatenessof investmentdecisions made during project preparation, EGAT performed a cost and benefit analysis on its FY90-99 Power DevelopmentPlan (PDP) and for each one of the project components funded under the loan. The re-evaluatedIERR of 19.2% (Table 9A) for EGAT's power expansion program compares favorably with the appraisal estimate of 16%. The difference is accounted for mainly by the higher actual kWh sales in the FY90-95 period and higher estimated sales for the period after FY95.
38. The equalizingdiscount rate for the Pak Mun Hydropowerproject, vis-a-visthe next best option, which at appraisal was gas turbine generation, is 12%, which is above the opportunitycost of capital of 10% in Thailand, but much lower than the equalizing discount rate of 15.7% at appraisal. The difference results primarily from the much higher than estimated cost of completingthe project (para. 48).
39. The Internal Economic Rate of Return (IERR) for the lignite mine expansion for power Units 8 and 9, when treated as a stand-aloneproject, is above 150% (Table 9C). This unusually high IERR is predominantlyaccounted for by the high transfer price for lignite. This transfer price, which is calculated and "net-backed"from the cost of electricity produced from a hypotheticalplant at Mae Moh based on imported coal, is about 80% above internationalcoal prices on the spot market. The IERR for the combined investment, the mine expansion and power Units 8 and 9 treated as a single investment, is 13.5%. This is marginallyhigher than the estimate of 13% obtained at appraisalduring preparationof the SecondPower System DevelopmentProject (Loan 3138-TH).
Financial Performance (see Appendix C, Sections A and B for details)
40. EGAT returned a satisfactory financial performance in the FY91-95 period, and was in compliancewith all financial covenants agreed with the Bank. During the period, kWh energy sales increased by 62% to 72,800 GWh in FY95, compared to an appraisal estimate increase of 42% to 65,300 GWh. However, operating revenues did not increase commensuratelyprimarily because of a lower per kWh sales revenue realized for the period. The lower sales price charged by EGAT to PEA coupled with increasing rate of PEA's demand which has surpassed MEA's for several past years, resulted in a decrease in the average selling price and consequently, slower growth of EGAT's sales revenue.
41. Overall, EGAT's financial position during the period was strong and highly adequate; it was able to internally finance an average of 34% of its capital investment program, and this was considerablyhigher than the appraisal average estimate of 25% for the period. The average debt to debt plus equity ratio of 44% for the five year period was more favorable than the appraisalestimate of 48% and the covenantedmaximum of 60%. Other financial performanceparameters, not covered by covenants, are comparableto appraisalestimates and are discussed in AppendixC (SectionA).
42. EGAT maintains separate accounts for its mine operations. The Mine Directorate's financialposition is strong, and a detailed discussionis included in AppendixC (SectionB). The mine -11- operationsare in compliancewith respect to covenantsagreed with the Bank during the five year period (FY91-95). During the period, the debt to equity ratio averaged 1.11 and ranged between 0.87 and 1.29, compared to the maximum covenantedfigure of 1.5. The debt service coverage ratio averaged 2.2 in the period, and is above the covenantedminimum ratio of 1.3. However, the mine operations's debt service coverage was at -0.03 in FY95 due to the steep increase in development and other expendituresin FY95. Because the debt service coverage ratio is based on current figures, the ratio provides only an indication of capacity to comply with the covenant for FY95; the actual compliance must be tested by strict applicationof the formula at the time of borrowing. The self-financingratio averaged 64% while the rate of return averaged 32% during the period. However, it is necessary to view the strong financial performance and overall position of the mine department in the context of transfer prices charged by the mine department and coal prices in internationalmarkets as discussed elsewhere (AppendixC, Section B). When viewed in the vontext of internationalspot price of coal (on Btu basis), the mine department's performanceis less impressive and requires improvementin future, perhaps initially along lines suggestedelsewhere (AppendixC, Section B, para. 9). Its strong financial performanceand position is due to tranisferprices mandatedby Bank covenants.
C. Implementation Record and Major Factors Affecting the Project
Major Factors AffectingImplementation
43. The major factors which affected implementationof the resettlement and compensation component of the Pak Mun Hydropower project were: (a) the weaknesses in project preparation in regard to: (i) the lack of comprehensivenessof the assessmentof impact on persons (para. 12); (ii) the absence of a detailed ResettlementAction Plan at start of project (now required by the Bank for all projects); and (iii) inadequatebase line data on fishermen in the area (para. 14), all of which was not only conducive to continuous opposition from the affected people, but also necessitated continuous change in resettlementand compensationentitlements and a greatly increasedbudget; (b) the lack, from the start of the project, of: (i) strong involvementof affectedpersons in project design and formulation of the resettlement and compensationplans; and (ii) a well formulated informationdissemination and grievanceredress program; subsequentefforts by EGAT in this direction did not prove very successful (para. 16); and (c) the continuousadversarial stance of the Thai NGO, Project for EcologicalRecovery, which spearheaded the movement of villagers against the project, in general, and against the resettlementand compensationplans, in particular; this NGO stance could not be moderatedright up to project completion(para. 17).
ImplementationArrangements and Status
44. EGAT, with assistancefrom consultantsand contractors, was responsiblefor implementing all components of the project which involved constructionactivity. The resettlement program on Pak Mun was implementedby EGAT with oversight provided by government committees. The major portion of the health impact mitigationplan on the Pak Mun project was and is being implementedby the Ministry of Public Health (MOPH). The fisheries componentwas and is being implementedby the Department of Fisheries (DOF) with the involvementof EGAT. It will be funded until end-1996 by EGAT and thereafter by the Government. In regard to Mae Moh, the Government established committeesand working groups (AppendixE) in 1992, consisting of representativesfrom government -12- agencies and EGAT, to monitor impact mitigationmeasures, establish an air quality monitoringsystem in Mae Moh, and evolve long term S02 control strategiesfor the Mae Moh power units.
45. Consistent with EGAT's excellent record in the past, the Pak Mun Hydropower project was commissioned(Part II, Table 5) within the planned schedules. This has been an excellent performance record, considering that the project had experienced disruptions and protests from opposition groups during implementation, and EGAT had to cope with frequent distractions and enquiries from governmentcommittees and the public on a number of issues. Completionof the lignite mine handling system was delayed for a few months; however, this was not critical, since the need for lignite was reduced due to curtailmentof its use followingthe 1992 incident. Procurementof auxiliary equipment was also slowed, some of it to the period following loan closing, since immediateneed for equipmentin question did not exist.
Strengtheningof EnvironmentalInstitutions and Formulationof Eniission Standards
46. Without firm arrangements for funding/assistance, the Government could not act expeditiouslyto implementthe program for training and technical assistance for its agencies. These tasks were initiated for implementationonly at the end of 1995 after a long delay (para. 35). While emission standards for new power plants have been issued, emission standards for industry are still under consideration. The Government decision to introduce a 1-Hour ambient SO2 standard and its directive to EGAT to introduce FGDs at Mae Moh have significantly reduced concerns about high ambient SO2 levels (para. 36).
CompletionCosts
47. Including auxiliary equipment procured after loan closing, the Mae Moh mine expansion project was completed at a cost of US$41 million, compared to an appraisal completion estimate of US$46 million (Table 8A). Savings resulted from the procurement and installation of the lignite handling system (US$18 million vs US$20 million), and significantlylower import duties and taxes (US$3.8 million vs US$8 million). The savings in import taxes and duties resulted from a peculiarity in Thai taxation laws. Import duties for turnkey projects are much lower than those for imported equipment, and consequentlythe handling system was installed as a turnkey project. Some of these gains were offset by increased cost for engineering and supervision (US$3.9 million vs US$1.2 million).
48. The completioncost for the Pak Mun dam project was US$233 million, compared to an appraisalestimate of US$178million. The completioncost tor this project was very adversely impacted by developmentsin the Gulf and war in 1990-91, during which period most of the bid documentswere issued and offers received. Abnormal increases in energy costs affected constructioncosts significantly. This eventualitycould not have been predicted at the time of preparing the cost estimates and may be considered as a force majeure affecting the project. Resettlement, compensationand environmental impact mitigation costs (US$32.3 million) were about US$10 million higher than appraisal estimates. The main reason for this was the more generous compensationpackages provided to curb protests and accommodateaffected people through more diverse resettlementoptions.
49. Major increases resulted from civil works completion costs, and increases in electro- mechanical equipment procurement costs. The costs for these components were US$75 million and US$61 million, and these were about 70% and 32% above appraisal estimates, respectively. The -13- transmissionsystem componentwas completed at US$13 million, about 45% above appraisal estimate. As shown in Table 8A, there were cost increases for all other items for the dam project, except for duties and taxes; however, the effect of these increases on overall completioncost for the project was small. Based on the same reasons discussed in para. 47 above, importduties and taxes (US$4.1) for the project was about 41 % of the appraisalestimate.
D. Project Sustainability
Physical Sustainability
50. The physical and economic aspects of the projects completedunder the loan are likely to be sustained. EGAT has had a long record of excellent managementand operation on hydropowerand lignite miningprojects. The Pak Mun Hydropowerproject may return even enhancedbenefits in future, since energy prices are expected to trend upward with rapid consumptiongrowth in Asia. The Mae Moh mine operations are expectedto yield consistentbenefits similar to those being produced recently, since the mine has a "captive" in-houseclient for its production. FGDs being installed on power Units 4 - 11 assure usage of the mine output in future, while significantly curbing emissions of SO2. However, it is possibleto make significantimprovements to yield improvedproduction cost at the mine in line with the cost of coal elsewhere(Appendix C).
Enviromnentaland Social Sustainability
51. Although the Pak Mun Hydropower project has been implementedwith due regard to environmentalimpact mitigationand resettlementand compensation,the sustainabilityof the project in regard to these attributes will depend significantly on what actions are taken by EGAT and the Government in the future in: (a) periodically monitoring and evaluating the social and economic conditionsof the people affected by the project and taking remedial steps if necessary; (b) adequately funding and continuingthe fisheries development program and the fisheries migration study; and (c) adequatelyfunding and continuingthe health impact mitigationprogram, exercisinggreat vigilance on the outbreak of diseases, especially Schistosomiasis. Similar vigilance needs to be exercised in regard to monitoring of the environmentalconditions at the Mae Moh complexand in continuouslyreviewing the options for controllingemissions from power plants and industry, ultimately with the evolutionof emission standardsfor industry as well. Also, the Bank needs to continuesupervision and monitoring of Pak Mun and Mae Moh for the next several years, in parallel with supervisionof its future projects in Thailandand requiring periodic reports from EGAT. -14- E. Bank Performance
52. Overall, the Bank's performance in identification and preparation is considered to be satisfactory. In regard to high SO2 emissions at Mae Moh, the Bank could have insisted on employmentof SO2 reductiontechnologies from the start rather than agreeing to EGAT's proposals for completionof complex and lengthy studies to arrive at a least-costsolution. The Bank's performance during the implementationphase and in supervisionof the project is also considered to be satisfactory. The Bank has been in close and continuoustouch with EGAT and the Governmenton the environmental and resettlementissues of Pak Mun and the environmentalissues of Mae Moh. Its mid-term review of Pak Mun has been successfuland served to identifyproblems and corrective actions at a crucial stage in project implementation. The Bank has also responded adequately and in a timely manner to the numerous confrontationalcorrespondence and publicationsfrom the NGOs. Its Brochure "Pak Mun - The Facts, The Background,Questions and Answers", which was subsequentlytranslated into Thai and publishedin the Thai newspapers,has been particularlyeffective in disseminatinginformation about the project. Finally, the Bank has been successful in implementingthe major lessons learned from this project in regard to "Participation"in EGAT's next project, the Lam Takhong Pump Storage Project.
F. BorrowerPerformance
53. Consideringthat Pak Mun was the first run-of-the-riverproject (involvinga whole range of diverse social impacts not normally encountered in storage dam projects) that EGAT was implementing,its performancein planning and preparation was satisfactory. EGAT's performance in project implementationis rated as highly satisfactory,considering its institutional,policy and budgetary initiativesand corrective measures taken throughout project implementation. EGAT cooperated fully with the Bank missions during implementation, provided all data requested and implemented all suggestionsmade by the Bank. EGAT also fully implementedthe decisionsof the various Government appointed committees, providing budget increases in a timely manner. It complied fully with the agreementsreached with the Bank. Implementationof the health impact mitigationcomponent for Pak Mun by the Ministry of Public Health, though satisfactoryin its physical implementationaspects, was less than satisfactoryin regard to its coordinationand managementand collating of information.
54. The performanceof the Governmentin implementingthe componenton strengtheningthe environmentalregulatory agencies could have been substantiallyexpedited; however, Government's performance in taking actions after the high SO2 incident at Mae Moh and in eventually issuing emission standards for new power plants was commendable. The Government spared no efforts in accommodatingthe demands of persons affected by Pak Mun.
G. Assessmentof Overall Outcome
55. The overall outcome in implementationof the project componentsunder the loan is rated as satisfactory,since most of its objectivesand all its major targets have been (and are being) achieved. The fisheries developmentand the health impactmitigation components for Pak Mun will continueto be implementedtill 1997-98;however, the accomplishmentson these componentsto date have been in line -15- with appraisalobjectives. No abnormaloutbreak or introductionof diseases/infectionshave occurred in the dam area, as feared during preparation. The ultimate success of the project will depend on actions listed in para. 51 above in regard to the fisheries and health aspects, and monitoringand evaluationof the resettlementand compensationprogram of Pak Mun, and the environmentalissues associated with Mae Moh.
H. Future Operations
56. With completion of the project components implemented under the loan, the main emphasis in future should be on the points enumeratedbelow:
Pak Mun
(a) DOF should fund and continueimplementation of the fisheries developmentcomponent of the project, and EGAT should monitor the results and periodicallyprovide the Bank with informationon the accomplishmentsof the program;
(b) MOPH should fund and continueimplementation of the health impact mitigationprogram and EGAT should monitor the results and periodicallyprovide the Bank with information on the accomplishmentsof the program;
(c) EGAT should continue to engage the services of an independentsocial science agency to periodicallyassess the economicand social conditionsof villagerswho were resettled and compensated,take remedial steps if necessary and provide the Bank with informationon the success (or otherwise)of the program;
Mae Moh
(d) EGAT should install FGDs on Units 4 - 13 expeditiouslyand inform the Bankperiodically about progress;
(e) EGAT and DPC should continue monitoring air quality regularly and frequently at the mine and power complex, worker residentialareas, and surroundingvillages at Mae Moh until all FGDs are installed on power units to adequatelysuppress SQ2 levels;
(f) EGAT should continue and effectively use watering and other measures in mining operations to control TSP levels at the mine pit and surrounding areas, and monitor contractor mining, overburdenremoval, and dumping practices to reduce dust levels;
(g) Prior to completionof the installationof FGDs on a majority of the power units, EGAT should continue stocking and effective blending practices to ensure use of low sulfur lignite during unfavorableweather conditionsin the cool season;
(h) EGAT should continue the practice of reducing electricity output at Mae Moh during adverse meteorologicalconditions in the cool season, when SO2 levels are likely to exceed -16- air quality standards, and continue to schedule plant maintenancework during the cool season when unfavorablemeteorological conditions exist;
(i) EGAT should monitor the physical and chemicalcomposition of water streams and bodies at the Mae Moh complex, and downstreamin the valley;
(j) EGAT should intensifyeffort to analyze, develop an understanding,and mitigate the water qualityproblem at Mae Moh. It should monitor the input and output quality of the waters in the wetlands to assess the effectivenessof wetlands for removal of sulphate and other soluble species;
(k) EGAT should secure more funding for procuring an automatic early warning system to warn power plant operators and EGAT Headquarterswith respect to hazardous air quality situations;and
(1) The Governmentshould continueits efforts through DPC to evolve emission standardsfor industry.
X. Key LessonsLearned
57. Followingare the key lessons learned from the project:
(a) Changes in project design to reduce its environmentalimpact and resettlementneeds (even at the expenseof losing economicbenefits) are essentialfor hydropowerprojects (para. 3);
(b) Developing an agreed policy and implementation framework for resettlement and preparing a resettlementaction plan acceptable to the affected groups at the start of the project is essential so that subsequentchanges are minimized and costs are kept within budget. (paras. 12 and 14). This requires conducting of very detailed surveys of submergenceand other adverse social impacts from the start. While this is simple for a normal hydroelectricdam which impounds a river, it is less so for a run-of-the river scheme like Pak Mun (incidentally, EGAT's first project of this kind), which presents diverse categoriesof affected persons;
(c) Involvementof affected persons (and concernedNGOs) in project design and formulation of the RAP is necessary right from the project concept stage (para. 16); EGAT's attempts at securing this involvement during project implementationdid not meet with much success, due in no small measure to the continuingadversarial stance of the NGOs;
(d) When environmentalimpact mitigation programs are entrusted to government agencies other than the Borrower (health program for Pak Mun) mechanismsneed to be established to ensure that the Borrower can effectivelycoordinate and control those activities (para. 23); -17- (e) The Bank needs to take a pro-active stance in respondingto issues raised by NGOs, keep project informationready in a suitable form (this could be in the form of questions and answers) and disseminateit periodicallyas appropriate(para. 52);
(f) A mid-term review is essential for complexprojects (para 52);
(g) Funding or sou.ces of support for all tasks/programsshould be identifiedand agreed to at appraisal (funding for strengthening the environmentalagencies was not finalized and hence considerabledelay was experiencedin implementingthis component)(para. 46); and
(h) In situationswhere adverse health effects or other serious impact is probable, as for the case of the looming emissions problems in Mae Moh, the Bank should insist on installation of control measures from the start instead of acceding to the Borrower's request to complete lengthy studies to find the least-costsolution (para. 52).
IMPLEMENTATION COMPLETION REPORT
THAILAND
THIRD POWER SYSTEM DEVELOPMENT PROJECT (LOAN 3423-TH)
PART II - STATISTICAL TABLES
-18-
THIRD POWER SYSTEM DEVELOPMENT PROJECT
Table 1: Sunimary of Assessments
[ A. Achievement of Objectives Substantial Partial J Negligible Not Applicable Macro policies X Sector policies X Financial objectives X Institutional development X Physical objectives X Poverty reduction and X other social objectives Environmental objective X Public sector management x Private sector development X B. Project Sustainability Likely Unlikely Uncertain x C. Assessment of Overall Highly Highly Outcome Satisfactory Satisfactory Unsatisfactory Unsatisfactorv x D. Maior Factors Affecting the Project Substantial Partial Negligible Factors not generally subject X to government control Factors generally subject to X government control Factors generally subject to X implementing agency control Highly E. Bank Performance Satisfactorv Satisfactorv Deficient Identification X Preparation assistance X Appraisal X Supervision X Highly F. Borrower Performance Satisfactorv Satisfactor Deficient Preparation X Implementation and Operation X -19-
THIRD POWER SYSTEM DEVELOPMENT PROJECT
Table 2: Related Bank Loans
Loan Purpose Year of Status
______Approval l 1. 1852 Lignite Mining 1980 Completed 2. 2000 Hydropower Development 1981 Completed 3. 2312 Rural Electrification 1983 Completed 4. 2407 Lignite Mining 1984 Completed 5. 2915 Transmission/Distribution 1988 Completed 6. 3027 Power Development 1989 Completed 7. 3138 Power Development 1990 Completed 8. 3404 Distribution System 1991 Implementing 9. 3404 Distribution System 1991 Implementing 10. 3598 Distribution System 1993 Implementing 11. 3798 Distribution System 1994 Implementing 12. 3884 Hydropower Development 1995 Implementing
Table 3: Project Timetable
Steps in project cycle [ Date planned T Date actual Identification (Executive Project Summary) June 15, 1990 June 15, 1990 Preparation September 1990 September 1990 Appraisal September 1990 October 1990 Negotiations January 31, 1991 May 28, 1991 Board presentation August 20, 1991 December 10, 1991 Signing January 8, 1992 January 8, 1992 Effectiveness March 19, 1992 March 19, 1992 Completion December 31, 1994 January 1995** Closing March 31, 1995 March 31, 1995
8 Fisheries Development work financed by EGAT till December 1996, and by the Department of Fisheries subsequently, will continue until September 1997. -20-
TIIRD POWERSYSTEM DEVELOPMENT PROJECT
Table 4: Loan Disbursements: CumulativeEstimated and Actual (US$ Millions)
______I FY92 J FY93 [FY94 [ FY95 Appraisal estimate 8.0 32.0 49.0 54.0 Actual 9.2 33.5 45.9 54.0 Actual as % of estimate 115 105 94 100 Date of final disbursement March 1, 1995
Table 5: Indicators for Project Implementation
[L. SAR KEY IMPLEMENTATIONINDICATORS [ Estimated | Actual Pak Mun Proiect:
1. Completion Preliminary Works March 1991 January 1991
2. Completion of Bid Awards a. Civil Works December 1990 March 1991 b. Power Plant Equipment December 1990 August 1991 c. Hydraulic Equipment June 1991 December 1991 d. High Voltage Equipment June 1991 October 1991 e. Transmission System December 1991 January 1992
3. Completion of: a. Coffer Dams February 1994 February 1994 b. Powerhouse June 1994 November 1993 c. RCC Closure Dam September 1994 April 1994
4. Completion of Erection/Commissioning: a. Turbine Generator #1 June 1994 June 1994 b. Turbine Generator #2 September 1994 August 1994 c. Turbine Generator #3 December 1994 September 1994 d. Turbine Generator #4 February 1995 October 1994 e. Hydraulic Equipment June 1994 January 1995 f. High Voltage Equipment June 1994 October 1994 g. Transmission System September 1993 August 1993 Mae Moh Mine:
1. Lignite Handling System: a. Commencement of Bid Preparation/Invitation September 1990 April 1990 b. Commissioning May 1993 May 1993
2. Procurement of Auxiliary Mining Equipment: a. Start of bid preparation June 1990 June 1990 b. Start of Procurements January 1991 January 1991 c. Completion of Procurements July 1993 September 1996 -21-
THIRD POWER SYSTEM DEVELOPMENT PROJECT
Table 6: Key Indicators for Project Operation a!
|l. SAR Key OperatingIndicators | Estimated | Actual Energy Sales (GWh) in FY95 65.283 72,779 Average Sales Increase (FY91-95). % 10.7 13.1 Average Revenue (Baht/kWh) in FY95 1.82 1.31 Average Revenue (Baht/kWh) in FY91 1.44 1.26 Operating Revenues. Million Baht (FY95) 119.269 96,449 Average ROR, (FY91-95), % 11.7 6.6 Operating Revenue Increase (FY91-95). % 78 68 Average SFR (FY91-95), % 25 34
a! For EGAT overall.
