PROMOTE EXPORTING JAPANESE QUALITY INFRASTRUCTURE, THAT IS, BEST AVAILABLE TECHNOLOGY, FY2018
FEASIBILITY STUDY ON EXPORTING OF INFRASTRUCTURE FOR WATER SUPPLY, SEWAGE & RECYCLING SYSTEMS THROUGH COMPREHENSIVE SERVICE BY WATER SOLUTION COMPANIES IN THAILAND
FINAL REPORT
FEBRUARY 2019
MINISTRY OF ECONOMY, TRADE AND INDUSTRY CONTRACTOR: SUMITOMO ELECTRIC INDUSTRIES, LTD.
Abbreviation 略語 説明 BMA Bangkok Metropolitan Administration（バンコク首都圏庁） BOI Board of Investment（タイ投資委員会） BOO Build Own Operate（建設－所有－運営方式） BOT Build Operate Transfer（建設―運営－移転方式） BTO Build Transfer Operate（建設－移転－運営方式） CIP Cleaning in Place（定置洗浄） DBO Design Build Operate （設計－建設―運営方式） DDS-BMA Department of Drainage and Sewerage（排水下水局、BMA） DOLA Department of Local Administration（地方行政局、MOI） EEC Eastern Economic Corridor（東部経済回廊） EHIA Environmental and Health Impact Assessment （環境健康影響評価） EIA Environmental Impact Assessment （環境影響評価） EPC Engineering, Procurement and Construction （設計、調達、建設） ERC Expert Review Committee （専門審査委員会） EW Eastern Water Resources Development and Management Plc.（East Water 社） FIRR Financial Internal Rate of Return（財務的内部収益率） FS Feasibility Study（実施可能性調査） IEE Initial Environmental Examination （初期環境調査） IETA Industrial Estate Thailand Authority（タイ工業団地公社） JBIC Japan Bank for International Cooperation（株式会社 国際協力銀行） JETRO Japan External Trade Organization（独立行政法人日本貿易振興機構） JICA Japan International Cooperation Agency（独立行政法人国際協力機構） MBR Membrane Bio-Reactor（膜分離活性汚泥法） METI Ministry of Economy, Trade and Industry （経済産業省（日本）） MF Micro Filtration Membrane (精密ろ過膜) MONRE Ministry of Natural Resources Environment（天然資源環境省） MOI Ministry of the Interior（内務省） MOIn Ministry of Industry（工業省） MWA Metropolitan Waterworks Authority（首都圏水道公社） NHA National Housing Authority（住宅公社） NPV Net Present Value（純現在価値） OCC Opportunity Cost of Capital（資本の機会費用） O&M Operation and Maintenance（運転維持管理） ONEP Office of Natural Resources and Environmental Policy and Planning, MONRE （天然資源環境省 天然資源環境政策計画局）
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PCD-MONRE Pollution Control Department （汚染管理局（天然資源環境省）） PFI Private Finance Initiative（民間資金イニシアチブ） PPP Public-Private Partnership（官民パートナーシップ） PTFE Polytetrafluoroethylene（四フッ化エチレン樹脂） PVDF Polyvinylidene fluoride（ポリフッ化ビリニデン） PWA Provincial Waterworks Authority（地方水道公社） PWD Public Works Department, MOI（公共事業局） RID Royal Irrigation Department（王立灌漑局） RO Reverse Osmosis Membrane（逆浸透膜） SEI Sumitomo Electric Industries, Ltd.（住友電気工業株式会社） SPC Special Purpose Company（特別目的会社） TDS Total Dissolved Solid（総溶解性物質） TMP Trans-Membrane Pressure（膜間差圧） TTW TTW PUBLIC COMPANY LIMITED（Thai Tap Water 社） UF Ultra Filtration Membrane（限外ろ過膜） UU Universal Utilities Plc.（Universal Utilities 社（East Water 社の子会社）） WACC Weighted Average Cost of Capital（加重平均資本コスト） WMA Wastewater Management Authority（下水道公社） WTP Water Treatment Plant（浄水場） WWTP Wastewater Treatment Plant（下水処理場）
Exchange rate as of 8th January 2019 Currency TTS TTB TTM USD 109.79 107.79 108.79 THB 3.49 3.33 3.41 THB/USD 31.5 32.4 31.9
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Table of Contents
Abbreviation
CHAPTER 1 BACKGROUND AND PURPOSE OF THE SURVEY ...... 1-1 1.1 Background of the Survey ...... 1-1 1.2 Issues on the Target Field of the Survey ...... 1-1 1.3 Purpose of the Survey ...... 1-2 CHAPTER 2 OUTLINE OF THE SURVEY ...... 2-1 2.1 The Contents of the Survey ...... 2-1 2.2 Survey Method and Structure of the Survey ...... 2-6 2.3 Survey Schedule ...... 2-6 CHAPTER 3 WATERWORKS, SEWARAGE WORKS AND RECLAMED WATERWORKS IN THAILAND ...... 3-1 3.1 Waterworks ...... 3-1 3.2 Sewage Works and Reclaimed Water Works ...... 3-6 3.3 Current Situation of Installation of Membrane Technology and its Issues for the Water Business ...... 3-13 3.4 Outline of Water Supply Companies ...... 3-16 3.4.1 East Water ...... 3-16 3.4.2 TTW ...... 3-17 3.5 Outline of Environmental and Social Considerations and PPP Projects ...... 3-19 3.5.1 Environmental and Social Considerations ...... 3-19 3.5.2 Trend in the PPP Projects ...... 3-35 CHAPTER 4 PROPOSAL OF COMPREHENSIVE SERVICE ...... 4-1 4.1 Target Field of the Comprehensive Service ...... 4-1 4.2 Outline of Comprehensive Service ...... 4-2 4.3 Beneficial effect to the Partner Country by Comprehensive Service ...... 4-3 CHAPTER 5 CASE STUDY (PRELIMINARY DESIGN) ...... 5-1 5.1 Target Project of Preliminary Design ...... 5-1 5.1.1 Selection of the Target Project ...... 5-1 5.1.2 Target Area ...... 5-1 5.2 Current Water Supply Condition, Existing System and its Issues ...... 5-3 5.3 Preliminary Design of Water Treatment Plant applied Membrane Technology 5-6 5.3.1 Design Condition (Target Area, Water Quality and Population Served, etc.) .. 5-6