Table 7: Studies Included in the Project
Purpose as defined at 1 j Study | appraisal/redefined | Status Impact of Study 1. System-Wide Control To determine the effect of using particular Completed The study confirmed the feasibility Strategies for Mae Moh Power control strategies on power plant of the strategies being implemented Plants combinations in the Mae Moh area: to on the power units in Mae Moh to identify the least cost solutions to the SO, control SO, emissions. The study emission problem; & to investigate also gives comparisons on the compliance issues vis-a-vis each strategy. feasibility of locating new coal plant The study also compares the merit of combinations in different locations. locating future plants in different locations in Thailand.
2. Acidic Deposition Study. To determine the extent and level of acid Completed Data collected and modelling studies depositions in Northern Thailand show that acid deposition rates from originating from the Mae Moh plants. & Mae Moh plants are quite high & to evaluate the effect of the control significant over wide areas strategies planned for installation on downwind. Results also show that deposition rates using different control strategies will be effective in combinations of existing plants and new reducing levels significantly. plants.
3. High Terrain Forest Ecology To evaluate the high terrain forest Completed Study finds the high terrain ecology Study ecology in the Mae Moh area & identify in a deteriorated state; however. the influences and effects on the ecology. primary cause/influences appear to be human disturbances, fires, & mining. SO2 emissions do not appear to have yet caused adverse effects on plants & living creatures. 4. Air Pollution Modeling Study To develop a dispersion model to measure Completed The model is being used at Mae ground level SO, concentrations based on Moh as part of the early warning prevailing meteorological conditions. system to warn power plants of hazardous air quality conditions. -22-
THIRD POWER SYSTEM DEVELOPMENT PROJECT
Table 8A: Project Costs a/
Appraisal estimate Actual Foreign Foreign Item Local exchange Local exchange costs costs Total costs costs Total (US$ million) (US$ million) Mae Moh Mine
First Lignite Handling System 8.00 12.00 20.00 2.70 15.25 17.95 Auxiliary Mining Equipment 0.67 14.50 15.17 5.22 9.83 15.05 Engineering 0.25 0.50 0.75 0.33 - 0.33 Civil Works 1.20 - 1.20 1.15 1.15 Dams & Diversions 0.88 0.88 - - Duties & Taxes 8.00 - 8.00 3.85 - 3.85
Base Cost 19.00 27.00 46.00 13.25 25.08 b/ 38.33
Physical Contingencies 1.90 2.50 4.40 - - - Price Contingencies 2.90 4.70 7.60 - - -
Total Cost 23.80 34.20 58.00 13.25 25.08 b/ 38.33
Pak Mun Dam
Preliminary Works 6.13 - 6.13 10.43 . 10.43 Compensation, Resettlement Environmental 22.41 - 22.41 32.30 - 32.30 Civil Works 25.85 17.88 43.73 46.30 29.13 75.43 Hydraulic Equipment 1.28 6.15 7.43 1.38 7.64 9.03 Electro-mechanical Equipment 5.02 41.10 46.12 16.47 44.66 61.12 High Voltage System 0.41 3.85 4.26 0.12 6.12 6.24 Transmission System 3.69 5.35 9.04 5.78 7.19 12.96 Engineering & Administ Overheads 4.64 - 4.64 13.29 - 13.29 Consulting Services 2.53 3.43 5.96 3.40 4.30 7.71 Duties & Taxes 9.92 - 9.92 4.12 - 4.12
Base Cost 81.88 77.76 159.64 133.60 99.04 232.65
Physical Contigencies 4.09 3.88 7.97 - - - Price Contingencies 5.15 4.90 10.05 - -
Total Cost 91.12 86.54 177.66 133.61 99.04 232.65
a/ Totals may not agree due to rounding. b/ Includes auxiliary equipment in the amount of US$2.96 million procured after loan closing. -23-
THIRD POWER SYSTEM DEVELOPMENT PROJECT
Table 8B: Financing of EGAT's PDP, FY91-92 (US$ Million)
l Planned Actual loans Source | Local J Foreign I Total Local Foreign I Total
Loans Outstanding - 60.0 60.0 _ 74.3 74.3 Proposed Loan 54.0 54.0 16.7 16.7 Other Borrowings 752.0 1,397.0 2,149.0 594.3 608.6 1,202.9 EGAT 670.0 - 670.0 935.1 - 935.1
Total 1,422.0 1,511.0 2,933.0 1,529.4 699.6 2,229.0 -24-
THIRD POWER SYSTEM DEVELOPMENT PROJECT
Table 9A: Internal Economic Rate of Return for EGAT's PDP (FY90-99) (1994 Price)
Fiscal Cost Stream | Benefit Stream _ Net Year CapitalCost O&M Cost FuelCost TotalCost IncremnentalAverage Selling Price Sale Benefit EnergySale (THB/kWh) Revenue (GWh) Current Constant Price 1994 Price _ __. 1983 1984 1985 26.91 26.91 (25.91 1986 146.08 146.08 (146.08 1987 1,013.74 1,013.74 ((1,013.74 1988 2,101.31 2,101.31 (2,10V31 1989 14,003.41 14,003.41 1.2625 1.5843 (14,003.41 1990 40,058.70 203.62 3,997.26 44,259.58 5,758 1.2594 1.4894 8,575.97 (35,683.61 1991 30,888.08 560.57 9,394.50 40,843.15 11,162 1.2553 1.4041 15,672.56 (25,170.59 1992 11,127.91 1,131.09 10,474.51 22,733.51 17,160 1.2168 1.3070 22,428.12 . . .(3.39' 1993 7,452.69 1,582.08 12,884.16 21,918.93 22,947 1.1983 1.2642 29,009.60 .- ,090.6T 1994 18,375.36 2,226.11 17,690.94 38,292.41 30,032 1.1976 1.1976 35,966.32 (2,326.09 1995 39,003.72 4,201.41 18,058.61 61,263.74 37,966 1.3413 1.2897 48,964.75 (12,298.99 1996 36,680.18 5,994.79 18,518.27 61,193.24 45,175 1.4363 1.3280 59,992.40 .(1200.84 1997 36,109.73 7,509.64 23,706.85 67,326.22 51,914 1.5334 1.3631 70,763.97 . 3,437.75 1998 22,757.59 8,253.45 24,337.48 55,348.52 58,862 1.5556 1.3297 78,268.80 .22,920.28 1999 10,354.46 11,522.01 18,155.21 40,031.68 66,063 1.6997 1.3970 92,290.01 52,258.33 2000 11,522.01 18,155.21 29,677.22 66,063 1.6997 1.3970 92,290.01 62,612.79 2001 11,522.01 18,155.21 29,677.22 66,063 1.6997 1.3970 92,290.01 62,612.79 2002 11,522.01 18,155.21 29,677.22 66,063 1.6997 1.3970 92,290.01 62,612'79 2003 11,522.01 18,155.21 29,677.22 66,063 1.6997 1.3970 92,290.01 82,612.79 2004 11,522.01 18,155.21 29,677.22 66,063 1.6997 1.3970 92,290.01 62,612.79 2005 11,522.01 18,155.21 29,677.22 66,063 1.6997 1.3970 92,290.01 62,612.79 2006 11,522.01 18,155.21 29,677.22 66,063 1.6997 1.3970 92,290.01 62,612.79 2007 11,522.01 18,155.21 29,677.22 66,063 1.6997 1.3970 92,290.01 62,612.79 2008 11,522.01 18,155.21 29,677.22 66,063 1.6997 1.3970 92,290.01 . v62,612.79 2009 11,522.01 18,155.21 29,677.22 66,063 1.6997 1.3970 92,290.01 62,612.79 2010 11,522.01 18,155.21 29,677.22 66,063 1.6997 1.3970 92,290.01 62,612.79 2011 11,522.01 18,155.21 29,677.22 66,063 1.6997 1.3970 92,290.01 62,612.79 2012 11,522.01 18,155.21 29,677.22 66,063 1.6997 1.3970 92,290.01 62,612.79 2013 11,522.01 18,155.21 29,677.22 66,063 1.6997 1.3970 92,290.01 62,612.79 2014 11,522.01 18,155.21 29,677.22 66,063 1.6997 1.3970 92,290.01 62,612.79 2015 (60,062.04) 11,522.01 18,155.21 (30,384.82 66,063 1.6997 1.3970 92,290.01 122,674.83
Total 210,037.83 227,536.931 447,701.15 885,275.91 - I 1,938,572.68 1,053,296.77
P.V 1 27 5,186.15 f 89,559.53!1228.518.8 593,264.53 - 834,79-.92 241,526.39 Economic Internal Rate of Return = 19.19 %
Notes: All Costs are basedon 1994price level. Presentvalue is calculatedwith 1994base year -25- THAILAND THIRD POWER SYSTEM DEVELOPMENTPROJECT Table 9b: Equalizing Discount Rate for Pak Mun Hydropower Project (All figures in Baht million unless otherwise stated) 1/ Pak Mun4134 MW Gas Turbine 3x50 MW Year Capital O & M Total Capital O & M Inc.Fuel (HFO) Total Net Cost2J Cost Benefits Cost2/ Cost Mil Lt. THBALt. Total Costs Benefits 1988 0.0 0.0 0.0 0.0 1989 47.0 47.0 0.0 0.0 (47.0 1990 160.3 160.3 0.0 0.0 (160.3 1991 483.1 483.1 0.5 0.0 0.5 (482.6 1992 461.5 461.5 241.7 0.0 241.7 (219.8 1993 2,669.1 2,669.1 1,634.4 0.0 1,634.4 (1,034.7 1994 1,055.4 59.2 1,114.6 573.5 68.6 9.3 2.96 27.5 669.6 (445.0 1995 865.3 59.2 924.5 68.6 108.7 3.05 331.5 400.1 (524.4 1996 59.2 59.2 68.6 108.7 3.14 341.5 410.1 350.9 1997 59.2 59.2 68.6 108.7 3.24 351.7 420.3 361.1 1998 59.2 59.2 68.6 108.7 3.33 362.3 430.9 371.7 1999 59.2 59.2 68.6 108.7 3.43 373.1 441.7 382.5 2000 59.2 59.2 68.6 108.7 3.54 384.3 452.9 393.7 2001 59.2 59.2 68.6 108.7 3.64 395.9 464.5 405.3 2002 59.2 59.2 68.6 108.7 3.75 407.7 476.3 417.1 2003 59.2 59.2 68.6 108.7 3.86 420.0 488.6 429.4 2004 59.2 59.2 68.6 108.7 3.98 432.6 501.2 442.0 2005 59.2 59.2 68.6 108.7 4.10 445.6 514.2 455.0 2006 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2007 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2008 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2009 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2010 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2011 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2012 59.2 59.2 227.0 68.6 108.7 4.22 458.9 754.5 695.3 2013 59.2 59.2 1,503.0 68.6 108.7 4.22 458.9 2,030.5 1,971.3 2014 59.2 59.2 396.0 68.6 108.7 4.22 458.9 923.5 864.3 2015 14.7 59.2 73.9 68.6 108.7 4.22 458.9 527.5 453.6 2016 5.0 59.2 64.2 0.5 68.6 108.7 4.22 458.9 528.0 463.8 2017 132.4 59.2 191.6 14.7 68.6 108.7 4.22 458.9 542.2 350.6 2018 43.6 59.2 102.8 131.4 68.6 108.7 4.22 458.9 658.9 556.1 2019 154.6 59.2 213.8 177.5 68.6 108.7 4.22 458.9 705.0 491.2 2020 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2021 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2022 2.6 59.2 61.8 68.6 108.7 4.22 458.9 527.5 465.7 2023 3.0 59.2 62.2 68.6 108.7 4.22 458.9 527.5 465.3 2024 55.2 59.2 114.4 68.6 108.7 4.22 458.9 527.5 413.1 2025 232.8 59.2 292.0 68.6 108.7 4.22 458.9 527.5 235.5 2026 34.3 59.2 93.5 68.6 108.7 4.22 458.9 527.5 434.0 2027 16.0 59.2 75.2 68.6 108.7 4.22 458.9 527.5 452.3 2028 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2029 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2030 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2031 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2032 59.2 59.2 227.0 68.6 108.7 4.22 458.9 754.5 695.3 2033 59.2 59.2 1,503.0 68.6 108.7 4.22 458.9 2,030.5 1,971.3 2034 59.2 59.2 396.0 68.6 108.7 4.22 458.9 923.5 864.3 2035 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2036 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2037 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2038 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2039 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2040 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2041 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2042 59.2 59.2 68.6 108.7 4.22 458.9 527.5 468.3 2043 (166.7) 59.2 (107.5) (1,063.0) 68.6 108.7 4.22 458.9 (535.5) (428.0)
1/ 1995 Price Level. Equalizing Discount Rate = 11.92% 2/ Capital cost includes HV switching andtransmission system THIRDPOWER SYSTEM DEVELOPMENT PROJECT
Table 9C: Internal EconomicRate of Return for Mae Moh Mine ExpansionUnit 8-9 (Stage 2)
Fiscal Capital and O&M Cost Electricity Lignite Transfer Value of Total Benefit Net Cash Flow Year Lignite Power Plants Total Generated Requirement Price of Electricity Mine Mine & Mine Mine & Mine & Trans. Lignite Generated Alone Power Plants Alone Power Plants System (GWh) (M Ton) (USD/Ton) (c/kWh) 1985 38.25 38.25 -38.25 1986 47.64 47.64 -47.64 1987 127.21 127.21 26.39 -127.21 1988 158.84 158.84 25.73 -158.84 1989 9.40 196.95 206.35 525.00 d/ 0.42 d/ 27.03 6.27 11.35 30.28 1.96 -176.06 1990 30.09 51.94 82.02 3,300.00 d/ 2.71 d/ 27.02 5.42 73.22 164.55 43.13 82.53 1991 40.81 42.19 83.00 4,321.00 dl 3.67 d/ 26.60 5.09 97.62 202.34 56.81 119.34 1992 38.36 17.30 55.67 4,353.00 d/ 3.67 d/ 25.28 4.74 92.78 189.83 54.42 134.16 1993 35.22 17.30 52.53 1,194.00 dl 1.65 d/ 24.12 5.09 39.80 55.91 4.58 3.39 1994 38.71 17.30 56.01 2,066.00 d/ 1.77 d/ 23.71 4.70 41.96 89.33 3.25 33.32 1995 36.83 17.30 54.13 1,928.00 d/ 1.74 dI 24.17 5.04 42.05 89.40 5.22 35.27 1996 51.16 17.30 68.47 4,205.00 3.29 24.58 5.16 80.87 199.62 29.70 131.15 1997 42.90 17.30 60.20 4,205.00 3.29 24.79 5.23 81.56 202.33 38.65 142.12 1998 42.55 17.30 59.85 4,205.00 3.29 25.04 4.82 82.38 186.47 39.83 126.61 1999 40.79 17.30 58.09 4,205.00 3.29 25.25 4.72 83.07 182.60 42.28 124.50 2000 40.79 17.30 58.09 4,205.00 3.29 25.46 4.26 83.75 164.80 42.96 106.71 2001 50.11 17.30 67.41 4,205.00 3.29 25.54 4.26 84.03 164.80 33.92 97.39 2002 43.78 17.30 61.08 4,205.00 3.29 25.63 4.26 84.30 164.80 40.52 103.72 2003 41.61 17.30 58.91 4,205.00 3.29 25.71 4.26 84.58 164.80 42.97 105.89 2004 47.94 17.30 65.25 4,205.00 3.29 25.84 4.26 84.99 164.80 37.04 99.55 2005 41.40 17.30 58.70 4,205.00 3.29 25.92 4.26 85.26 164.80 43.87 106.10 2006 42.31 17.30 59.61 4,205.00 3.29 26.00 4.26 85.54 164.80 43.23 105.19 2007 42.88 17.30 60.19 4,205.00 3.29 26.00 4.26 85.54 164.80 42.65 104.61 2008 42.88 17.30 60.19 4,205.00 3.29 26.00 4.26 85.54 164.80 42.65 104.61 2009 39.20 17.30 56.51 4,205.00 3.29 26.00 4.26 85.54 164.80 46.33 108.29 2010 45.44 17.30 62.75 4,205.00 3.29 26.00 4.26 85.54 164.80 40.09 102.06 2011 48.72 17.30 66.02 4,205.00 3.29 26.00 4.26 85.54 164.80 36.82 98.78 2012 38.46 17.30 55.77 4,205.00 3.29 26.00 4.26 85.54 164.80 47.08 109.04 2013 37.69 17.30 55.00 4,205.00 3.29 26.00 4.26 85.54 164.80 47.85 109.81 @ P.V. 10%DR. Net Present Value at 1994 470.03 327.82
EconomicInternal Rate of Return >150.00X 13.52% Notes: a/ Asumed station service lou 5% and transmission loss of 3%. b/ All cost are baed on 1994 price level. c Present value is calculated with 1994 base year. d/ Actual Record 3a/43421:MINE29EI 2D-02-96 -27-
THIRD POWER SYSTEM DEVELOPMENT PROJECT
Table 10: Status of Legal Covenants
Agreement Covenant Orignal Revised Description of Covenant Section Type Fulfillme Fulfillm Comments nt Date ent Date
LOAN AGREEMENT
Section 5.01 F A - (a) Have accounts & financial Complied every (b) statements audited each year. fiscal year (FY).
Section 501 F A - (b) Furnish certified copies Complied every (b) of financial statements to year. the Bank 6 monchs after end of each FY.
Section 502 F A - (a) Continue to operate each Complied. (a) of its lignite mining operations as separate accounting centers; maintain separate accounts and financial statements for each operation.
Section 5.02 F A - Continue to set lignite transfer Complied every (b) price for each operation year. according to methodology agreed between Bank and EGAT.
Section 5.03 F A - Maintain self-financing ratio Complied every (a) (SFR) of at least 25% for each year. FY.
Section 5.03 F A - Review and inform the Bank Complied. (b) whether the Borrower will meet the covenanted SFR for current & following fiscal years.
Section 5.03 F A - Maintain a provision for fuel Complied. Since (b) adjustment cost in the tariff June 1992 the schedule. tariff structure allowed adjustment of sale price based on changes in fuel, taxes and demand side management costs.
Section 5.04 F A - (a) Shall not incur debt Complied every (a) greater than 1.5 times of year. capital plus surplus.
Section 5.04 F A - (b) Shall not incur short and Complied every (b) medium term debt exceeding year. 15% or all debt.
Section 5.05 F A - (i) Mine Department shall not Complied. (a) incur debt greater than 1.5 times its capital plus surplus.
Section 5.05 F A - (ii) Internal cash generation Complied except in (a) of Mine Department shall FY95 when debt not be less than 1.3 times service coverage the maximum debt service. ratio was at -0.03. -28-
Agreement Covenant Orignal Revised Description of Covenant Section Type Pulfillme Fulfillm Comments nt Date ent Date
Schedule SA M,T 1/1992 - A. SWVIIRiNfI'AL PROTKCTII9 (1) Mae Moh Mine Expansion (a) Implement action plan to Actions were taken monitor & reduce to reduce dust atmospheric dust to levels; however, levels agreed with Bank. dust levels at times surpass standards at some locations. Further control effort being undertaken.
(b) Implement by October Several measures 1992 a satisfactory plan implemented to
to reduce SO2 levels in reduce SO, levels Mae Moh Valley. following 1992 incident. Levels still high at times. FGDs have been installed on units 12 & 13, and will be completed for units 4 - 11.
(c) Complete acid rain & Acid rain study plant ecology on high completed & terrain studies; measures being exchange views on implemented with findings with plans to Bank support. implement environmental Plant ecology study control measures. being revised after review by Borrower.
(d) Install real time air Real-time air quality monitoring monitoring system system to warn plant based on a operators on hazardous dispersion model metereological and installed in 1994. emission conditions.
(e) Implement satisfactory Measures, including action plan to monitor installation of and reduce water wetlands, pollution in Mae Moh instituted in Mae reservoirs. Moh. Water pollution remains high; however, further control effort being studied.
(f) Continue mine Reclamation effort reclamation effort continuing satisfactory to Bank. according to plans. Tree planting progressing as required.
Cg) Carry out EIA studies Expansion plans prior to expansion of shelved pending the the Mae Moh-Lampang solution of air complex. quality problems in Mae Moh. -29-
Agreement Covenant Orignal Revised Description of Covenant Section Type Fulfillme Fulfillm Comments nt Date ent Date
(2) Pak Mun Hydropower
(a) Implement plan for Plan executed & rehabilitation of rehabilitation construction site and measures completed access road. satisfactorily.
(b) Strengthen conservation Conservation of Kaeng Tana National measures were fully Park for 5 years . implemented. beginnning 1991.
(c) Implement a fisheries Fisheries development plan development plan satisfactory to Bank. being implemented satisfactorily and is to continue till September 1997.
(d) Implement plan EGAT implemented a satisfactory to Bank for satisfactory health prevention and control services program. of endemic diseases. MOPH implementing a program for monitoring, training & prevention. Implementation tardy and is unsatisfactory till 1995. Progress unknown recently.
(e) Minimize run-off of In full compliance. construction wastes; reclaim spoil areas in timely manner; prevent damage to archeological sites; prevent damage to agricultural and resettlement areas.
(f) Furnish details to Bank Complied. on monitoring program of Environmental Mitigation Implementation Plan.
(3) Resettlement
Implement a plan, In compliance. The satisfatory to the Bank, for Borrower exceeded the resettlement & the compensation compensation of persons levels and schemes affected by the Pak Mun agreed to with Bank project, according to at appraisal. settlement and compensation plans agreed to with the Bank.
B. OTHRR (1) (a) Appoint a board of Complied. experts to review design and construction of Pak Mun Dam. -30-
Agreement Covenant Orignal Revised Description of Covenant Section Type Fulfillme Fulfillm Comments nt Date ent Date
(b) Employ experts in Complied. specilized fields such as roller-compacted concrete, bull turbines and fish ladders.
GURANTEE AGREEMENT
Section 3.01 F A Self-financing ratio (SFR) of In Compliance. (a) not less than 25% for the power subsector.
Section 3.03 M - Guarantor shall carry out Part B Partial Compliance. of the Project & shall discuss Parts of with the Bank findings and strengthening recommendations arising out of program still being the study under Part B. executed.
Section 3.04 M - Guarantor shall establish Not complied yet. standards for atmospheric emissions from industries
Section 3.05 M - Guarntor shall carry out Training to be training under Part B. implemented.
MINUTES OF NEGOTIATION
M - Part B of the Project
1. Strengthening Agencies: The Complied partially agencies to be provided so far. Training technical assistance and and technical training will be: NEB, DIW, assistance is to be DMR & PWD. implemented.
M 2. EGAT to make available for Complied. inspection to the public documents on the EIA, Environmental Mitigation plan, and Resettlement Plan for Pak Mun project.
F = Financial, M = Management, T = Technical. A = Effective and fulfilled under previous loans. -31-
TEIRD POWERSYSTEM DEVELOPMENT PROJECT
Table 11: Bank Resources: Staff Inputs
[ Task Input (Staff weeks) Project Preparation 54.6 Cofinancing Lending Development Project Appraisal 24.8 Loan Negotiation 25.7 Project Supervision 43.7 ImplementationCompletion Report 10.2
TOTAL 159 -32-
TEHRDPOWER SYSTEMDEVELOPMENT PROJECT
Table 12: Bank Resources: Missions
Stage of | Month/ Number Days in Specialized Performance Typesof project year of field a/ staff skills rating problems c/ cycle .e persons representedb/ status Through Appraisal 6/90 1 3 PE 1 7/90 2 3 EN, ECO 1 10/90 7 6 PE, HPE, FA, 1 RS, ME, FS, HS 6/91 1 13 ME 1 Supervision 3/92 1 3 HPE 1 1 4/92 4 5 PE, HPE,EN, 1 1 FA, RS 7/92 4 6 PE, HPE, EN, 1 1 CON 5/93 6 11 PE, EN, FA, 1 2 FS, HS, RS 1/94 5 13 PE, HPE, RS, 1 2 FS, HS, FA 7/94 5 11 PE, HPE, RS, 1 2 7/94______5______HS, FS, FA Completion 1 2/96 1 17 CON
/a Includestime devotedto other operationsin the country.
/b PE = Power Engineer,HPE = HydropowerEngineer, EN = EnviromnentalEngineer, ME = MiningEngineer, FA = Financial Analyst, ECO = Economist, FS = Fisheries Specialist, HS = Health Specialist, RS = Resettlement Specialist,CON = Consultant
/c I = No. of minor problems,2 = Procurementdecision delays/progress, 3 = Disbursement,4 = ProjectManagement
IMPLEMENTATION COMPLETION REPORT
THAILAND
THIRD POWER SYSTEM DEVELOPMENT PROJECT (LOAN 3423-TH)
APPENDIX A - MISSION AIDE-MEMOIRE
-33- Appendix A Page 1 of 3
Wdrk Bank Mission, Feb 1ruary3toTer l
]. A World Bankr Mission comprising of Mr. Brahmn Prasher (consultant) visited EGAT from February 13 to February 28, 1996 for a field completion mission to prepare the Implementation Completion Report (ICR) for the Third Power System Development Project (Loan 3423 - TH). The mission gratefully acknowledges the excellent cooperation and hospitality provided to it by EGAT. The mission has been favorably impressed with the level of assistance extended in prviding the Bank with infirmnation on the technical, financial, enviromental, implementation and operational aspects of the projects financed under Loan 3423-TH. 2. EGAT and th; rA;ssion discussed the Borrwer's role in preparing its final evaluation of the project implementation and operation experience, as required under the Loan Agreement, including preparation of a suntmary report which is to be included in the ICR. EGAT will transmit these reports upon completion within a few weeks of the end of the present Bank mission. The Bank will oomplete the draft ICR on this Loan within the next two months and transnit the draft to EGAT for comment. The tentative main findings with respect to this ICR mission are as folows.
A. Mae Moh Mine Expansion (Stage 2) 3. This component of the project has been completed satisfactorily, and the implementation objectives have been substantially realized in temis of the production targets, costs and benefits. The mine is cuntly operating at levels well beyond the targets anticipated with the completionof power units 8 and 9. Environmental and meteorological monitoring equipment planned for acquisition and installation at Mae Moh under Bank Loans 3138-TH and 3423-TH have for the most been procured and is beiri; effectively used for monitoring the environment. 4. The installation oi flue -as desulfurizationdevices (FGD) on power units 12 and 13 was completedin 1995. This has significantly curtailed the emissionlevel for sulfur dioxide from these two units by approximately90 per cent. FGD's are expected to be instaled on power units 1O and l1 by the end of 1996, and on units 8 an,d 9 shortly thereafter. EGAT plans to issue tenders for the installation of FGD s on units 4 to 7 by mid-1996. With completion of installationof a realtime air quaity monitoring network and measures to curb overall generation capacity during the cool season in conjunction with the use of higher quality low sulfur lignite, EGAT has been able to avoid the recurrence of air pollution incidents similar to the 1992 incident 5. Water quality downstrean at Mae Moh has not shown significant improvement during implementationof this project with respect to conductivity, total solid and sulphate content levels. Some recent data availablefirm the three wetlands being used to process water from the settling ponds show some mitigation capabilities with respect to total dissolved solid content ; however, sulphate ion content does not appear to show any improvementeffects. EGAT will intensify further effort to attempt to imprve water quality at Mae Moh. -34- Appendix A Page 2 of 3
B. Pak MunrLydropoweEr'rQject
6. The imple,nmenlation of the Pak Mun projecl is essentially complete with respect to EGAT s role, and project objectives with respect to the generation and irrigaiion aspects are being realized. For the first year of operation (Octoberl994 to September 1995) for which generation data is available, the Pak Mun dam generaled a total of 216 Gwh of electnicity. It is expected that the dam will achieve its annual generation target of 281 Gwh in subsequent years.
7. With regard to the resettlemnent and compensation issues for displaced villagers, monitonng of health and provision of health services for villagers affected by the dam project, construction of mad and bridge facilities around the dam project, and other related activities specified during appraisal of the project, EGAT has substantially complied with the requirements and met the objectives intended for the projecL EGAT has provided compensation to 2,932 households which were impacted with respect to their fishing income, according to a finding by a Government Committee. Three thousand additional claims have to be reviewed by the Committee before compensation claims can be resolved.
8. The miision and EGAT discussed future operations, of the components implemented under this Loan, and agreed that benefits can best be maximized and assessed by monitoring performance and other indicators being currently used witliin EGAT for each component project. With regard to the envirnmental quality and inpact mitigation actions required for each of the projects, the operational plan in future will include the items outlined in the Attachment
.3 y4.,&
Boonshai Jiwalai Brahm D. Prasher Deputy Governor-Mining Consultant Electricity Generating East Asia & Pacific Region Authority of Thailand World Bank
EGAT has subsequently asked for substitution of para. 5 as under:
To improve the water quality management,EGAT has increased the frequency of water samplingand analysis. In addition, EGAT also put the automaticwater quality and quantitysensors to collect the data for 24 hours. Some recent data availablefrom the two wetlands being used to process water from the settling ponds shows some mitigationcapabilities with respect to total dissolved solid content. EGAT plans to control the operationof wetland in June 1996 and will intensify further effort to attempt to improve water quality at Mae Moh. -35- Appendix A Attachment Page 3 of 3
oirntiv suLPliaD-fuL Third-Power-SystemU DeJeyQpment prWe.ct JLnJA42IlJ1Ii
A. Mae Moh Mine Expansion Project
- Continue monitoring air quality regularly and frequently at the mine and power complex, worker residential areas, and surmunding villages at Mae Moh until all FGD s are installed on power units to adequately suppress SOx levels. - Continue and effectively use watering and other measures in mining operations to contrl TSP levels at the mine pit and surrounding areas. Monitor contractor mining, overburden removal, and dumping practices to reduce dust levels. - Prior to completion of the instalation of FGD s on a majority of the power units, continue stocking and effective blending practices to ensure use of low sulfur lignite during unfavorable weather conditions in the cool seasorL - Continue the practice of reducing electricity output at Mae Moh during adverse meteorological conditions in the cool season, wben SOx levels are likely to exceed air quality standards. Continue to schedule plant maintenance work during the cool season when unfavorable meteoxological conditions exist
- Monitor the physical and chemnicalconposition of water streams and bodies at the Mae Moh complex, and downstream in the valley.
- Intensify effort to analyze, develop an understanding, and mitigate the water quality problem at Mae Moh. Monitor te input and output quAlity of the waters in the wetlands to assess the effectiveness of wetlands for removal of sulphate and other soluble species.
- Identify more funding for procuring an automatic eady warning system to wam power plant operators and EGAT Headquarters vith respect to hazardous air quality situations.
B. Pak Mun Project
- Continue providing medical and other related services to resettled villagers, according to plans specified during the mid-temi review.
- Periodically continue to engage the services of an independent social science agency to assess the economic and social conditions of villagers whAowere resettled.
- Monitor the results of the Fisheries Development Componen of the project being implemented by the Department of Fisheries, and provide the Bank with information, when requested, on the accomplishments of the prgram
- Monitor the data, results and accomplishments of the Health Mitigation Plan, as being implemented and reported by the Ministry of Public Healdt Provide information periodically to the Bank on the accomplishments of the plan
IMPLEMENTATION COMPLETION REPORT
THAILAND
THIRD POWER SYSTEM DEVELOPMENT PROJECT (LOAN 3423-TH)
APPENDIX B - BORROWER'S CONTRIBUTION TO REPORT
-36- -36- i~~~~~~~ageAppendix1lof B 8 ElectricityGenerating Authority of Thailand
NONTHABURI,THAILAND CABLE: EGATNONTHA8URI TELEX: 82711EGAT TH
NO. EGAT 51502/ t March 2e , 1996
Mr. Darayes Mehta Principal Power Engineer, Infrastructure Operations Division Department I, East Asia and Pacific Region lntemational Bank for Reconstruction and Development 1818 H. Street, N.W., Washington D.C. 20433 U.S.A
Dear Sir,
Re : Implementation Completion Report for the Third Power System Development ProjecL (Loan No.3423-TI-) Sub Summary Report
As requested, we are pleased to submit herewith the Summarv Reports of the projects financed from Loan No. 3423TH to be appended in the Implementation C-ompletion Report for the Third Power System Development Project. These reports are prepared in two parts, * Pak Mun Hydro Electric Project and Mae Moh Mine Expansion Project for Power Plant Units 8 and 9, Stage 2.
Please let us know should any information or clarification is required.
With best regards.
Yours sincerely,
(C-hamlong Uchukomol) Assistant Govemor,MIne Oreration
Mine Central Services Office Tel. 436-5076 Fax. 436-4675 Encl Summary reports: 7 pages CC Mr. Brahm Prasher -37- Appendix B Page 2 of 8 SUMMARYREPORT LOAN NO. 3423TH FOR MAE MOH MINE EXPANSION PROJECT FOR POWER PLANT UNITS 8 & 9, STAGE 2 AND PAK MUN HYDROELECTRIC PROJECT
INTRODUCTION
As rapid economic growth in Thailand had been accompanied by increasing energy consumption, commercial energy demand grew at an average rate of 5.5% between 1979 and 1989. It was indicated that electricity consumption had increased faster than energy consumption as a whole, averaging 14% per annum for the last three years. For "his reason, the Third Power System Development Project was included in EGAT s Power Development Plan (PDP) to assure that electricity capacity met the demand growth. The Project was comprised of two subprojects, i.e., the Mae Moh Mine Expansion Project and the Pak Mun Hydro Electric Project.
Following the IBRD Mission's appraisal of EGAT's Third Power System Development Project in October 1990, Loan No.3423TH was agreed to be provided by the Bank in an amount of US$ 54.0 million ; US$ 30.0 million provided for the Mae Moh Mine Expansion Project for Power Plant Units 8 and 9, Stage 2 and US$ 24.0 million for the Pak Mun Hydro Electric Project. The Loan Agreement was signed on January 8, 1992 based on the objectives to assist EGAT in optiniizing its investment decisions and help meet the growth in power demand over the medium term at least cost and to enhance the environmental capabilities of the power and mining sectors. -38- ~~~~~~AppendixB Page 3 of 8
MAE MOH MINE EXPANSION PROJECT FOR POWER PLANT UNITS 8 AND 9, STAGE 2
1. PROE;CT BACKGROUN A fIECIVE
The Mae Moh Mine Expansion Project for Power Plant Units 8 and 9, Stage 2 was a subproject to the EGAT s Third Power System Development Project It was approved by the Cabinet in the same package and with the same objective as the Project, Stage 1 on December 29, 1987. The total estimated cost for the two stage implementation was approved at 6,723.77 million baht of which 2,194.36 million baht allocated for the Stage 2 Project The Mine Expansion Project, Stage 2 covering the period 1992 - 1996 was established with on objective to assure a firm lignite production of 9.5 million tonnes per year for the nine thermal power units at 1,425 MW total generating capacity at Mae Moh. Major components of the Project intended to be financed from IBRD loan proceeds included supply and installation for the first lignite coveyor system extension, the procurement of auxilliary equipment, and necessary environmental equipment to strengthen the capabilities to cope with the environmental and ecological impacts associated with mining activities.
2. PROJICT DES-CIPTION
The Mae Moh Mine Expansion Project for the Power Units 8 and 9, Stage 2 was established to increase the lignite production upto 9.5 million tonnes per year for supply to the nine power stations to generate 1,425 MW electricity. In implementation, EGAT had requested loan in an amount of US$ 54.0 million from the World Bank under the Loan Agreement No. 3423TH for the Third Power System Development Project; US$ 30.0 million was agreed to be utilized for procurement of mine and environmental equiprnentfmstruments in various currencies for the mine expansion and US$ 24.0 million for civil works associated with hydro power plant construction at Pak Mun. During the project period, the overburden removal in the North East pit of 244.5 million cubic meters was planned to be contracted out wholy funded by EGAT while the entire lignite excavation to be undertaken by EGAT s own effort. In this connection, the environmental monitoring network was intended to be imnprovedfor environmental performance efficiency.
8. IMPLEMENTATIfN
The Mae Moh Mine Expansion Project could be regarded successfully implemented especially in terms of the production targets and schedules. The mine was capable to increase lignite production to supply to the nine power stations as required and the long term overburden removal contract of 244.5 million cubic meters was efficiently performed by the private Contractor. The strategy to contract out such a vast volume of overburden had reduced considerable investment cost on major equipment for mine expansion. -39- Appendix B Page 4 of 8
Regarding the procurement of equipment funded from Loan No. 3423TH to support the mine expansion of the Stage 2 Project, the supply as well as installation of the first lignite conveyor extension equipment were carried out in accordance with the schedule. Other equipment having been approved to be purchased from loan proceeds was mostly delivered and put into operation as scheduled except for a few items agreed to be disbursed from the loan balance but finally funded by EGAT totalling US$ 2.963 million due to the loan closing in March 1995. All environmental equipment had been in use and contributed to the environmental monitoring network within the power plant and mining project areas.
4. RESULTS Based on the Loan Agreement No. 3423TH, the Mae Moh Mine Expansion Project to meet the fuel requirement of the nine power stations was completed satisfactorily. The technically and financially sound management as well as harmonious cooperation among parties concerned, i.e., the Bank, Government agencies, consultants, contractors, and EGAT staff obviously resulted in achievement of the project in compliance with the Loan Agreement and financial covenants. In addition to the increasing electricity supply to serve the ever rising needs as planned for the Third Power System Development Project, the Mining Sector also gained a more sophisticated project planning and management experience which regarded useful for future mine expansion at larger scale. The overall satisfactory result of the major as well as related mine activities under the Project, Stage 2 should be accredited to the Bank Mission, the Government agencies the independent consultants, and consultants under the Australian aided program, for their valuable recommendationsand good cooperation which greatly contributedto the efficient and effective carrying out of the project
5. LESSONS LEARNED
During the project period, EGAT experienced certain procurement lessons which positively as well as negatively effected the management Namely, the cost of import duties and taxes for the first lignite conveyor extension equipment was saved by a significant amount due to declaration of the project to be a turnkey construction project Before the project commencement 30 - 40 per cent of the total equipment expenses was estimated for import duties and taxes (excluding VAT) based on the supply contract for equipment but only 5 per cent was spent when the first lignite conveyor extension project had been affirmed as construction work. Consequendy, the actual duties and taxes were levied in an amount of US$ 3.85 million instead of US$ 8.0 million which is much lower than budget Regarding negative lessons learned, the problems during procurement process of some equipment items also caused delay and additional workforce particularly items for mine specific purposes. Sometimes there were no authorized distributors or representatives of such items in Thailand to assist in information provision for decision making during the procurement process so extended time for certain steps was unavoidable. Besides, the specific designs and mamufacturingof these items was more time consuming than expected and thus effected the delivery schedule. -40- Appendix B Page 5 of 8 SUMMARY IMPLEMENTATION COMPLETION REPORT PAK MUN HYDROELECTRIC PROJECT UNITS 1-4
1. PROJECT BACKGROUND
Mun River, the most important river of Thailand's northeastem region, flows from the west to the east. The Mun River has catchment area of 117,000 sq km or about 700/o of the overall area of the northeastem region. Rainfall of the basin drains into the Mun River before finally discharging into the Mekong River. Annual runoff of the river is about 24,000 MCM or 760 cms. Due to this enormous quantity of water, the National Energy Authority (NEA) had initiated the developmentof this water resource. With cooperation from the Govemment of France, preliminary survey through feasibility study of the project had been concluded in 1970, and the damsite was selected at Kaeng Tana. In May 1979, the project had been transferred to the Electricity Generating Authority of Thailand (EGAT) to continue further study, and the result confirmed that the project implementation was still probable. However, according to ecological and environmental studies which were fulfilled in January 1982, it was found that approximately 4,000 households would have had to be relocated due to the impoundment of the reservoir. Consequently, the project has been temporarily shelved. Until in 1985, EGAT had reviewed the project and investigated the site once more, and this time determined to move the project location upstream by 1.5 km; lowered the retention level of the reservoir so that the Kaeng Tana, which is an important part of the national park, would not be flooded. This also has substantially reduced the number of resettlers.
For the Pak Mun HydroelectricProject, ecological and environmental studies had also been conducted in parallel with an engineering study; this, therfore, resulting in much more useful information to protect design modification which substantially reduced the impact on community and environment. In addition, several counter measures were suggested to cope with individual aspect of the project such as resettlement, fishery, public health, communicable diseases etc. -41- Appendix B Page 6 of 8
2. PROJECT OBJECTIVE
Currently, demand for electricity in the northeast is double the existing production capacity. The demand for power is increasing every year as a result of economic expansion. Electricity used in the region is transmitted from the central and northern regions of the country as well as being purchased from Laos. Electricity supplies in the northeast are consequently unstable. Problem in the electricity transmission system causes lengthy black-outs, since power is generated hundreds of kilometers away in other parts of the country.
To solve this problem, it is necessary to build power plants in the northeast, at the point of consumption, therefore, 4I'e Hydroelectric Power Plant of the Pak Mun Dam Project was put into EGA.T's electricity develcpment plan under the Sixth National Economic and Social Developme:t iPlan (1987-1991). The Cabinet approved construction of the project on May 15, 1990. The project construction budget approved by the Cabinet amounts to THIB 3,880 million. This figure was increased, in August 1991, to THB 6,600 million because of increases in expenditure brought on by economic situations, both locally and overseas. The increased budget was considered and approved by the committee of the Office of the National Economic and Social Development Board (NESDB) on August 27, 1991. -42- Appendix B Page 7 of 8
3. PROJECT IMPLEMENTATION
The Pak Mun Project was first implemented in June 1990, right after the cabinet approved the project. The project mainly divided into 2 categories i.e. construction and environmental works. Most of construction work (except preparatory works) was implemented on contract basis, assisted by SOGREAH and TEAM CONSULTINGas the consultant. Environmental work was implemented by EGAT, in collaborated with others concemed govemment agencies under the close supervision of The Committee for Provision of Assistance to Affected People by Implementationof Pak Mun Project which was appointed by the Prime Minister. The Project's significantworks comprise: 1. Civil Works: Compose diversion work, construction of cofferdams, RCC. closuredam, spillway, powerhouse etc. Work started in May 1990 by construction of cofferdam phase 1 and river diversion. The civil works was completed in April 1994 as planned. 2. Electro-mechanical Equipment: Work involved mainly on supply and installation of 4 x 34 MW, bulb type, generating units. Installation work was started from the Unit #1 in February 1993 until completed by Unit #4 in October 1994 and all units can be synevonized into EGAT power system since October 1994 as scheduled.
3. Compensation and Resettlement: All works have been done under the closely supervision of the committees set up by the Govemment. The project has been widely monitored by local public and abroad. The affected villager can recieve high compensation and so many choices of resettlement. 4. EnvironmentalImpact Mitigation: All items have successfully excecuted with the full support from all involved departments. There are 2 public-interesting items that should be mentioned of: 4.1 Fishery Development Plan: The Pak Mun's fish ladder has proved itself workable. It was found that numerous kinds of fish have migrated over the ladder, particularly during rainy season. Began in 1994, EGAT and Department of Fisheries have gradually released an amount of 5 million fingerlings (11 different species) and 7 nillion young prawns in the Mun River, upstream of Pak Mun Dam. According to the data gathered at the end of 1995, an accumulated weight of 52,000 kilograms of tfsh and 15,000 kilograms of pawns have been caught from upstream of Pak Mun Dam. It was also planned to release about 10 million of fingerlings and young pawns, this year. 4.2 Communicable Diseases: Many studies and examinations have been gradually conducted for the past 3 years by both EGAT's Medical & Health Office and Ministry of Public Health at all surrounding villages. The results still shows that neither snails, the carriers of Schistosomiasis Disease nor people infected with this disease have been found, so far (the examinations found that number of villagers have been infected with various parasitic diseases but none of them have something associated with Schistosomiasis disease). -43- Appendix B Page 8 of 8
4. LESSON LEARNED This project is a good example of development and environment. It is an interesting issue worldwide. To develop future project, we should have clear picture of development, environment and the people need. IMPLEMENTATION COMPLETION REPORT
THAILAND
THIRD POWER SYSTEM DEVELOPMENT PROJECT (LOAN 3423-TH)
APPENDIX C - FINANCIAL AND ECONOMIC ANALYSES
Appendix C -44- Page I or 14
A. EGAT'SFINANCIAL PERFORMANCE
1. The Borrower's financial performance during the five year interval FY91-95 has been satisfactory. During this period kWh energy sales increased by 62% to 72,800 GWh in FY95, compared to an appraisalestimate increaseof 42% to 65,300 GWh. However, operatingrevenue in the period increasedonly by 68% to Baht 94.5 billion, comparedto an appraisal estimate increase of 78% to Baht 119.3 billion. The lower relative revenue realized was primarily accountedfor by a lower per kWh sales revenue. During the five year period, the average per kWh sales revenue increased from Baht 1.26 to Baht 1.31, against an appraisalestimate increase of from Baht 1.44 to Baht 1.82. Energy sales to PEA during the period increasedstrongly yielding an adverse sales mixed variance. In FY92, sales to Provincial Electricity Authority (PEA) accounted for 47% of total sales at 0.99 stangs/kWh (compared to MEA's of 41% at 1.46 stangs/kWh). In FY93, while the percentage of sales to PEA increased to 48%, the sale price dropped to 0.96 stangs/kWh (comparedto Metropolitan Electricity Authority's (MEA's) 40% at 1.46 stangs/kWh). In FY94, PEA's share increased to 49% with no correspondingincrease in sales price while MEA maintainedits 40% share but increasedits sales price to 1.47 stangs/kWh. The lower sales price to PEA coupled with increasing rate of demand which has surpassed MEA's for several past years resulted in a decrease in the average selling price and consequently,slower growth of EGAT's sales revenue.
2. During the period, the tariff structure has been adjusted twice in line with the three year tariff settingagreement. The first took effect in FY92 when the Govermnentagreed to a tariff structure allowing EGAT to make sales price adjustmentsif there were increases in its cost as a result of the value added tax (VAT) and fuel prices. The second took effect from January 1995 which affected the selling prices to MEA and PEA but did not affect end user prices. The concept underpinningthe tariff structure continue to be that EGAT, MEA and PEA should all achieve rates of return of 8% per annum, but in reality PEA had made returns of approximately14%. As a result, the PEA price was increased to 1.09 stangs/kWh, while the price to MEA was increased only to 1.49 stangs/kWh. In FY95, PEA's share of EGAT's electricity sales amountedto 51 % while MEA's share was 41 %.
3. EGAT's financial performance during the period was strong and satisfactory. Despite EGAT's net income being significantlylower each year than estimatesmade at appraisal, it generated sufficient funds internally to self-financean average of 34% of its capital investmentprogram which compares very favorably against appraisal average of 25%. The Self Financing Ratio (SFR) each year during this interval exceededthe covenantedvalue of 25 %, ranging in the period between a low of 28% in FY92 and a high of 38% for FY91 and FY95. This performance was accomplisheddespite the significant increase in EGAT's overall remittancesto the Government in order to qualify as a "Good State Enterprise". The debt to debt plus equity ratio during the period averaged about 44% compared to the appraisalaverage estimateof 48 %. This ratio was also significantlybelow the covenantedannual maximum of 60%.
4. EGAT's rate of return (ROR) during the period averaged 6.6%, which was significantly lower than the appraisalaverage of 11.7% for the period. Accounting for this was the slower sales growth realized for the period, and increased Government remittancesof from 15% to 20% in FY92 and from 20% to 30% in FY94, resulting in a significant reductionto operating income. The average operating ratio for the period was 83%, and was higher than the appraisal average of 77% for the five year interval. Two expense items contributed to this unfavorable comparison. Depreciationexpenses and Government remittanceswere significantlyhigher in the period than those estimated at appraisal. The current ratio for the five year interval averaged0.76, and was half the estimated appraisalratio for the period, due to a substantialincrease in payables and current maturities. -45- Appendix C Page 2 of 14
5. Overall, EGAT's financial position has been strong, since its debt load has been low and it is able to internally finance a significant portion of its power development and transmission system expansion programs. EGAT has been in full compliance with all Bank covenants in FY91-95 and for the years prior to the appraisal of the loan. -46- Appendix C Page 3 of 14
THALAND ThIRD POWER SYSTEM DEVELOPMENT PROJECT EGATS Past Financial Performance Summary ofEGATs Financial Statwemnts 1991-1995 (Million Baht)
1991 1992 1993 1994 1995 SAR Actual SAR Actual SAR Actual SAR Actual SAR I Actual
Energy sales (GWh) 46,102 44,773 50,620 50,771 55.294 56,558 60,290 63,643 65,283 72,779 Average revenue (Baht/kWh) 1.44 1.26 1.44 1.22 1.44 1.20 1.61 1.20 1.82 1.31
Operating revenues 66,897 57,216 73,390 62,702 80,383 68,463 97,837 76,855 119,269 96,449 Operating expenses 51,067 46,815 54,946 51,333 64,482 57,619 77350 64,690 90,881 78,991 Operating income 15,830 10.401 18,444 11,369 15,901 10,844 20,487 12,165 28,388 17,458 Net income 9,288 5,562 11,193 5,329 8,697 3,492 11,301 4,215 16,036 8,070 Rate base 111,912 139,255 135,594 156,068 170,376 177,520 207,167 192,517 247,670 210,721 Long - Term Debt Net 95,617 90,269 113,563 99,461 140,058 117,237 168,898 126,126 188,909 131,327
Primary Ratios: Ralc of Return (%) 14.1 6.7 13.6 6.7 9.3 5.7 9.9 6.0 11.5 7.7 Debt service coverage 1.6 2.1 1.8 2.1 1.6 1.7 1.5 1.9 1.4 1.8 Operating ratio 76 82 75 82 80 84 79 84 76 82 Current ratio 1.4 1.0 1.6 0.8 1.5 0.7 1.5 0.5 1.6 0.8 Debt as % of Dcbt and Equriv 45 41 46 41 48 45 49 47 48 44 Self - financing ratio (%) (3 - year average) 25% 38% 31% 28% 25% 36% 25% 30% 25% 38% -47- Appendix C Page 4 of 14
THAILAND THIRD POWER SYSTEM DEVELOPMENT PROJECT EGATS Past Financial Performance Financial Statements 1991-1995, Income Statement (Milion Baht)
1991 1992 1993 1994 1995 SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual
Energy Sale (GWh) 46,102 44,773 50,620 50,771 55,294 56,558 60,290 63,643 65,283 72,779 Sales Increase (%) 17.1% 13.7%) 9.8% 13.4% 9.2% 11.4% 9.0% 12.5% 8.3% 14.4% Average Energy Price (B/kWh) 1.44 1.26 1.44 1.22 1.44 1.20 1.61 1.20 1I.2 1.31 Price Increase (%) 14.8% -0.3% 0.0% -3.1% 0.3% -1.5% 11.8% -0.1% 12.7% 9.4%
Operating Revenue Energy Revenue 66,156 56,185 72,640 61,860 79,623 67,798 97,067 76,190 118,489 95,247 Other Operating Revenue 740 1,031 750 842 760 665 770 665 780 1,202 Total 66,897 57,216 73,390 62,702 80,383 68,463 97,837 76,855 119,2691 96,449
Operating Expenses Fuel and Purchased Power 35,762 30,499 36,347 32,448 44,214 35,143 53,709 40,950 62,780 50,757 Operation & Maintenance 7,395 7,382 8,940 8,488 9,435 9,785 10,626 10,656 12,165 12,242 Depreciation 1/ 5,942 7,387 7,243 8,117 8,749 9,712 10,360 9,554 12,233 9,973 Remittance to Government 1,968 1,5471 2.416 2,280 2,084 2,979 2.655 3,530 3,703 6.019 Total Operating Expenses 51,0671 46,815 54,946 51,333 64,482 57,619 77,350 64,690 90,8811 78,991
Operating Income 15,830 10,401 18,444 11,369 15,901 10,844 20,487 12,165 28,388 17,458
Nonoperating Expenses Interest Charged to Operations 5,074 4,288 5,922 4,584 7,274 6,048 9,496 6,422 12,862 6,894 Loss on Exchange 2,455 3,590 2,313 2,110 1,269 2,157 1,147 2,504 894 5,250 Bonus & Remittance - Mining 0 352 0 288 0 560 0 729 0 492 Revenue From Associated Company 0 0 0 0 0 0 0 0 0 -1,554 Profit From Seling Power Plant 0 0 0 0 0 0 0 0 0 -570 Mining Income -988 -1,3931 -985 -942 -1,339 -1.413 -1.458 -1,705 -1,404 -1,124 Total Nonoperating Expenses 6,541 4,839 7,250 6,040 7,204 7,352 9,185 7,950 12,352 9,388
Net Income 9,288 5,562 _ 9 5,329 8.f97 3,492 11.301 4,215 16.36 8,070
Average Rate Base - Power 111,912 139,>55 135,594 '56B,O68 170,376 177,620 207,167 192,517 247,670 210,721 Rate of Rdurn (%) 141% 6.7% 1.6% 6 .7% 9.3S% .7% 9.9% 6.0% 11.5% 7.7% Operating Ratio (%) 76% 82% 75% 82% 80% 84% 79% 84% 76% 82%
1/ Revalued Depreciation
SOURCE: EGAT Appendix C Page 5 of 14
TnIAIAND THiRD POWER SYSTEM DEVELOPMENT PROJECT ECiArs Past Financial Perfomiance Financial Statements 1991-1995, Sources and Application of Funids (Million Baht)
1992 1992 1993 1994 1995 SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual
Sources of Funds Intemal Cash Generation Operating income 15,830 10,401 18,444 11,369 15,901 10.844 20,487 12,165 28,388 17,458 Add: Olher Items not Involving Cash 0 3,341 0 3,797 0 3,456 0 4,118 0 3,920 Depreciation 5,942 7,387 7.243 8,117 8,749 9,72 10,360 9,554 12,233 9,973 Mining Income 988 1.391 985 942 1,339 1.413 1.458 1,705 1.404 1,124 Total Internal Sources 22,760 22,520 26,672 24,225 25,989 25,425 32,305 27.542 42,025 32,475
Noncash Items 1,130 0 384 0 -92 0 -57 0 -938 0 Capital Contribution 125 255 218 227 247 Sale of Power Plant 0 0 0 0 17,182
Increase in Long - Term Debt 29,497 27,426 27,062 17,916 38,309 24,135 46,479 24.742 39,527 16,276 Less Refinancing 0 -6,984 0 -6,155 0 0 -3,991 0 -4,398
Total Borrowings 29,497 20,442 27,062 11,761 38,309 24,135 46,479 20,751 39,527 11,878 Other Items (Net) 0 122 0 -326 0 286 0 -1,173 0 2,493 Total Sources of Funds 53.386 43,209 54,118 35,915 64,206 50,064 78,727 47,347 80,614 64,275
Application or Funds Capital Investment Capital Expenditure - Power 34,472 30.426 30,440 21,984 37,421 30,303 39,856 25,230 35,048 28,059 Interest During Construction 2.166 1.472 3.109 1.843 3.598 1,483 4,875 2,366 5,218 2,533 Total Capital Investment - Power 36,638 31,898 33,549 23.827 41,019 31,786 44,731 27,596 40,266 30,592
Capital Expenditures - Mining 1,328 1,614 2,809 2,628 1,444 3.430 1.899 3,402 2,072 3,766
Total Capital Investment 37.966 33,512 35,358 26,455 42,463 35,216 46,630 30,998 42,338 34,358
Net Sinking Funds for Redemption & Note -1,151 885 1,063 370 -668 Debt Service Interest 5,074 4.288 5,922 4,584 7,274 6,048 9,496 6,422 12,862 6,894 Principal 8,624 13,367 8,925 12,859 9,116 8,853 11,814 12,110 17,639 15,555 Less Refinancing -6.984 -6.155 0 -3,991 4,398 Total Debt Service 13.698 10,671 14,847 21,288 16,390 14,901 21,310 14,541 30.501 18,051
Investment in Associated Company 100 1,820 , 593 Stockpile for Future Use 253 271 Reafforestation 188 Increase in Deferred Liabilities 87 8 70 51 0 10 0 40 0 17 Increase in Non - cash Working Capital 474 -853 -133 1.847 -892 -1,460 -117 1,665 715 3,545 Increase in Cash 1,161 1,021 3,975 -4,710 6,246 335 10,904 -2,338 7,060 7,922
Increase in Total Working Capital 1.635 168 3.842 -2.863 5,353 -1.125 10.7871 -673 7,775 11,466
Total Application of Funds 53.3R6 43.208 54. 228 35.916 4. 50,065 78.727 47.349 14 276
Debt Service coverage 1.6 21 1.8 21 1.t1 1.7 1.5 1.9 1.4 1.8 S Years Average Investment s4.020 27,890 38.598 29,108 41.484 27,672 4S.810 29,967 48,098 85,994 Self. lin,ancingRatio (8 Yrs. Avg.) (%) 25% 88% 8.1% 28% 25% jS6% 256* 30% 256 I88% -49- Appendix C Page 6 of 14
TnAILAND THIRD POWER SYSTEM DEVELOPMENT PROJECT EGATS Past Financial Perfornanice Financial Statements 1991-1995, Balance Sheet (MiLion Baht) 1991 1992 1993 1994 1995 SAR Actual SAR Actual SAR Actual SAR Actual SAR Actual
Fixed Assets- Power Plant in Service 192,032 224.873 233,514 260,526 281,758 283,340 333,225 303,238 393,392 344,332 Less: Accumulated Depreiation 71,112 79.720 81.247 93.542 93,274 95.284 107,375 106.260 123,901 119,869 Net Operating Plant 120,920 145,154 152,267 166,984 188,484 188,055 225,850 196,978 269,490 224,463 Work in Progress 52.907 41,765 55,532 46.288 61,148 36,817 69.342 49.600 67,105 33,739 Total Fixed Assets - Power 173,827 186,919 207,799 213,272 249,633 224.,872 295,192 246,578 336,595 258,202
Total Fixed Assets - Irigation/Mine 13,995 10,754 15,370 10,490 16,849 11,087 18,764 11,999 21,729 13,982 Net Assets Sinking Fund 3,700 7,470 4,296 8,790 4,957 10,430 5,773 5,389 6,625 5,948 Other Assets 361 455 449 8,398 10,203 Current Asets Cash 15,035 7,074 19,010 2,363 25,256 2,697 36,160 359 43,220 8,281 Receivables 10,997 8,820 12,064 10,510 13,214 9,107 16,083 11,486 19,606 16,920 Inventories 4,313 2.89' 3,978 3,036 4,615 4,376 5,315 5,465 6,222 5,136 Total Current Assets 30,345 18,793 35,052 15,909 43,085 16,180 57,557 17,310 69,048 30,337 Defered foreign exchange adjustmnent 8.179L 10.978 5,866 13,630 4,597 14,125 3,450 14,674 2,556 9.570 Total Assets 230,0451 235,275 268,383 262,546 319,121 277,143 380,737 304,349 436,5531 328,243 Equity and Liabilities Equity Paid -in capital 8,536 8,601 8,536 9,195 8,536 9,310 8,536 9,465 8,536 9,662 Irrigation- Contribution 4,773 3,685 4,704 3,625 4,628 3,669 4,548 3,658 4,468 3,632 Retained Eaznings 46,060 60,177 57,254 69,460 65,951 75,472 77,252 80,948 93,288 92,205 Revaluation Surplus 49,780 48,989 57,464 55,857 67,047 42,292 78,276 44,578 91,680 49,367 Total Equity 109,149 121,452 127,958 138,137 146,162 130,743 168,612 138,649 197,972 154,866 Long. Term Debt Long - Term Debt 104,542 96,600 122,679 107,497 151,872 125,974 186,537 142,325 208,425 144,716 Lens: Curent Maturities 8.925 6,331 9.116 8.036 11.814 8,737 17,639 16.199 19,516 13.389 Long - Term Debt - Net 95,617 90,269 113,563 99,461 140,058 117,237 168,898 126,126 188,909 131,327 Sinking Fund 3,700 4,001 4,296 4,436 4,957 4,917 5,773 5,389 6,625 5,948 Deferred Liabilities 70 178 0 127 0 117 0 77 0 60 ConsunmerContribution 85 83 102 113 Current Liabilities Accounts Payable 10,789 11,674 11,322 10,758 13,412 13,294 16,084 15,366 18,736 20,208 Current Maturities 8,925 6,331 9,116 8,036 11,814 8,737 17,639 16,199 19,516 13,389 Accrued Intereston Long ermnDebt 1.795 1,371 2,128 1.506 2.717 2.015 3.731 2,442 4,794 2,332
Toul Current Liabilities 21,509 19,375 22,566 | 20,300 27,943 24,046 37,454 34,006 43,0461 35,929 Total Equity and Liabilities 230,045 235,275 268,3831 262,546 319,1211277,143 380,737 304,349 436,5531 328,24
Debt as 5 of Total Cepital 45% 41% 4e% 41% 48% 45% 49% 47% 48% 44% Long - Term Debt as % of Total Capital 47% 42% 47% 42% 49% 46% 50% 48% 49% 45% Current ratio 141% 97% 155% 78% 154% 67% | 164% 51% 160% 84 % -50- Appendix C Page 7 of 14
B. MINE DIRECTORATE'SFINANCIAL PERFORMANCE
FGAT operates its Mae Moh lignite mining operations as separate profit center, and the 'fthe lignite mine operations may be assessed overall from the tabular presentations l5. The ROR for the five year interval averaged 32%. The mine departmenthas been in .lmpliancewith respect to covenantson debt to equity and debt service coverageratios. For iiiuerval FY91-95,the debt to equity ratio oscillated annually between 0.87 and 1.29. The avcrage tor tlhe period was 1.11, and is substantially below the maximum of 1.5 allowed by Bank covenants. Debt service coverage in the period averaged 2.2, and this average is substantiallyabove the minimumratio of 1.3 required by the covenants. However, in FY95 the debt service coverage was at -0.03 (FY94: 1.54) due to significant increases in development and other expenditures, over the preceding year. Loan repaymentamounts also increased by about 40-45% over each of the preceding four years.
7. Other financial performance indicators for the Mine Directorate (Appendix C, page ) also indicate that the Directorate's financial position and performance has been satisfactoryand strong. Debt as a percentage of total deployedcapital averaged a low 23 % during the five year interval, while the SFR, though highly variable in the period (between 25% and -124%), averaged 64% during the period. The large oscillationsin the SFR resulted primacily from the large year to year variations in capital and developmentexpenditures. The average operating ratio for the period was about 77%, and the high and the low for the period was 83 % and 73 %, respectively.
8. Lignite sales in the five year period reached a maximumof 12.8 MMT in FY95 from 11.6 MMT in FY91. The transfer price for lignite ranged between 443 Baht/MT and 501.5 Baht/MT. The transfer price is derived from net-back calculations on the price of electricity from imported coal discussedbriefly elsewhere (AppendixC, para C16), and hence is subject to fluctuationsas the price of coal varies on the internationalmarket. EGAT's lignite production costs have been relatively stable at an average of 344 Baht/MTduring the five year interval. Despite some inflationin Thailandduring the last five years, EGAT has been able to limit production costs within a narrow range of Baht 329/MT to Baht 355/MT.
9. Since the mine department is experiencedand mature, its performanceshould be assessed on the basis of the cost of coal on the internationalmarket. In this context, the mine department's production cost on a Btu basis is higher by about 20% than the internationalspot market (fob) price, and is probably close to the price of long term contracted coal. However, Mae Moh lignite is of low quality, and its use requires significantinvestment in capture technologyboth for S02 and particulates. The need for this investmentfor pollution control should further offset the price of this lignite. Hence, EGAT needs to bring down production costs in its operations. A first realistic target, taking the above issues into account, would be a production cost of US$11. Two realistic avlenuescan be identifiedfor improvementon this score: (a) increase1manpower pioductivity significantly; and (b) reduce the staffing levels to half or less of the present manpower strength in the mine department within a few years. At this time the total employmentroll in the Mine Directorate is about 2,800 strong, even though most of the overburdenexcavation operations have been contractedout. Without imminentplans for expanding operations, this staffing level is excessive. -51- Appendix C Page 8 of 14
THAILAND Third Power System Development Project Lignite Mine Directorate Summary of Financial Performance, 1991- 1995 ( Million Baht )
.____-______--- 1991 I 1992 1 1993 I 1994 I 1995 Lignte Sales. MMt 11.58 -12.55 11.83 12.29 12.79 Transfer Pnce. BMon 463.6 451.4 475.8 501.5 443.4 ProductionCost. Blton 329 355 340 351 343 TotalRevenue 5369 5666 5630 6163 5692 GeneratingExpenses 3415 3985 3432 3260 3388 Interest 155 210 177 183 190 Net Profit 1391 942 1413 1660 10 Ratios: Debtas % of TotalCapital 21 12 35 24 2 DebtService Coverage 5.14 2.55 1.75 1.54 -0.03 DebtEquity Ratio 0.87: 1 1.02: 1 1.29: 1 1.25: 1 1.14: 1 Se.f- financingRatio 256.73% 89.07% -9.41% 108.22% -123.53% OperatingRatio 74.09% 83.27% 74.89% 73.06% 80.94% Current Ratio 0.64:1 0C72:1 1.41 :1 0.70:1 0.91:1 Rateof Return 45.97% 2866% 28.04% 32% 26.07
I- ___ -52- Appendix C Page 9 of 14
THAILAND Third Power System Development Project EGAT Lignite Mine Operations Source and Application of Funds, 1991- 1995 (Million Baht) _1991 1992 1903 _ 1994 1995 SOURCESOF FUNDS Net incomebefore interest 1547 1153 1591 1844 1274 Adjustmentfor itams not involving the movementof funds 2892 3354 3043 3014 3193 Totalfunds generated from operations 4439 4507 4634 4858 4467 OTHERSOURCES OF FUNDS Long- term loansreceived 583 362 1335 905 1057 Govemmentcontribution 10 Miscelaneouscontributions 2 1 17 2 14 Disposal of fixed assets 8 Total source of funds 5022 4870 5986 5765 5538 APPLICATIONSOF FUNDS Loan repayments 363 369 348 337 511 Irterest 292 2S0 319 372 454 Capital expenditure 1107 404 443 288 1044 Developmentexpenditure 1522 2558 3322 3252 357 Lignie Stockpile for future use 253 272 Total funds applied 3284 3611 4432 4502 5860 NET OLUTFLOWOF FONDSI INFLOW 1,738 1.259 1,554 1,263 (322) TRANSFERTO EGAT 1.898 1.217 1.248 1.348 211 INCREASE/(DECREASE)IN WORKING CAPITAL (180) 42 306 (85) (111 Madeup as follows: Increase/ (Decrease)in materials& supplies 45 104 361 (60) (65) IncreaseI (Decrease)in accountsreceivable (142) 22 (18) 50 (38) IncreaseI (Decrease)in accountspayable (63) (84) (37) (75) (8) ______(160) 42 1 306 (85) (111) -53- Appendix C Page 10 of 14
THAILAND Third Power System Development Project EGAT Lignite Mine Operations Financial Statements 1991 - 1995, Income Statements Million Baht)
1991 1992 1993 1994 1995 Lignite Sales . MMt 11.58 12 55 11.83 12.29 12.79 Transfer Price. B/ton 463.6 451.4 475.8 501.5 443.4 Revenue 5369 5666 5630 6163 5692 Generating Expenses Overburden removal 2588 2905 2629 2572 2657 Reclamation 61 71 72 81 88 Others 766 1009 731 607 643 Subtotal 3415 3985 3432 3260 3388 Head Office 138 181 202 225 297 Amount of Preliminary expenses 15 6 5 266 32 Inventory adjustment 2 4 93 243 286 Depreciation 203 241 246 251 229 Iriterest charge 155 210 177 183 190 Foreigr, exchange losses 50 97 62 75 186 Net operating Expenses 39781 4724 4217 4503 4608 NET PROFIT 1391 942 1413 1660 1084 - VA Appendix C Page 11 of 14
THAILAND Third Power System Development Project EGAT Lignite Mine Operations Financial Statements 1991 - 1995, Balance Sheet (Million Baht)
-- ______I 1991 1 1992 1993 J 1994 1 199S Assets Property. plant & equip At cost 4225 5571 5800 6541 6930 Less Acc. Depr. 2579 2875 3194 3567 3883 Net 1646 2696 2606 2974 3047 Under construction 1474 584 807 394 1085 Development expenses 3305 2974 3809 4698 5940 Reclamation sinking fund 350 451 557 675 675 Deferred expenses 16 16 17 13 8 Subtotal 6791 6721 7796 8754 10755 Current Assets Inventory 350 454 815 1007 1214 Receivables 63 85 67 118 79 Subtotal 413 539 882 1125 1293 Total Assets 7204 7260 8678 9879 12048 Liabiities & Eauity Equity 739 739 756 758 772 Retained earnings Intemal Funding 2941 2666 2832 3143 4438 Deferred foreign exchange adjustment -683 -814 -714 -691 -493 Subtotal 2997 2591 2874 3210 4717 Long -term debt 3557 3834 4826 5498 6151 Less current portion of LTD. 346 363 206 613 234 Net 3211 3471 4620 4885 5917 Reclamation sinking fund 350 451 557 675 675 Current Liabilities Payables| 263 347 362 435 435 Current portion of LTD 346 363 206 613 234 Interest due 37 37 59 61 70 Subtotal 6461 747 627 1109 739 Total Liabilities & Eouitv 72041 7260 8678 9879 12048 -55- Appendix C Page 12 of 14
ECONOMICANALYSIS A. EGAT POWERDEVELOPMENT PLAN B. PAK MUN HYDROPOWERPROJECT C. MAE MOH MINE EXPANSION
10. EGAT conducted the economic analvses to reconfi1m the viability of its power developmentplan (PDP) for FY90-99 and the two project componentsfinanced under the Third Power System DevelopmentProjec.. Each analysis and resiuits obtainedare discussedas follows.
A. EGAT's Power DevelopmentPlan
11. To reconfirm the appropriatenessof the least-costpower expansion plan for the interval FY90-99, EGAT re-computedan adjusted financial rate of return as an approximation of the IERR. The IERR was calculatedon the basis of the incrementalcost and benefit streams associated with the time-sliceof EGAT's investmentsfor the period FY90-99, as shown in Table 9A in Part II. The capital costs shown in Table 9A are the investmentcosts of power plants, transmissionsystem expansions,and other related investmentswhich will be completed by FY99. Fuel costs are actual fuel costs up to FY94. Between FY95 and FY99, oil based fuel costs are inflatedon the basis of inflation predictions by the National Energy Policy Office. The cost of natural gas between FY95 and FY99 is also escalated on the basis of cost factors provided by the PetroleumAuthority of Thailand. The economic cost of lignite fuel is the estimated production cost, and this is held relatively constant between US$12.60and US$12.90/MTafter FY94. The fuel cost predictionshave a minor effect on the IERR, since the tariff structure which went into effect in FY91 has a fuel adjustmentprovision for the revenue per kWh.
12. Future operations, maintenance and administrative costs for the generation and transmissionsystem facilitiesare charged according to EGAT's historical rates which are expressedas a percentage of capital costs. These costs are charged as follows: oil/gas thermal plants (2.5%), lignite/coal plants (3.0%), combined cycle plants (2.8%), gas turbine (3.0%), hydropower plants (1.0%), and transmission system (1.5%). For the period FY90-94, the Operations and Maintenance and administrativecosts charged are actual costs incurred in the period.
13. The IERR obtained for the expansionprogram is 19.2%, and is appreciably higher than the rate of 16% estimated at appraisal. Two main factors contributedto this: (a) EGAT's actual energy sales in FY90-95have been significantlyhigher (20-25%) than appraisalestimates; sales between FY95 and FY99 are also presently estimated to significantlyexceed those estimated at appraisal; and (b) total fuel costs have been significantlylower during the period than those estimated at appraisal.
B. Pak Mun HydropowerProject
14. At appraisal in 1991, the equalizing discount rate for the Pak Mun Hydropower project when compared to the next best generation option (3 x 50 MW gas turbines) was estimated to be 15.7%; the price of crude oil was assumed to be US$20 per barrel, escalated in real terms at 3% per annum until the year 2006. The re-evaluationof the equalizingdiscount rate is done By EGAT in 1995 prices based on the followingassumptions: (a) annual energy generation- 280 GWh; (b) price of crude -56- oil - US$19/barrel(corresponding price of low sulfur heavy fuel oil at Baht 3.05/liter), with a fuel price escalation of 3% per annum until 2006; (c) calorific value of heavy fuel oil - 5.57 MMBTU/barrel;(d) efficiency of gas turbines - 25 %; (e) O&M costs - gas turbines: 3 %, hydro plant: 1%, and transmission: 1.5%; and (f) economiclives - gas turbines: 20 years, hydro civil works: 50 years, hydro plant: 30 years, and transmission:33 years. The capital costs of gas turbine power plant and associated high voltage switching and transmission system are based on EGAT costs for similar plants in the system.
15. On the above basis, the equalizingdiscount rate is evaluated at 12%, which is above the opportunitycost of capital of 10% in Thailand, but much lower than the appraisal estimate of 15.7%. This is mainly due to the completioncost of Pak Mun being about 31 % higher than the estimatedcost.
C. Mae Moh Mine Expansion
16. The economicanalysis for the mine componentof the project has been conductedfor two cases: (a) the mine expansioncomponent investment treated on its own; and (b) the mine component plus power units 8 and 9 (2 x 300 MW) treated as a single investment. The methodologyand assumptionsfor the analysis are similar to those used for appraisal of the project under Loan 3138-TH. For the first case, the transfer price of lignite is computedusing net back calculationsas shown in the Appendixtable. The cost of generatingelectricity from a hypotheticalcoal burning plant at Mae Moh using imported coal is computedbased on the internationalpurchase price of coal, its sea and inland transportation cost, and the cost of the coal generating plant. The transfer cost of lignite is "net- backed" from the cost of electricity produced in the hypothetical (import) coal based plant and the investment cost of the lignite plant. The IERR for the expansion project, when the lignite mine operations are treated as a stand alone operation, is above 150%. This unusually high IERR is predominantlydue to the high transfer prices for lignite which is almost double the production cost of lignite at Mae Moh.
17. The joint treatmentof the mine expansionand power Units 8 and 9 investmentsyielded an IERR of 13.5%, compared to the estimate of 13% at appraisal of the Second Power System DevelopmentProject. Calculationof NetbackValue of Lignite
Fiscal Coal - Based Generation Costs Lignite - Based Generation Costs Assumptions Year Coal Energy Capacity Total Capacity Inferred Netback Price Charge Charge Generation Charge Energy Value Cost Charge of Lignites (USD/Ton) (c/kWh) (c/kWh) (c/kWh) (c/kWh) (c/kWh) (USD/Ton) 1987 56.42 1.93 1.97 3.90 1.74 2.16 26.39 Plant Capital Cost (USD/kW) 1988 54.85 1.88 1.97 3.85 1.74 2.11 25.73 - Coal 1175 1989 57.96 1.98 1.97 3.95 1.74 2.21 27.03 - Lignite 1036.8 1990 57.93 1.98 1.97 3.95 1.74 2.21 27.02 1991 56.93 1.95 1.97 3.92 1.74 2.18 26.60 Plant Heat Rate (kcal/kWh) 1992 53.77 1.84 1.97 3.81 1.74 2.07 25.28 - Coal 2275 1993 51.00 1.74 1.97 3.71 1.74 1.98 24.12 - Lignite 2383 1994 50.00 1.71 1.97 3.68 1.74 1.94 23.71 1995 51.10 1.75 1.97 3.72 1.74 1.98 24.17 Heatin Value (kcal/kg) 1996 52.10 1.78 1.97 3.75 1.74 2.01 24.58 - Coal 6653 1997 52.60 1.80 1.97 3.77 1.74 2.03 24.79 - Lignite 2825 1998 53.20 1.82 1.97 3.79 1.74 2.05 25.04 1999 53.70 1.84 1.97 3.81 1.74 2.07 25.25 Load Factor 75% 2000 54.20 1.85 1.97 3.82 1.74 2.09 25.46 2001 54.40 1.86 1.97 3.83 1.74 2.09 25.54 O&M Cost (% of Plant Cost) 2002 54.60 1.87 1.97 3.84 1.74 2.10 25.63 - Coal and Lignite 3 2003 54.80 1.87 1.97 3.84 1.74 2.11 25.71 - TransmissionSystem 1.5 2004 55.10 1.88 1.97 3.85 1.74 2.12 25.84 2005 55.30 1.89 1.97 3.86 1.74 2.12 25.92 Lignite Mine Loss Factor 3% 2006 55.50 1.90 1.97 3.87 1.74 2.13 26.00 2007 55.50 1.90 1.97 3.87 1.74 2.13 26.00 2008 55.50 1.90 1.97 3.87 1.74 2.13 26.00 2009 55.50 1.90 1.97 3.87 1.74 2.13 26.00 2010 55.50 1.90 1.97 3.87 1.74 2.13 26.00 2011 55.50 1.90 1.97 3.87 1.74 2.13 26.00 Notes: a/ Excluding taxes and IDC. b/ All Costs are based on 1994 price level. e c/ Present value is calculated with 1994 base year. X Q 38/43421:NETBACK 19-02-96 f' . IMPLEMENTATION COMPLETION REPORT
ThAILND
THIRD POWER SYSTEM DEVELOPMENT PROJECT (LOAN 3423-TH)
APPENDIX D - PAK MUN HYDROPOWER PROJECT
-58-
AppendixD Page 1 of 21
PAKMUNHYDROPOWER PROJECT A. RESETTLEMENTAND COMPENSATION B. ENVIRONMENTALIMPACT MITIGATION C. HEALTHIMPACT MITIGATION
1. The Pak Mun Hydropower project went through extensive review and evaluation, includingassessment of environmental,resettlement and ecologicalimpacts, beginning in 1982 before the project was approved by the Cabinet of Ministers in May 1990. The project scope was progressivelymodified and downsizedto minimizeecological, environmentaland resettlementimpacts. The approved project involved the constructionof a dam 5.5 km upstream from the confluence of the Mun River with the Mekong River, and its operation at completionwas specifiedto allow a maximum water level of 108 m msl (meters above mean sea level). This level would allow the river to rise to no more than the level it attained to the top of its banks in the flood season. The storage capacity of the dam thus consists essentially of the existing river channel. The original design of 1982 ( which provided for a water retention level at 113 m msl and a dam located at Kaeng Tana rapids) maximized power output at about twice the present generation capacity.
2. To minimizeenvironmental and aesthetic impact, the dam was moved 1.5 km upstream to preserve the Kaeng Tana Rapids which serve as a major tourist attraction for the area. The operating regime of the dam was also altered to preserve the upstream Kaeng SaphueRapids by limitingthe water level at the dam to 106 m msl during the dry season. These changes also considerably reduced estimates of the number of people that would be displaced from about 20,000 in 1982 to about 1,500 (248 families)at appraisal.
A. Resettlementand Compensation
Summaryof AgreementsBetween EGAT and the Bank at Appraisal
3. The designof the Resettlementand Compensationcomponent of the Pak Mun Hydropower project, as reflected in the SAR and the Loan Agreement, was based on the following agreements reachedwith EGAT:
(a) Policy. The resettlementand compensationpolicy would seek to improve the standard of livelihood of affected households through the provision of infrastructure and economic assistance opportunities; and provide affected households a choice among alternative resettlementarrangements. It was agreed that the program would be implementedwith the participationof the affected people. Specifically,the Loan Agreement stipulatesthat, in addition to any compensationpaid for loss of property: (i) the affected people would be provided with one of the following options: (1) the allocationof at least 0.08 hectare of land for home plots and 1.6 hectares of land for farm plots per family in the resettlement area and necessary assistance to such persons for construction of houses out of compensationreceived by them for property acquired from them; or (2) reconstructionof their existinghouses on new back-filled ground near the original locationsof such houses; (ii) low income families would be provided with support for a transition period until -59-
AppendixD Page 2 of 21
production facilities are functional; and (iii) public infrastructure facilities would be provided in the resettlement area, such as irrigation, electricity, paved roads and water supply and necessary schools and relevant governmentoffices.
(b) Base-LineData. Base-linesocio-economic data was compiledby TEAM consultants. The Base-linesurveys availableat appraisal indicated that a total of 248 households(families) in 11 villageswould be "directly"affected by the project (i.e. their house plots would be flooded)and would need to be resettled. These comprised: (i) 142 householdsbelow 108 m msl; (ii) 95 householdsbetween 108 and 108.5 m msl; and (iii) 11 householdsupstream of the dam site in Ban Hua Heo village. In addition, there would be a number of households "indirectly"affected by the project (a household is considered indirectly affected if its farm plot would be submerged but the household itself would not be required to relocate as its house plot would not be submergedby the project). The exact number of "indirectly"affected householdshad not been establishedat appraisal.
(c) ImplementationArrangements and i3udget. The program weuld be formulated, evolved and (its compensationcomponernt) managed by two go vernmentappointed committees, one for Resettlement and one for C-mpensation of Land Righ.s and Properties. EGAT assumed the responsibility for inplementing the resettlement component. For this purpose, it agreed to establisha ResettlementOffice headed by an engineer experiencedin resettlementwork. EGAT also undertook to carry out a public informationcampaign to inform the affectedpeople and to ascertain their preferences among resettlementoptions. The budget for resettlementwas estimated by EGAT at Baht 159 million; the budget for compensationwas to be determinedlater on the basis of a detailed survey.
(d) Monitoringand Evaluation. EGAT and the Ubon RachathaniProvince agreed to contract an independentsocial science institution for conducting annual evaluation studies of the outcomeof resettlement.
(e) EnvironmentalOversight. At Bank's specific request, the Governmentagreed to appoint an Environmental Impact Monitoring and Evaluation Committee to oversee the implementationof the environmentalimpact mitigationand resettlementplans.
EGAT's Compliancewith Agreements
4. The Implementation Completion Report (ICR) mission found that EGAT has fully complied with (and in many instancesexceeded) the provisionsof the aforementionedagreements with the Bank. All land acquisition, resettlement, and compensation for houses and farmland has been completedon terms and with options which have been more diverse and generousthan those formulated at appraisal.
Evolutionof Resettlementand CompensationPolicies
5. The absence of comprehensivesurveys of all adverse project impacts, during the early stages of project preparation, necessitatedsubstantial upgrading of the resettlementand compensation policies. The resettlemententitlements were thus continuouslyaugmented to mitigate the diverse and -60-
Appendix D Page 3 of 21 unforeseen nature of project impacts and to meet the demands of the affected persons, often expressed through confrontation. Significant changes in the policy first established in May 1990 are summarized below.
Base Resettlementand CompensationPolicy (May 1990)
6. The base policy of May 1990 provided for the following:
(a) Each affected household was entitled to receive a cash compensation for land at the rate of Baht 6,000 - 8,000/rai (1 rai = 0.16 hectare), the then prevailing land price. Following the protests at the end of 1991, this was raised to Baht 35,000/rai;
(b) Households with unaffected farmland could opt to have each houseplot back-filled to elevation 108.5 m msl at EGAT's expense and relocate or reconstruct their houses on back-filled land. Infrastructure facilities were to be rehabilitated/replaced by EGAT;
(c) Households opting for relocation were offered developed houseplots each measuring 800 square meters in Sirindhorn resettlement area prepared by EGAT at the base of Sirindhorn dam. Households opting for resettlement to this site could exercise one of the following options: (i) build their house by themselves with the compensation paid, and an additional grant of Baht 135,000 per household; or (ii) accept a core house of two rooms constructed by EGAT to which they could make further additions on their own; and
(d) Under the initial resettlement policy (May 1990) only cash compensation was offered for affected farmland. This policy was modified in November 1990 to allow for choice of "land-for-land" with an allotment of up to 10 rais of irrigable farmland at the resettlement site.
Policy Modificationsin December 1991
7. In December 1991 the resettlement policy was modified as follows:
(a) Persons, who had built houses on lands not owned by them and/or farmed on lands owned by the Government, were made eligible for the same entitlement as those who legally owned the land;
(b) Households affected by dam-site construction were to be fully compensated for their lands and properties (houses and structures) and in addition were to be provided new houses constructed by EGAT on houseplots measuring 2 rais; and
(c) All the required civic infrastructure at the resettlement site would be provided by EGAT.
SubsequentPolicy Modificationsin 1993 and 1994
8. In March-May 1993, additional modifications were made to the resettlement and compensation policy following further protests to demand more favorable compensation and resettlement -61-
Appendix D Page 4 of 21 packages. These protests were also accompanied by disruptive behavior at the project site. The changes institutedin response to these protests were:
(a) Households affected by farmland acquisitions could make a choice between alternative resettlementoptions. Households could opt for allotment of 10 rais of farmland at the Sirindhorn resettlementsite, as specified under the November 1990 policy revision, or under a new option, receive land purchased by EGAT in the vicinity of their original village;
(b) A householdcould also opt for back-fillingof up to 3 rais of farmland;
(c) The settlementoptions were further broadened to include an option consisting of a cash grant of Baht 35,000/rai in lieu of receiving up to 10 rais of farmland from EGAT. Under this option the recipients could make the purchasesof farmland on their own; and
(d) EGAT agreed to compensatehouseholds from Ban Hua Heo Village affectedby blastingat the tailrace along the same lines as affected households discussed above. Those who did not wish to relocate on a permanent basis were given the option of receiving a monthly rent of Baht 3,500 until project completion.
Suimmaryof Number of Affected Households and Compensation
9. Surveys at project approval indicated that the number of households/familiesrequiring relocationtotalled about 262, while 780 householdswould be affected through the acquisitionof 5,700 rais of farmland. The data of affected households, the correspondingpolicy changes and the resulting compensationcosts are summarizedbelow:
Date Of Policy Announcement Number of Households Cost Eligible Baht million
May 1990 (Base Policy) 984 295.7 (House and land compensation)
June-December 1991 16.9 (AdditionalBaht 135,000 to those not opting to settle in Sirindhorn) (Infrastructuredevelopment) 103.7
May 1993 226 41.5 (Relocationor rental expensesto those affectedby constructionnoise)
January 1994 83 13.7 (Compensationto those in free board zone opting to relocate) -62-
AppendixD Page 5 of 21
January 1994 445 20.0 (Compensationto those above 108.5 m msl opting to relocate)
Total 1,738 491.5
Infrastructureand Other DevelopmentWork Undertakenby EGAT
10. In addition to the resettlementand compensationdescribed above, EGAT undertook the following steps to improve the resettlementprogram and the livelihood of the villagers, and to pacify those resorting to protests and disruptivebehavior:
(a) Instituted vocational training programs between October 1993 and September 1994 for residents of 31 affected villages. A total of 900 persons were trained in eight types of vocationsat a total expense of Baht 1.5 million;
(b) Establisheda Public Service Center at Khong Chiam district offices and a mobile unit to receive grievancesof people allegedlyaffected by the project;
(c) Funded a study, as a precaution, to determine the prevalence of schistosomiasisand evidenceof the presence of the carrier of this disease, the Neotriculasnail. EGAT further establisheda mobile medical treatmentunit to identify and treat parasitic infectionsamong the affected villages in the project arza. This health mitigationeffort is further discussed in SectionC of this Appendix,
(d) Raised the ievcls of roads, constructedbridges, and installed hundreds of markers in the project area and villages on both sides of the river wherever inundationof infrastructure or land was expected to result, due to impoundmentof the dam; and
(e) Set up much improvednew communityhealth centers, temples, schools and other facilities in place of those which had been affected by the project. A total of 38 km of roads and 12 bridges have been constructed in eight villages. In the Sirindhornresettlement site, EGAT had also planned to establish demonstration farm plots, and model poultry and dairy farms. The Sirindhorn settlement site was also supposed to be provided with electricity and water supply includinga 35,000 cu m reservoir. These activitieshad to be abandonedas few wanted to relocate to this resettlementsite.
Consequences of Upgrading Resettlement Entitlements
11. The resettlementand compensationoffered first in 1990 was generous (6,000 to 8,000 B/rai) in relation to prevailing property/land price levels and local income data. This compensation level was partially instrumentalin raising land and property values around the Pak Mun Hydropower project and the banks of the river. Since significant delays occurred in acceptance of final compensationand resettlementpackages in a large number of cases, land and property values escalated further as others purchased properties on the river and around the lake for investmentor development purposes. Despite the escalation in land values, revised compensationpackages (35,000 B/rai) offered -63-
AppendixD Page 6 of 21 after 1991 remainedgenerous in relation to prevailingproperty values. Households,which had no titles to land they occupiedor those which were farming/squattingon Governmentlands, were also extended the same liberal policy provisions.
12. The improved economicstatus of householdsaffected by the project vis-a-visthat of those who had not been affected was a cause for further discontent, on the part of those who had not been affected by dam construction. This was often exploited by advocacy groups opposed to the dam project. Frequently, unreasonabledemands were made for redress of grievanceswhich did not have a basis. All the demandswere systematicallyreviewed by the resettlementcommittees, responded to, and redressed as necessary.
Compensation for Impact on Fisheries
13. In early 1994 before impoundment of the dam, villagers supported by some NGOs conducted protests in Bangkok to demand compensation for households engaged in fishing as an occupation, and also for households deriving income from fishing as a sideline pursuit. The protesters alleged that the project had adversely impacted the fishing catches and income of households dependent on fishing. The Committee for Provision of Assistance to Project Affected Persons (CPAAP), which succeeded two predecessor committees established in 1991 to execute and monitor resettlement and compensation activities, requested a sub-committee, which it had organized in October 1993 on fisheries issues, to determine the number of households which had been impacted. In June 1994, the subcommittee came out with a number of 2,140, and recommended a compensation level ranging between Baht 10,000 and Baht 97,000 for each household. These settlements were not accepted by many, and protests continued on this issue.
14. In January 1995, the Government set-up a new committee called "Committee on Assistance and Occupational Development for Fish Farmers" (CAODFF) to establish the appropriate criteria for compensation and to determine the level of compensation which may be paid to those impacted. The committee included members from among affected people, NGOs who supported these people, EGAT representatives, members of the Government of Ubon Ratchathani province, and representatives of agencies of the province of Ubon Ratchathani concerned with fisheries.
15. In March 1995, CAODFF decided that a compensation level of Baht 90,000 each should be paid to 2,932 households allegedly affected by the project with regard to their fishing income. The compensation of Baht 90,000 would consist of: (a) an outright cash payment of Baht 30,000 per household; and (b) a contribution of Baht 60,000 per household to fund a program for occupational development of fish farmers. This program will be implemented through the formation of a cooperative which will be advised by a panel of senior experts on fisheries, experts on fisheries from academia, and some members of the faculty from Kasetsart University. Some 3,000 additional household cases remain to be investigated by CAODFF to determine if they have been impacted with respect to their fishing income. The total compensation paid to date amounted to Baht 240 million. -64-
AppendixD Page 7 of21
InstitutionalArrangements for Planningand Implementation
16. The overall responsibilityfor smooth implementationof the resettlement program was vested with the two committeesformed by the Government for this purpose on May 15, 1990. These committeeswere:
(a) The committeefor compensationof land rights and properties; and
(b) The committeefor resettlement.
17. The committees were headed by the Provincial Governor of Ubon Ratchathani and consisted of members from EGAT and the various government agencies concerned. The Deputy PermanentSecretary to the Prime Minister's Office was appointedas an advisor to the committees. For performance of specific tasks related to resettlement and rehabilitation of the affected persons, the followingsub-committees were also formed:
(a) Land and properties compensation disbursement sub-committeefor each of the three affected districts;
(b) Land plots allotmentand residents relocation sub-committee;
(c) Agricultureand occupationalpromotion sub-committee;
(d) Public relationssub-committee;
(e) Environmentalimpact assessmentmonitoring and evaluationsub-committee; and
(f) Fishery occupationimpact survey and study sub-committee(formed in October, 1993).
18. The subcommittees,headed by a Deputy Governor of Ubon Ratchathanior the Provincial PermanentSecretary also comprised of the chiefs of the three affecteddistricts, EGAT officialsand the local governmentofficials. The sub-committeesbriefed the apex committeeson the various resettlement and rehabilitationrelated issues from time to time.
19. The two committeeson resettlementdeliberated on resettlementand rehabilitation issues and conveyed findings/requiredactions to EGAT management. EGAT accordinglydirected the Pak Mun project staff to implementthe directivesof the committees. The compensation/resettlementrelated tasks were carried out by the ResettlementUnit of the Pak Mun Hydropower project, based at the project site.
Approvalof ResettlementPlans and Monitoringand Evaluation
20. The National Economic and Social DevelopmentBoard (NESDB) was responsible for approval to the initial resettlementplans drawn up by EGAT at the time of project approval. NESDB was also responsiblefor monitoringthe implementationof environmentand social plans for the project. NESDBdesignated the Office of EnvironmentalPolicy and Planning (OEPP) for carrying out this task. -65-
Appendix D Page 8 of 21
Changesin Apex CommitteesResponsible for Implementation
21. In order to better focus implementation efforts related to resettlement and rehabilitation of persons affected by the Pak Mun Hydroelectric project, the Government replaced the two committees in charge of compensation and resettlement issues with a single committee, the committee for assistance to project affected persons (CAPAP), in December, 1993. The change of government at the central level was also an important reason for this change. This committee, chaired by the Governor of Ubon Ratchathani also comprised members from the Prime Minister's office, EGAT, various departments of the Government, the provincial council, heads of all the affected districts and the Pak Mun Hydropower project staff. The responsibilities of this committee were:
(a) To establish fair and acceptable principles and guidelines on provision of assistance to the persons affe ted by the project;
(b) To oversee compliance of the declaration made by EGAT on March 18, 1993;
(c) To respond to the petitions submitted by affected persons at the Khong Chiam District office and direct the agencies concerned to carry out the necessary actions and inform the local communities;
(d) To address any controversial issues related to environmental and resettlement impact of the project; and
(e) To periodically report to the Minister in the Prime Minister's Office on the performance of the committee.
22. The issue of impact on fisheries could not be resolved effectively through the CAPAP since it did not include fisheries specialists as members. The decision given by the committee on compensation due to the impact on fisheries was not widely accepted by the affected persons. In order to address this issue, the Government constitute,'. on January 27, 1995, a separate "Committee for provision of assistance and development of fisheiy occupation" for fishernen affected by the Pak Mun Hydropower project (CPADFF). The commiLee, heaued by the Director General of Fisheries of the Government, was created ai par with the existing CAPAP.
23. Since all compensation ard resettlement related work has been completed, the Resettlement Unit of the Pak Mun Hydropower project has been dissolved since September, 1995. Only the staff associated with actions related to providing compensation for fisheries and formation of fishing cooperatives has been retained. This staff is also responsible for addressing residual resettlement related issues, if any.
InformationDissemination, Participation and Consultations,and GrievanceRedress
InformationDissemination
24. Efforts to disseminate project related information and involve affected persons in resettlement planning and implementation, which were initially lacking, increased as project -66-
AppendixD Page 9 of 21 implementationprogressed. These efforts were substantiallyprompted by the increasing reliance by affected persons on NGOs and anti-projectactivists for project related information. The information disseminationcampaign was substantiallystrengthened in 1993 and subsequentyears. The district level committeeson various project related issues and also the fisheries committeeincluded representatives of affected villages (village heads) as members in order to facilitate easier information dissemination among affected persons and ensure their participation in the deliberationsof these committees. From 1993, officials from the project office regularly conductedthe followingmeetings to inform/consultwith the affected persons on various project issues:
(a) Meetings in the affected villages on specific project/resettlementrelated issues. At least one such meeting was held every month in at least one of the affected villages. The project officials, members of the sub-committeeson various project related issues, the village heads and affected persons participatedin these meetings;
(b) From 1993, at least one meeting was held in the district governmentoffice of the affected district; and
(c) Meetings of the sub-committeeson the various project related issues. These meetings were held in the district offices (for the three district committees)once every month. The sub-committeeon impact of the project on fisheries includedthree representativesof the affected people from each of the three affected districts.
Participationof, and Consultationswith Affected Persons
25. Serious initiatives to strengthen participation of affected persons in the resettlement program were taken only when project implementationwas at a fairly advancedstage. The main reason for increasing informationdissemination and participation of the affected people was the strong anti- project campaign launchedby some NGOs. Efforts in this direction during the early stages of project planning and implementationmay have helped avoid some of the misgivingsin the minds of the affected people regarding the scope of project impacts and the compensation/resettlementprogram proposed to be implementedby EGAT. However, the affected people were free to exercise their option regarding resettlementalternative preferred and the choice of resettlementsite, from the earliest stages of project implementationitself. In order to improvethe effectivenessof the fisheries developmentprogram in the project area, it has been decided that fishing cooperativeswill be managed exclusivelyby the affected persons.
GrievanceRedress
26. The mechanismsfor redress of the resettlementrelated grievancesof the affected persons, which were initially lacking, improved as project implementationprogressed. Project authorities realized that a number of contentiousissues related to resettlementpolicies and implementationcould only be addressedthrough regular contact with the affectedpersons. Efforts were consequentlymade to present adequate opportunitiesto the affected persons to express and resolve their grievances. The inclusion of local district chiefs in the committees responsible for resettlement planning and implementationwas aimed at ensuring that effective channels are available to convey and address the problems/grievancesassociated with the resettlementprogram. Subsequently,partly in response to the -67-
AppendixD Page 10 of 21 demand of the affected persons to demarcate and publicize the areas affected by the project, a Service Center was opened at the district office at Khong Chiam to receive and process the petitions received from affected persons. Affected persons could also submit petitions to the project office at Srindhom, to the district offices of the three districts, or directly to the sub-committees established for addressing various issues. The petitions/grievances of the affected persons were examined by the sub-committee concerned and its findings and recommendations were conveyed to the apex committee on resettlement issues. The apex committee(s) reviewed the recommendation of the sub-committee and directed EGAT to take the required actions. In case the petition was found not to merit any action, a written reply was given to the petitioner clarifying the reasons for the committees decision. A total of 1,372 petitions were received from the affected persons during project implementation and all of these petitions were addressed by the concerned sub-committees/apex committee(s).
Monitoring and Evaluation of The Resettlement Program
27. Internal monitoring is being conducted by the Environment and Social Division of EGAT and external monitoring, until now, has been conducted by OEPP. Both types of monitoring are currently being carried out on an annual basis. In order to establish a baseline for monitoring the impact of the project on incomes and standards of living of the affected persons, a post-project implementation socio-economic survey of the affected households has been carried out by the Khon Khaem University in June, 1995. Comparison of the income estimates of the residents of the project area in general, prepared by Team Engineering Consultants as part of the EIA and the baseline surveys carried out by Khon Khaen University in 1995, suggests that income levels of affected persons are likely to have improved significantly. In future, both internal and external monitoring of the compensation and resettlement program needs to be carried out annually in the Pak Mun Hydropower project.
B. Enviromnental Impact Mitigation
28. EGAT has fully complied with all agreements reached with the Bank on the mitigation of environmental impacts during and following the construction of the project. A summary of the environmental impact mitigation program is given in Table Dl. EGAT has rehabilitated construction sites and access roads following project completion. Based on project supervision and review during implementation, the Bank found that EGAT had developed an adequate environmental impact mitigation plan. Construction of the dam was carried out in a manner to minimize adverse effects on the site and the river. Blasting to deepen the river-bed downstream to the dam was confined to areas within coffer dams to avoid killing/affecting fish. The Kaeng Tana Rapids downstream have not been affected, and the dam is operated in a way to preserve the Kaeng Saphue Rapids upstream. A warning system has been installed to regulate flow in the river to preserve beauty and tourist interest in the upstream rapids. Significant issues, mitigation actions, and accomplishments of the environmental plan are briefly as follows.
National Park Conservation and Enhancement
29. Under the conservation and enhancement plan, fully equipped protection and guard units have been installed at the Kaeng Tana National Park which is adjacent to the dam-site on the southern -68-
Appendix D Page II of 21 bank of the Mun River. A fully equipped first aid station for providing contingency aid to tourists, and a National Park patrol road, were also designed, constructed and completed for the park. EGAT completed construction of two suspension bridges from either bank to Don Tana island located in the middle of the Mun River. These bridges have considerably enhanced the attraction of the park as a tourist facility. Planting of trees in the park falls within the ambit of the Government's national policy for reforestation.
Archaeological Salvage
30. Prior to implementation, an archaeological survey was conducted by the Government's Fine Arts Department for locating probable archaeological sites and temples which may be affected by the project. The survey concluded that only one historical site, King Chittasen's inscription commemorating his victory several centuries ago over a local ruler, located about 500 meters from the dam was likely to be affected by the project. The pillar bearing the inscription was located at an elevation of 111.7 m msl, and this original pillar was relocated to a museum. A duplicate was constructed and placed at a site close to the original site at a higher elevation.
Fisheries Development
31. The environmental mitigation plan included a strong fisheries development component with a budget of Baht 15.9 million at appraisal. This component has a very broad-based program and the funds are sufficient to execute the following component programs until the end of 1996: (a) construction of a Fisheries Development Center; (b) construction of a Fisheries Resource Conservation/Control Center and execution of a fisheries resource conservation program; (c) construction and operation of a fisheries ladder at the dam; and (d) conduct of a "Fisheries Migration Study". These topics and other subtopics are reviewed briefly below with regard to the accomplishments and results. DOF has prime responsibility for the implementation of this program.
Fisheries Development and Conservation Centers
32. The fisheries development center which consists of an extensive compound, offices and buildings, fish hatchery and spawning facilities, and facilities for providing information and training to villagers has been constructed in the village of Hua Heo, adjacent to the river/dam. The center houses the fisheries development unit presently staffed by seven persons, which manages the operation of the fish ladder, conducts education and training of local residents in aquaculture, and in future will conduct studies and research on fish migration/abundanck. in the river. The other unit, which is housed at this center, is the conservation and regulation unit ccns;sting of 14 individuals who will be responsible for public relations and related activities.
33. The fisheries development center was completed in March, 1995 and it has several dozen large 20 and 40 square meter tanks which comprise the hatchery and culture facilities to be used to introduce fish into the lake/river in future. These facilities are capable of hatching and rearing several commercial fish varieties simultaneously. Starting in May 1996, these facilities will be used to hatch and stock local and other fish species into the Mun River to supplement shortages of fish, if any, created by the construction of the dam. In FY95, a total of 3,000,000 hatched fish and 7,000,000 Macrobrachium were released into the lake. The resulting first year catch of giant sized prawns, -69-
Appendix D Page 12 of 21
resulting from the introduction of Macrobrachium which is not native to the river, was 18 MT in FY95. The data for this estimate was collected from large purchasers from outside the region (60%) and local merchants/fisherman (40%). The planned stocking program and yields for FY96 and FY97 are shown in the Table D2 of this Appendix.
Fish Pond Culture
34. To improve the lives and income stream for villagers and households in the project area, EGAT/DOF evolved a program to provide households affected by the dam project with fish culture ponds, backyard cement ponds, cement and earthen ponds at schools, and large rice field culture ponds as shown in Table D2. The overall accomplishments for the program are generally on track with targets set for the program for the FY95-97 period. In FY95, a total of 150 fish culture and 200 backyard ponds were established for affected households, compared to the total of 500 to be established during the three year period. Similarly, the accomplishments with regard to large school-yard and rice field culture ponds are also on track. The lake reservoir is to be stocked with 5 million fish and Macrobrachium each in FY96 and FY97.
35. Each backyard pond is capable of sustained production of 50 kg of fish per month. Until the end of calendar 1996, funds allocated by EGAT will be used to provide food for fish grown in these community and household ponds. The ICR mission was given to understand that funds being provided for in the Government's planned budget for FY97 contains an allocation to support fisheries and fisheries development center programs. Free supply and distribution of fish food for private backyard and community ponds for affected villages will also continue with government funds after FY96. The program executed under the fisheries development component provided training on fisheries to 1,805 individuals in FY95. This training included instruction on fish culture and fish pond technology.
Fish Migration Study
36. DOF and EGAT jointly conducted studies in two phases on fish populations and migratory patterns in the Mun River and adjacent areas upstream and downstream of the Mekong River close to the confluence of the two rivers. During Phase I of the study sampling was conducted at four locations over a distance of about 140 km up the Mun River to a point close to the Chi River and at two locations upstream and downstream in the Mekong within 5 km of the confluence of the two rivers. This sampling was conducted in 1993 during the dry (April), early rainy (June) and rainy seasons (August).
37. A total of 109 and 93 fish species were found in the Mun and Mekong rivers, respectively, and 32 species were found exclusively in the Mun River. The Mun and Mekhong had 53 and 45 fish species of commercial value, respectively, and between the two only 4 rare species. The relative weight percentages of the four generic groups found (carps, murrels, catfishes, and miscellaneous) in the two rivers are similar, with carps significantly predominating over the other three groups. Carps decrease in relative quantity seasonally from the dry to the rainy season in the two rivers, while the relative quantities of catfishes increase between these seasons. In the Mun, smaller fish tended to concentrate in the rapids, while larger fish were more predominantly found in riverine habitat. However, density of fish found in the rapids was about four times that in the riverine. -70-
Appendix D Page 13 of 21
38. The number ot specie,s and density of fish found during the dry season were considerably higher in the two rivers than in the rainy season. The grand average of standing crops (representing the abundance of fish) is slightly highei in the Mekong than in the Mun. However, in relation to other rivers in Thailand, the abundance found in the Mun and Mekong can be described as moderate.
39. The results and insights gained from the Phase I study were used to design the Phase II studies conducted between October 1993 and September 1994. The objective of the Phase II study was to assess species richness, composition, size distribution and abundance of economically important fish species, and to gain further insight into the movement and migratory patterns of fish in the Mun and Mekong. This study also concentrated on acquiring data from six sampling locations described under the Phase I study, and used two different fish net sampling methods. The results of this study were in line with results obtained under Phase I. A total of 123 fish species representing 29 families were found in the Mun and Mekong locations. Of these, 40 species are considered to be commercially important, while 20 species represent the ornamental varieties. The results obtained on species distribution under the study are similar to data obtained in 1992 from a 4.4 ton fish-kill in the Chi and Mun Rivers resulting from a toxic spill.
40. Data collected under Phase II also show that species present in the Mun and Mekong do not show seasonal variations between the dry and wet season, even though environmental conditions (volume flow, discharge levels, sedimentation loads, allochthonous availability) vary between the seasons. This implies species composition, richness and abundance factors change between seasons, because of limiting factors for growth, reproduction, distribution and food availability. The data collected pointed to different effectiveness (and observed abundances) based on the method employed for harvesting fish.
41. With regard to spawning and migration/movement patterns, the characteristics for each species vary. Spawning and migration occurs throughout the year, depending on the species. There is evidence that some fish descend the Mun for feeding, and others go up the Mun from the Mekong for this purpose. The physico-chemical conditions (pH, dissolved oxygen, etc) factors are different. Phytoplankton is abundant in the two rivers, even though abundance levels change seasonally. Zooplankton levels are moderate, while species composition and distribution of benthos depend on the presence/levels of organic and detritus, aquatic vegetation and water level in each location. In all, 2,992 fish representing 57 species were tagged and released into the rivers, and about 14% of these representing 33 species were recaptured.
42. Together with data collected on fish abundance and distribution in the Mun River in the early 1980's during the EIA for this project and data available since then from other sources, the Phase I and II studies will be useful in evaluating the effect of the dam on fish life in the rivers in future.
Operationof the Fish Ladder
43. The fish ladder has been constructed based on experience and design of the ladder at the Phayao dam. Operation of the fish ladder by DOF, optimization of its operation, and studies to determine its effectiveness in fish migration are being supported by funds provided by EGAT since completion of the dam. Based on data and experience to date from operation of the ladder, particularly over the two major migration seasons (May-June and October-November, 1995), about 60 species of -71-
Appendix D Page 14 of 21
fish native to the river can migrate over the ladder. The experience so far is similar to the fish ladder operated at Phayao. A total of 1,200 fish migrating up the ladder have been tagged, and results and analysis from the Phase I migration data are due in a study form by mid-1996. This will be followed by Phase II migration study commencing in May 1996 which will yield data and results on migration and abundance in 1997. EGAT's funds allocated for fisheries development programs will support these studies and programs up to December 1996. DOF will support these studies and other development programs after this period.
Fishing Activities
44. The DOF estimates the following fishing activities currently taking place in the project area:
In the Reservoir
Number of full-time fishermen 207 Average daily fish catch (Jan - Sept) 190 kg Average daily shrimp catch (Jul - Oct) 70 kg Average daily income per fisherman (approx.) Baht 125
Downstream of the Dam
Number of full-time fishermen 270 Average daily catch 70 kg
Environmental Impaci Nionitoring
45. Throughout the implementation period, environmental effects during construction had been monitored by several government bodies, including the Environmental Impact Monitoring and Evaluation Committee appointed by a Minister in the Prime Minister's office. These committees have, in general, endorsed the mitigation actions taken by EGAT and have been satisfied with EGAT's performance on mitigation measures implemented under the project.
C. Health Impact Mitigation
46. The primary agency responsible for implementing the Health Impact Mitigation (HIM) component is the Ministry of Public Health (MOPH) with EGAT and the Department of Tropical Medicine of Mahidol University being involved in some important aspects. This component had a budget of Baht 5.5 million. The basic objectives of the program plan consisted of: (a) monitoring and prevention of water-borne diseases; (b) improving the health status of affected population; and (c) undertaking research work on schistosomiasis. The five work plans formulated by MOPH to meet the basic objectives of the program involve: (a) inicreasing the efficiency of local health services; (b) preventing local endemic diseases; (c) establishini, primary health centers in the resettlement areas; (d) improving nutrition and environmental sinitatiun; and (e) conducting a vector survey. -72-
Appendix D Page 15 of 21
47. The mid-term review of the health impact mitigation plan in 1993 found that the implementation of the plan by MOPH had been tardy and implementation had not been coordinated between the various departments. The review stated that results of the surveys had not been properly collated, some work plans had not been implemented, and the technique used for surveillance of water- borne diseases was not sensitive enough. However, the judgement at that time was that, if the program enacted was strictly and consistently implemented, the health status of the affected people would be considerably improved. Accordingly, the review mission had made several recommendations on the execution of the HIM, one of which was the establishment of a "Steering Committee" to coordinate and supervise the HIM program.
48. In June 1994, a follow-up review of the HIM plan showed that, with the exception of the research work on snails in the reservoir, the survey on schistosomiasis and two other preliminary work surveys on health of the affected people, no other information was available on the progress of work plans. The establishment of HIM committee to supervise, coordinate and monitor the work was again recommended, and revision of the HIM plan and its technical measures was also recommended. The account on the status of the HIM work-plan described below is based on material presented at a workshop at Khong Chiem (Ubon Ratchathani Province) organized by MOPH in July 1995 on "Improvement of Environmental Health of Pak Mun Project", and interviews by local Bank consultant on health with officials of MOPH.
49. The reconmmendationmade on formation of the committee to supervise, coordinate and monitor the revised HIM plan, as discussed in the preceding paragraph, was implemented by organizing a committee for the purposes stated on March 29, 1995. The committee is chaired by the Deputy Permanent Secretary for Public Health. Based on the information obtained at the workshop, the status of the five work-plans for which MOPH was responsible is discussed below. As originally conceived, the HIM plan was supposed to be conducted in parts over a six year period.
Increasing the Efficiency of Local Health Services
50. Under this work-plan, a public seminar titled "Love Mae Mun" having the objective of emphasizing the need for environmental protection of the Mun River and educating the public on its impact on health was conducted in September 1993. Research on the quality of water in the Mun River was performed in July 1994. Analysis of 20 water samples showed that between 90 and 100% of the samples collected were contaminated with fecal coliform and coliform microorganisms. The component of the work-plan to increase capability and effectiveness of local health services in monitoring and prevention of water-borne diseases through training had not been implemented yet in 1994. This activity is proposed to be implemented in FY96 with a budget of Baht 245,000. It was also originally intended to procure support equipment, including five microscopes, in attempts to strengthen local health monitoring and prevention services. This had not yet been procured based on the information obtained at the workshop in July 1995.
Surveillance of Local Endemic Diseases
51. An epidemiological survey of communicable diseases in areas around the project has been completed. The survey reported 11 communicable diseases in 10 villages in the project area, including diarrhoea, severe diarrhoea, pyrexia of unknown origin (PUO), malaria, enteric fever, dysentery, -73-
Appendix D Page 16 of21 dengue hemorrhagicfever (DHF), encephalitis, influenza, coryza, measles and rabies. Between 1990- 93, the morbidity rates were 997, 2,467, 2,419 and 4,270, respectively, per 100,000 of population. However, it is too early to make a judgement on what the causes are; the darn was only impounded after mid-1994. The incidencesof DHF and malaria in the project area between 1990-92 were lower than those for the whole of the province in which the dam is located, but the 1993 data shows higher incidencethan those of the province at large. The overall morbiditylevels for communicablediseases were similar to those iinthe province in general. 'The data obtained for the period between 1990-93 may be assumedto be baselinedata, sirice dam impoundmentoccurred after the data was collected.
52. A survey of water-bornediseases was conducted once in the last quarter of 1992, which showed that 4.8%, 22.0% and 1.3% of 2,335 people in 13 villages around the project area were infected, respectively, with liver-fluke, hookworm, and intestinalfluke infections. The survey did not encounterany schistosomeincidence.
Establishmentof Health Care Center
53. The original plan called for the establishment of a primary health care center with communityparticipation in monitoringand support of communityhealth activities. This objective had to be modified since EGAT could not persuade villagers to relocate to the resettlement area at Sirindhorn. Affected people preferred to reside in areas close to their original homes in the indigenous villages above the flood-line. The plan was changed into an effort to recruit and train village health volunteers. In 1994-95, 30 village health volunteers and 60 communityleaders were recruited in six villages. The plan had an approved budget of 200,000 Baht and some of these funds were allocatedfor acquisitionof materials and drugs for the primary care centers establishedin these villages. The plan for providingprimary health care services based on the concept of self-relianceis similar in concept to that used all over Thailand. The volunteers will provide basic medical care to the communityand will also serve as a link between the community and the Government for exchanginginformation. The program continues in the 1995-96period along the same lines as in 1994-95.
Improvementof Nutrition and EnviromnentalSanitation
54. The nutritionalbaseline survey was conductedin four villages in January 1993, including the collection of socio-demographicand health related data for the samplingpopulation. The survey revealed that most people had low income, and agriculture was the main occupation. Primary food source was from cultivationand fishing. Nutritional knowledgewas generally poor, especially in the case of pregnant and lactatingwomen. The survey showed that 19.4% of children below five years of age were in grade 2-3 of malnourishment,8.3% of school children were malnourished,and 25% of labor and the elderly were also malnourished. Anemia was found in 35.6% of the population, even though the majority of the sample had adequate protein nutrition, mainly from fish and other aquatic species. This nutritionalsurvey has been proposed to be continued.
55. The sanitation survey was conducted simultaneouslywith the nutrition survey in the four villages, each of which has between 57 and 190 households. The Mun River provides water for domesticuse in these villages, and rain-water is the source for drinking water. The river also is the source for fish. Fermentedfish and other fluke-basedhigh risk food sold in village grocery stores is consumedby the villagers. The school lunch program is below standard with respect to quantity and -74-
Appendix D Page 17 of 21 quality of food served. Overall, the food practices in the four villages were found to be below standard. However, the data does not appear to explain why such levels of malnutrition exist, especially since the calorific intake appears to be close to the standard and the diet appears to have sufficient variety. Still, this data may be useful to serve as baseline data against which future nutrition data may be compared. The sanitation survey also appears to lack depth in not collecting information on the disposal of human-wasteand garbage.
Vector Survey
56. The first and second vector surveys were conducted in 1993 and 1994, each at five sites around the dam project area, including one at a resettlement community. These data show that at present, the Pak Mun Hydropowerproject has had no impact on the distributionof all mosquitovectors on malaria (Anophelesdirus, minimusand maculatus) in the project area. All three mosquito vectors are present with a low population density in the project area. Preliminary data on Japanese B encephalitisand DHF vectors suggest presence with high population density for these mosquitos in villages at and above the dam site. The findings on these vectors suggest low risk for malaria and high risk for the outbreak of DHF.
57. The first and second snail surveys were conducted in 1993 and 1994 during the dry season. The surveys were conducted in four areas each, three in the rapids and one area in slow running water. In addition, 21 other sites on the banks of the river were investigated for the presence of Neotricula aperta, and four of these areas were found to show presence of Neotricula aperta. The result of the first survey show that N. aperta existed in the Mun River between the Saphue and Tana Rapids, and the snails preferred running water with clean substrates. In slow running water, such as at Ban Chad, development of the snail is not as good as in the rapids. The second survey showed similar results, except dam impoundment prevented the execution of studies in deep waters at Tam Plong Rapid and Ban Chad. In effect, the second survey was conducted exclusively in fast running water at the rapids, and use of this data alone for comparative purposes may be misleading, since it is known that snails thrive differently in fast and clean waters versus slow and/or muddy waters. In addition, snails tend to migrate between places, depending on flow conditions and quality of the waters (i.e. clean or dirty). It is necessary to conduct the survey using a variety of longitudinal sampling points to derive meaningful conclusions from the data. However, all snail samples collected during the two surveys did not show schistosome infection.
58. During the Khong Chiem Workshop in 1995, the Division of General Communicable Diseases responsible for the surveys proposed a surveillance and prevention program for schistosomiasis in the Pak Mun area. The program consisted of snail survey, human behavior study, development of methodologyfor surveillance of the infection, and transfer of prevention technologyto local health officials. The proposal was approved in principle with a provision of Baht 700,000 for the work-plan.
EGAT's Health Services Program at Pak Mun
59. The Medical Division of EGAT had started two health care programs for residents of villages affected by the dam project to: (a) provide medical services to the affected population; and (b) annuallymonitor schistosomiasisand other water-borne/communicablediseases in the project area. A mobile medical unit was formed to provide regular visits to the 15 affected villages for treatment of -75-
AppendixD Page 18 of 21 patients and conduct of stool examinations. EGAT provided good quality services to affected villages, and these services are to continueuntil the end of FY96.
60. The mobile medical health unit has provided medical services since 1993. The services had integrated the monitoring of schistosomiasis and liver fluke infections by conducting stool examinationsfor evidence of these diseases. EGAT's monitoring of stool examinations showed a decrease in the positive incidenceof infection for one or more of these infectionsfrom a rate of 39% in 1993 to 23% in 1995. Presence of schistosomeeggs was not seen in any of these examinations/cases. Stool survey for workers at the dam constructionsite, a large number of whom were migrantworkers, was also conductedin 1993 and 1995. In 1993, 24.3% of workers tested positive for infection, while in 1995 only 11.4% tested positive. However, it need to be pointed out that a large number of workers had left the site in 1994 with completionof dam construction,and therefore no certain conclusionscan be drawn on the decreases observed in infection rates without subjectingthe data to further analysis. Moreover, stool examinationswere conductedusing the Kato technique, both for EGAT's monitoring and the MOPH surveillance. Some intestinalinfections, especially protozoal and tape worm, can be missed with the use of this technique.
ResearchWork by MahidolUniversity
61. The faculty of tropical medicine conducted research work on the ability of Neotricula aperta to colonize in the man-made reservoir in Sirindhorn. The research work was also extended to determine if schistosomiasisinfection is present in people and animalsaround this man-madereservoir. The study found no Neotricula aperta in potential habitats in this reservoir. The results of the study also indicate that there is no infection of schistosomamekongi in humans, domestic animals and wild rodents in this area. The mid-term review mission in 1993 observed that further study is required to find out why Neotriculaaperta does not colonize the man-madereservoir. The ICR missionhas been unable to determine if this issue is being investigated.
Waste Water Plant for the City of Ubon and PibulmangsaharnDistrict
62. At appraisal, waste water from the city of Ubol and Pibulmangsaharndistrict several kilometersupstream to the dam site had been releasedinto the Mun River without being treated, despite the fact that these areas are highly populated. To improve the health of the river and reduce potential for serious infection of the river/reservoir, a waste water treatmentplant was planned for the city and district, especially as it was also expectedthat impoundmentof the dam would increasethe population and number of communitiesdownstream. A wastewatertreatment facility is being built at Ubon with a processing capacity of 22,000 cu m/day. The treatment system consists of a two-lagoon aerated stabilization/settlingpond. Wastewaterwill be collectedfrom interceptorsfrom present outfalls into the Mun River of individualcollection mains from different districts in the city of Ubon. The system is expected to reduce the BOD loads to the river, when all the collectors in the district are connectedto the treatmentfacility.
MonitoringProgress and Compliance
63. The issues involved in the implementationof the HIM plan are quite complex. The Bank has not always been successfulin obtainingmonitoring information on the mitigationplan designed for -76-
Appendix D Page 19 of 21 implementation by the MOPH. MOPH's performance on these tasks had been tardy, and the agency has not been solicitous in providing regular information on progress of the HIM plan. EGAT's performance on its health surveillance and assistance program has been satisfactory, and EGAT has regularly kept the Bank apprised of its activities in this regard.
64. The responsibilities for executing MOPH's tasks were spread across a few entities in MOPH. During the mid-term review in 1993 and a follow-up review in 1994, the Bank strongly recommended that a committee be formed with sufficient authority to coordinate, supervise and monitor the HIM implementation plan. It was also reconmmendedthat the HIM plan be critically revised and its implementation measures/objectives be improved on shortcomings identified during the reviews. These recommendations were not implemented, and in the period following the reviews, it was not possible to assess if there was any substantive or significant progress.
65. The ICR mission noted that a committee has finally been organized in March 1995, which appears to address recommendations made by the Bank with regard to supervision, monitoring, and coordination. However, based on information available to the Bank's local health consultant during the Khong Chiem workshop in July 1995, there is cause for concern with regard to the scope of some tasks and methodologies to be pursued on some of these tasks. Accordingly, a critique and set of recommendations had been forwarded on the proposed work-plan following the workshop. The Bank intends to monitor this program until its conclusion in 1998, and has impressed upon EGAT to continue monitoring MOPH's implementation of the HIM plan (Completion Aide-Memoire, Appendix A). -77- Appendix D Page 20 of 21
Table DI: ENVIRONMENTAL IMPACT MITIGATION PLAN Summary and Budget
Item | Work Budget Revised Actual _____I _|Baht m. Budget 1 National Park Conservation (Forestry Department): 16.2 17.6 17.7 (a) Warning System for Tourist Safety (b) Fully Equipped National Park Protection Unit (c) Fully Equipped Security Guard Unit (d) Fully Equipped First Aid Station (e) National Park Patrol Road 2 Tourist Attraction Enhancement (EGAT): 16.0 17.7 17.7 (a) Two Suspension Bridges to Don Tana Island (b) Water Regulation to Preserve/Enhance Rapids 3 Fisheries Development (Department of Fisheries): 1/ 15.9 21.1 16.1 (a) Fisheries Increment and Development Center (b) Fisheries Resource Conservation/Control Center (c) Fisheries Migration Ladder (d) Fisheries Migration Study 4 Health Impact Mitigation (Ministry of Health, 1/ 5.5 5.5 4.7 EGAT, Mahidol University): (a) Monitoring/Prevention of Water Borne Diseases (b) Improving Health Status of Affected Population (c) Research Work on Schistosomiasis 5 Land Transport Improvement (Highways Dept.): 11.0 11.0 11.0 (a) Improvement of Highway and Two New Bridges 6 Archaeological Salvage (Fine Arts Department): 1.4 1.5 1.5 (a) Survey and Exploration of Archaeological Sites (b) Restoration of Pak Dom Noi Inscription 7 Public Relations Campaign (EGAT): 25.5 25.0 25.0 (a) Community Relations Program (b) Public Information Program 8 Environmental Monitoring (EGAT, OEPP): 1/ 27.8 22.2 17.8 (a) Monitoring Implementation of Environmental Impact Mitigation Plan (b) Telemetering System for Flood Control 9 Project Monitoring and Evaluation (Govt. Committee, 2.0 2.0 2.0 EGAT, NESDB): (a) Monitoring by Governmental Committee (b) Evaluation By EGAT and NESDB Contingency 15.0 0.0 | 0.0 Total [136.3 1 123.6 1113.5
1/ To be continued. -78-
Appendix D Page 21 of 21
Table D2: THIRD POWER SYSTEMDEVELOPMENT PROJECT Fisheries DevelopmentPlan (FY95-97) and Accomplishments
Unit Plan Results for Activities No/No/rn2 Total | FY95 J FY96 FY97 FY95
1. Fish pond culture case/pond/m2 500/500/- 150/150/- 150/150/- 200/200/- 150/187/88,944 m2
2. Backyard pond case/pond/m2 500/500/3,000 200/200/1,200 150/150/900 150/150/900 200/200/1,200
3. School pond - earthen pond school/pond/m2 8/8/6,880 8/3/6,880 - - 8/8/6,800 - cement pond 30/30/360 10/10/120 10/10/120 10/10/120 10/10/120
4. Rice-fish culture case/pond/m2 45/45/144,000 15/15/48,000 15/15/48,000 15/15/48,000 15/15/93,920
5. Training trainee 1,805 635 535 535 635
6. Stocking in reservoir: - fish fish (million) 17 7 5 5 7 - giant prawn --- 17 7 5 5 7
7. Public relationship time 60 20 20 20 20
8. Pre and Post Eval. report 2 1 - I 1
IMPLEMENTATION COMPLETION REPORT
THAILAND
THIRD POWER SYSTEM DEVELOPMENT PROJECT (LOAN 3423-TH)
APPENDIX E - MAE MOH MINE EXPANSION
-79-
Appendix E Page 1 of 8
A. ENVIRONMENT AT MAE MOH B. INSTITUTIONAL STRENGTHENING IN THE ENVIRONMENTAL AREA
A. Enviromnent at Mae Moh
1. At project appraisal in 1991, environmental impact mitigation plans included implementation of measures for strengthening environmental control and monitoring capabilities at Mae Moh in anticipation of the completion of power plant Units 10 and 11 (2x300 MW) soon and Units 12 and 13 (2x300 MW) in 1995. With increasing use of lignite, the potential existed for significant adverse environmental effects from emissions of sulfur dioxide, nitrogen oxides, and particulates. The increase in pollution loads in runoff waters and water bodies downstream in the Mae Moh valley was also a concern with expansion of mining activities. EGAT had already initiated studies on acid rain and effect of SO2 on plant ecology on high terrain and had agreed to review the studies' findings with the Bank and take necessary steps to control and monitor SO2 levels. EGAT had also agreed at appraisal to formulate and execute programs to reduce dust levels and improve water quality.
Air Pollution Incident (1992)
2. Beginning in March 1992, after the commissioning of Units 10 and 11, there were sporadic reports/complaints from places as far away as the Pratoo Pha Military Camp (22 km from Mae Moh) and Tha Si School in Ban Daeng County about respiratory and other health effects from high concentrations of sulfur dioxide. These reports culminated in a health-related incident in October 1992, when about 1,000 villagers from the Ban Sob Pad area experienced acute respiratory distress and had to be treated at the hospital for symptoms of exposure to air containing high SO2 concentrations. The health effects were also accompanied by measurements of high SO2 levels, frequently exceeding hourly average concentrations of 2,000 ug/cu m between 10 a.m. and noon.
3. Apparently, meteorological and wind/mixing patterns in the Mae Moh valley are quite complex, especially during the cool season beginning in October. Subsequent investigations and modelling studies indicate the valley experiences serious inversion-fumigation effects. Meteorological conditions are frequently such in the cool season as to prevent rapid mixing of emissions from power plants with air above and outside the valley in the early mornings. The pollutant gases from the power plants, especially SO2 are entrapped in mist/fog droplets and fall to the ground well before mixing conditions allow high ground level SO2 conditions to occur. This hypothetically explains the time lag observed between the onset of symptoms and peak SO2 readings experienced after 10 a.m.
Short- Medium-Term Mitigation and Control Measures
4. Following the October 1992 incident, the Government immediately prepared an action plan consisting of a diverse set of measures, which were to be implemented by EGAT, the Lampang Province, and the Ministry of Science, Technology, and Environrnent (MOSTE). A working group consisting of EGAT, Department of Health (DOH) and Pollution Control Department (PCD) was established to implement the plan. Under this plan, PCD and EGAT were responsible for: (a) monitoring air quality and meteorological conditions in Mae Moh; (b) development of a dispersion/mathematical -80-
Appendix E Page 2 of 8 model describing ground level air pollution levels based on meteorological conditions and air quality readings from monitoring sites; and (c) selection of appropriate sulfur capture technology for installation on power plant units in the immediate future. DOH and EGAT were responsible for providing medical services to affected people and for carrying out an epidemiology study on acute and chronic effects on affected people. In addition, the following interim measures were instituted, especially during the cool season, to control pollution problems before long-term solutions are put in place:
a. Mining operations were modified to require stocking of lignite from lower sulfur content seams for use in the cool season, especially in the period between 6 a.m. and noon, when inversion-fumigation effects are likely. Effective blending and quality control procedures were instituted to ensure that feed fuel quality is consistent for safe operations;
b. Power plants were required to operate at much lower capacity during the cool season. Since the incident in 1992, the capacity utilization at Mae Moh in the cool season has been below 1,000 MW, compared to an existing total capacity of 2,625 MW in 1995. Capacity reduction is ensured, especially during mornings under adverse meteorological conditions. To reduce the economic impact of lower capacity factors, plant maintenance is scheduled during the cool season;
c. Environmental and meteorological monitoring equipment, including equipment planned for installation under Bank Loans 3138-TH and 3423-TH, was procured to adequately cover EGAT's monitoring needs, in the light of the enhanced awareness of ground level pollution effects resulting from the dispersion modelling exercises;
d. An automated ambient air monitoring network was installed at Mae Moh and surrounding areas in the valley. EGAT established eight continuous monitoring stations and PCD operated three additional continuous monitoring stations as part of this network. Data from this network is transferred continuously to the power plant, and EGAT and PCD offices in Bangkok;
e. EGAT installed continuous stack emissions monitoring equipment on power plant Units 4 - 11 to monitor SO,, and NO,. PCD also conducted periodic monitoring of plant emission levels;
f. In 1995, EGAT completed the installation of equipment to increase its capabilities for monitoring meteorological conditions with Sodar/RASS. This equipment replaced that obtained on loan from the National Oceanic and Atmospheric Administration of the USA, following the 1992 incident;
g. An air dispersion model was developed with assistance provided by US EPA. The model developed is being used in Mae Moh as part of the early warning system; and
h. During May 1993-June 1994, the PCD, under technical assistance provided by the Bank, reviewed air quality standards, especially the 1-hr standard for SO2 . An interim 1-hr air quality standard of 1,300 ug/cu m has been established for areas around the Mae Moh complex. -81-
Appendix E Page 3 of 8
5. In addition to the above mitigation measures, control and remedial actions, the provincial authorities at Lampang, at the behest of the Thai cabinet, instituted continuous health monitoring of the local population through the Mae Moh district and subdistrict hospitals. The authorities also continuously provided diagnostic and treatment services to affected people using mobile units, especially during the cool season. EGAT assisted in providing diagnostic and other medical services to Muban subdistrict on a weekly basis through a mobile unit, and dispatched an emergency unit into Muban during high SO2 alerts.
6. Under direction from a compensation committee established by the Ministry of Interior, EGAT provided a compensation of Baht 1.7 million to the affected people. The compensation was allocated on the following basis: 50% for impact on health, 41% for impact on plants and the rest for impact on animals. EGAT also provided funding of Baht 14.5 million to finance a health impact study to be completed in 1996. The rest of the funding for the estimated Baht 31 million completion cost for this study is to be derived from the Government.
Long-Term Control Measures
7. EGAT had organized a number of studies to assess the impact of increased mining and power development in Mae Moh. Lampang and Mae Kham. Following the 1992 incident, EGAT and PCD, with consultant assistance, completed a study to determine the effect of using particular control strategies on hypothetical power plant combinations consisting of existing units in Mae Moh as well as those planned in Lampang and Mae Kham. An improved dispersion model based on the US EPA SCREEN2 computer program was used to determine the effect and effectiveness of control strategies to meet different 1-hr quality standards for SO2 . The results of these studies show that the FGD control technologies planned to be installed by EGAT on Mae Moh Units 8-13 are consistenit with the least cost solutions indicated by this study. Adoption of the strategies planned by EGAT for Units 4-7 would essentially reduce SO2 ground level concentrations to levels below those mandated by the 1-hr quality standard.
8. As summarized in the completion Aide-Memoire (Appendix A), EGAT has designed and put into place a scheme to retrofit power units at Mae Moh with SO, control technology. Power Units 12 and 13 (2x300 MW) completed in 1995 were fitted with wet limestone scrubbers. The scrubbers have been operating effectively since their installation with sulfur capture efficiency in the 90 to 95% range. Units 10 and 11 (2x300 MW) are being fitted with wet FGDs which are scheduled to go into operation by the end of 1996, and Units 8 and 9 (2x300 MW) will be similarly retrofitted shortly thereafter. By the end of 1997, 1,800 MW of generation capacity out of a total of 2.625 at Mae Moh will be operated with FGDs. This is expected to significantly curb the SO, emission problem at the complex.
9. EGAT also plans to retrofit Units 4-7 (4x 150 MW) with FGDs, and the tendering process to install these is planned to commence in mid-1996. EGAT does not plan to fit Units 1-3 (3x75 MW) with FGDs, since the units are approaching the end of their useful life. However, even well before completion of installation of devices on all of Units 4-7, air quality in the valley is expected to meei the 1-hr standard with normal operation of the power station at full capacity. Plans for building additional lignite based units in Mae Kham and Lampang have been shelved, pending solution of the SO2 problem at Mae Moh. --82-
Appendix E Page 4 of 8
Air Quality at Mae Moh Post 1992 Incident
10. With the installation of a real-time air quality monitoring system and measures put into effect to curb emissions as discussed in para. 4, SO2 levels in the valley have been reduced considerably. For calendar year 1994 for which tabulated data is readily available, the 24-hr SO, standard established for Thailand has been essentially complied with. The 1-hr interim standard established for Mae Moh has been complied with for 99.8% of the annual hrs at locations which are most likely to show the highest SO2 concentrations. Occasionally, the interim 1-hr standard at one or more monitoring sites has been exceeded during the cool season. However, when this occurs, SO2 levels generally do not often exceed the hourly standard by more than 50%. The NO, levels in the valley are well below the 1-hr standard, and there are no compliance problems on this issue.
11. EGAT has developed a computer model for simulating total suspended particulate (TSP) levels in the mining areas. The 24-hr air quality standard with regard to TSP levels has been exceeded significantly and frequently close to and around the mining operations in the 1993 and 1994 periods. The frequency of the violations in locations away from the mining and power plant operations is relatively small, and the violations generally occur for less than 15% of the annual number of hours. Significant violations are confined to a few monitoring locations, such as Ban Hua Fai, Ban Koo and Ban Huai Khing, within EGAT housing and residential areas.
12. TSP standards are exceeded, if and when they occur, in the dry months, when water supply in the minepit is relatively scarce and roads over which trucks ply to transport overburden to dump sites stay dry for long periods. The ICR mission had the opportunity to observe contractor overburden removal operations. The mission feels that these operations need to be monitored closely to reduce dust levels. It needs to be emphasized that, when TSP levels are viewed in the context of the Bank's hourly standard of 500 ug/cu m, the problems encountered in the residential areas are less serious.
Water Quality at Mae Moh
13. Water quality is monitored at Mae Moh through sampling at 27 locations involving water streams, supply and receiving reservoirs, ponds, mine sumps, and power plant effluent. Water quality in the downstream reservoirs, which ultimately receive the waters from the mine-sumps, overburden areas, power plant effluent, and diversion channels, has not achieved acceptable norms during the implementation of the project. Even though the overall loading of the total solid dissolved content is high but acceptable, the conductivity, total sulfate, alkalinity and hardness levels are high and exceed Thailand's standards. The calcium and sulfate levels in downstream reservoirs generally exceed the drinking water quality standards, and in the case of sulfate the level is about 50 to 100% higher than the standard for much of the year. The quality of waters at Mae Moh is satisfactory with regard to heavy, trace and toxic metal species. For the most part, none are present in measurable levels or levels approaching environmental quality standards for surface or industrial waters.
14. Apparently, water from the upstream supply reservoirs is high in dissolved solids, sulfate and hardness levels, even though these are within general water quality standards. There is a pick-up in concentrations as a result of dissolved solid infusions from overburden runoffs, overflows from mine- sumps in the wet season, and some contributions from the soil and basin flows. The result is a large increase in concentration levels as the waters make their way to the downstream reservoirs and streams. -83-
Appendix E Page 5 of 8
The ICR mission had not been able to observe data on the various balances to identify specific levels of contributions and sources.
15. During implementation of the project, EGAT completed creation of three wetland areas to act as buffer and bio-processing medium for waters flowing between settling ponds and downstream water bodies. The ICR mission observed some marginal improvements in total dissolved solid content of water traversing through these wetlands; however, improvements in dissolved solid content did not show seasonal consistency. Sulphate content levels also appear to be largely unaffected. No conclusions on the effectiveness of wetlands can be drawn at this time. It is necessary to acquire more wide-ranging data to assess the effect of different parameters (flow, residence time, wetland plant density, etc) before the potential of the wetlands as a solution can be determined. EGAT may need to evolve other strategies to supplement the wetland option.
16. EGAT may be well served in conducting studies and/or calculations in the short term to determine if the sulphate problem is tied to the high levels of dissolved SO2 present in rain and other forms of precipitation around Mae Moh. 'Iheoretically, the SO2 present in runoff waters can undergo catalytic reactions with dissolved oxygen, water and limes present in soils to yield sulfate ions or sulfuric acid. These conversion reactions are the basis of some wet control technologies, and metal ions (such as ferrous/ferric and cuprous/cupric) required to rapidly catalyze the reactions are generally present within the soil and runoff waters. Should such be the case, then control technology being installed in Mae Moh should have a significant effect on the sulphate problem in future.
17. Sulphate, present as a suitable ion, promotes plant growth and quite often is used as a fertilizer. EGAT has established a sinking fund to finance a long-standing program to reclaim mined-out land and overburden dumps, and plant trees on reclaimed land. The emphasis of this program has been on planting trees which take a very long time to mature and assist in the formation of soil. However, this existing program could be modified by including in its activities undergrowth formation (small plants and grasses) strategies in areas where trees have been planted and others awaiting tree planting. Soil and undergrowth formation is a fast and effective strategy for retention of sulphate, calcium and water in the ecosystem and soil. Undergrowth is also effective in dust control. Water pollution originating from mined-out areas and dumps can be effectively controlled by strategies suggested in this paragraph.
Environmental Studies Completed by EGAT
18. A number of important studies were completed during the implementation of this project as briefly discussed below.
Air Dispersion Model
19. Following the 1992 incident, US AID and US EPA provided assistance in developing an air dispersion model for the Mae Moh area. EGAT reviewed and collected background data for development of the model. The emission and meteorological data were used to develop an air dispersion model in the USA for predicting ground level concentrations of pollutants based on specific emission and meteorological conditions. The model is being used at Mae Moh as part of the early warning system. -84-
Appendix E Page 6 of 8
System-Wide Control Strategies for Mae Moh Power Plants
20. This study was completed in 1994. Results of the study on the effectiveness of control strategies planned to be installed by EGAT on power Units 4 -11 at Mae Moh have been discussed in para. 7. The study results show that the technology options formulated by EGAT are effective for control of SO, to levels below air pollution standards. The results also show that solutions being planned for implementation are least cost strategies. Further, the study compares costs for installing new coal plants in Upper Southern Thailand with new ihgnite based plants in the Mae Moh area. The results show that plants constructed at a coastal location in Upper Southern Thailand can meet ambient air quality standards and be more cost effective than new plants in the Mae Moh area.
Acidic Deposition Study
21. This study was completed in October 1994. Under the study, the current levels of acidic deposition in Northern Thailand resulting from the operation of the Mae Moh power plants were assessed using a network of 15 precipitation collectors around Northern Thailand. The resulting data collected was analyzed using an acid deposition model. The study also predicted the deposition levels and the relative intensity of these deposits vis-a-vis hypothetical lignite based generation scenarios in Mae Moh. Lampang and Mae Kham. The simulation calculations show that total wet and dry sulfate deposition rates originating from Mae Moh plants range from 33 kg/ha-year to 257 kg/ha-year in large areas downwind from the plants. During the rainy season, maximum deposition occurs in the first 20 km downwind and corresponds to a deposition level between 61 kg/ha-year and 96 kg/ha-year. The significance of these results may be weighed by considering the fact that in North America, wet acidic deposition values above 20 kg/ha-year are considered a justification for protection of sensitive areas.
22. The modelling study found that no significant area would exist which would have high acidic deposition rates (above 30 kg/ha-rainy season) after installation of control technology being planned for Units 4 - 13. Thus, it is highly probable that solutions being implemented by EGAT would be effective in significantly reducing the size of the area having wet acidic deposition rates above 10 kg/ha- year.
High Terrain Forest Ecology Study
23. A draft of this study was completed in September 1995, and the Bank was provided access to it. EGAT recently completed review of the draft, and has provided the authors with comments for consideration and inclusion into the revised study to be available soon. The conclusions discussed here are tentative, and are subject to change. The study states that forest ecosystems around the Mae Moh area have been negatively impacted from the original natural state. The structure and functions of the ecosystems are in a deteriorated state. Despite a more than tenfold increase in SO, emissions over the last dozen years, the emission levels do not appear to have contributed significantly in a negative manner to the functioning of the forest ecosystem. Plant tissue shows the presence of sulfur; however, concentrations are low and therefore are not accountable to date for the sparse and deteriorated vegetation in some areas. Leaves and trees for the most part do not appear to exhibit wilting and yellow spotting, which usually are symptomatic of exposure to high concentrations of SO_.
24. The forest ecosystems appear to have been most influenced by human disturbance factors, -85-
Appendix E Page 7 of 8 forest fires and m.ning activities. The vegetation of the terrain is sparse also because rain occurs only for a small fraction of tlue year, the earth surface is generally arid, and the soil has low fertility. Some of the natural and human-intluenced factors, together, appear to be critical for the low abundance of wild life and insect populations in some areas. The soil in the Mae Moh area has a high buffering capacity, and can neutralize sulfur-based acidity to prevent damage to plants and undergrowth. There appears to be no effect of sulfur depositions on soil fauna, such as nematodes, invertebrates, and microorganisms. Seasonal changes on soils appear to be more critical in the relative abundance of these species between seasons. The study concludes that acidic depositions and high SO, levels in the air do not appear to have negatively influenced wild life populations, rock structures, soil conditions, and both surface and subsurface water quality in the high terrain area.
B. Institutional Strengthening in the Enviromnental Area
25. At appraisal, it was agreed that the Government would undertake to implement a component aimed at strengthening the environmental regulatory agencies with specific reference to the mining and power sectors. The agencies concerned with the two sectors were the NEB, DIW, DMR and PWD. The main items included in the component were: (a) strengthening of the capabilities of the agencies through technical assistance through a review of: (i) organizational functions and methods; (ii) Factory and Minerals standards; and (iii) standards and designs; and (b) technical assistance and training of staff in: (i) monitoring of emissions; (ii) use of monitoring equipment; (iii) reviewing of environmental impact assessments (ElAs); and (iv) design and operation of sewage systems; and (c) strengthening the environmental monitoring networks and procurement of laboratory and allied equipment.
26. The budget need for implementing the program on technical assistance outlined above was estimated at US$5.7 million, out of which between US$4 and US$5 million was estimated for equipment purchases. The Government was supposed to allocate funds for equipment purchases. It was expected that technical assistance and training, estimated to cost above US$1 million, would be implemented through grant assistance; however, should grant funds prove to be inaccessible, the Government would allocate the funds from its sources. Expert assistance was supposed to be implemented over two years beginning in 1993, to be followed by training of employees from critical agencies beginning in 1994 and ending in 1995, or thereabouts. Equipment purchases were slated to begin immediately in 1993 and completed in a period of three years.
Expert Assistance and Training
27. Procurement of expert assistance and implementation of training were considerably delayed due to limited capacity on the part of implementing agencies to formulate/write a good technical proposal, and seek grant assistance using such a proposal. PCD attempted to obtain government funding for this activity in FY94; however, justifications and detailed work-plans presented to the Government were considered to be inadequate to warrant budgetary allocations from FY94 funds.
28. In late 1994, the Bank secured grant assistance for preparation of a detailed work-plan for personnel training. A workshop, attended by key staff from various agencies concerned with this, -86-
Appendix E Page 8 of 8
was held in April 1995 to assess training needs and identify ways/means for implementing the training program. The framework, scope, and budget needs for the training program were identified during this workshop. The funding needed to execute the training program was estimated at Baht 48 million. The funding needed for FY96 was estimated at Baht 5 million; however, only Baht 2.5 million was allocated by the Government for FY96.
29. In late 1994, the E7 group of international utilities, introduced to the Government by the Bank, agreed to provide free expert assistance and training to trainees from key agencies of the Govermnent (PCD. OEPP, DEQP, DIW and EGAT) over a one year period during 1995/96. Implementation of this program commenced only in May 1996 and is expected to last for about a year. program.
Acquisition of Equipment
30. The procurement of equipment was planned at appraisal and carried out exclusively using government funds. Because of the 1992 incident, the equipment purchases for PCD were prioritized to meet the needs of the situation, and hence equipment specifications were modified to address the Mae Moh needs. PCD was allocated US$4.6 million in 1994, which was used to procure two meteorological monitoring stations, 1 mobile air quality monitoring unit, one automatic rain-sampling/monitoring station, eight semi-permanent air and noise monitoring stations, and a computer to form a system for data handling and processing. DMR was allocated US$159,000 to make equipment purchases, while DIW was not allocated any funds for equipment purchases. All in all, less equipment was acquired compared to those to be procured under the appraisal plans; however, the scope of some of the procured equipment was considerably more in terms of capabilities, in light of the needs following the 1992 incident.
Revised Enviromnental Standards
31. During negotiation of the loan the Bank stressed the importance of establishing a time- frame for the establishment of emission standards for power plants and industries. Emission standards for new power plants were issued by the Government in January 1996. In regard to Mae Moh, the Government has issued a 1-hour ambient SO2 standard and has directed EGAT to fit FGDs on all power plants except Unit 1-3 which will be soon retired. Emission standards for industry are still under consideration.
32. In 1995, NEB modified/ evolved some new ambient air quality standards which relate to the power subsector. A new 1-hr standard (780 ug/cu m) was established for SO,, and the carbon oxide 1-hr standard was reduced from 50 mg/cu m to 32 mg/cu m. There were no changes made in the standard for NOx. The 24-hr TSP standard remains the same as before at 330 ug/cu m; however, the Governmient introduced a new standard on particulates with diameter of less than 10 microns, which previously did not exist. The 24-hr ambient air quality standard for particulates below 10 microns has been set at 120 ug/cu m. MAP SECTION
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Report No: 15744 Type: ICR