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5.3.2 Overall Water Supply Facility Plan ...... 5-7
5.3.3 Effectiveness of Reduction in CO2 Emissions by Application of Membrane Technology ...... 5-16 5.3.4 Risk Analysis in the Project ...... 5-17 5.4 Estimated Project Cost and Schedule of the Project ...... 5-17 5.4.1 Cost Estimation ...... 5-18 5.4.2 Implementation Schedule ...... 5-19 5.4.3 O&M Cost ...... 5-19 5.5 Financial Analysis ...... 5-21 5.5.1 Economic Analysis of the Project ...... 5-27 5.6 Operation and Maintenance Plan ...... 5-28 5.7 Environmental and Social Considerations ...... 5-29 5.7.1 Implementation of Environmental and Social Consideration to obey Relevant Laws and Regulations of Thailand ...... 5-29 5.7.2 Environmental and Social Consideration ...... 5-31 CHAPTER 6 STUDY ON PARTICIPATION INTO OPERATION BUSINESS AND SETTING-UP OF ENGINEERING SUPPORT CENTER (ESC) ...... 6-1 6.1 Purpose ...... 6-1 6.2 Classification of PPPs ...... 6-1 6.3 Function and Organization of SPC in the Targeted Business of this FS ...... 6-3 6.3.1 SPC-JV as a Joint Venture between a Local Partner and Us...... 6-3 6.3.2 Functional Allotment to SPC-JV and to our own SPC (SPC-SEI) ...... 6-4 6.4 Applicable Investment Incentives by BOI to the SPC...... 6-4 6.4.1 Incentive Plans Prepared by BOI ...... 6-5 6.4.2 Applicability of BOI Incentives to the SPC ...... 6-6 6.5 Setting Up a Company and It`s Timeline: ...... 6-7 6.6 Financing ...... 6-7 6.6.1 Approximate Scale of Finance Requirement ...... 6-7 6.6.2 Cash Requirement and Financing (DBO and BTO - Plants do not belong to SPC) ...... 6-8 6.6.3 Cash Requirement and Financing (BOT, BOO, Concession, Full Private - Plants belongs to SPC) ...... 6-8 6.6.4 Study on Japanese Institutional Funding Support on Quality Infrastructure Export ...... 6-9 CHAPTER 7 HUMAN RESOURCE DEVELOPMENT PLAN ...... 7-1 7.1 Purpose of Human Resource Development Plan ...... 7-1
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7.2 Target Trainees ...... 7-1 7.3 Implementation Method of Training ...... 7-1 CHAPTER 8 TECHNICAL COMPETITIVENESS OF JAPANESE EQUIPMENT AND TECHNIC FOR FEASIBILITY OF THE PROJECT ...... 8-1 8.1 MF / UF Membrane ...... 8-1 8.2 RO Membrane ...... 8-3 8.3 Expansion Sales Activity Plan to Third Country by Utilizing Membrane Module Manufacturing Factory (China) ...... 8-4 8.4 Study on Advantage by Collaboration of Japanese Companies ...... 8-6 CHAPTER 9 OVERALL PLAN OF THE PROJECT, PROJECT SCALE AND MEASURES TOWARD TO RECEIVE ODER OF THE PROJECT ...... 9-1 9.1 Overall Project Schedule ...... 9-1 9.2 Trial Calculation of the Project Scale ...... 9-1 9.3 Utilization of SEI’s Existing Organization and its Business Flow for Order ... 9-2 9.3.1 Sales and Maintenance Services of Industrial Wastewater Treatment Plants to Improve Cash Flow and to Build Up the Local Presence as the Secondary Effect ...... 9-2 9.3.2 Contribution of Our Existing Local Company (SET) as an Investor to SPC- SEI...... 9-2 9.4 Study on Expansion Promote Measures and Possibility of Horizontal Expansion to the Other Countries ...... 9-3 9.5 Issues regarding of Project Implementation ...... 9-4 9.5.1 Political Risk ...... 9-4 9.5.2 General Risk of the Contract with the Government Agency ...... 9-4 9.5.3 Risk of Water Shortage and Non-Revenue Water ...... 9-4 9.5.4 Risk of the Contract with the Partner Company of SPC ...... 9-5
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CHAPTER 1 BACKGROUND AND PURPOSE OF THE SURVEY
1.1 Background of the Survey The government of Thailand announced “Thailand 4.0” in the Year 2015 as economical society to be targeted for long term vision. The specific measures to implement the policy are to attract investment and develop in 10 industrial sectors, which will become new economic growth engines, and to promote the economic plan of " Eastern Economic Corridor (EEC)" targeted the eastern coastal area (3 eastern provinces, such as Chonburi, Chachoengsao, Rayong), and the development of infrastructure such as ports, highways, railroads and airports have been progressed integrally. Furthermore, the economic plan which is the expansion of airport has been proceeding in Chaing Mai province and its surrounding area. Under such situation of the economic development plan, it is expected that water demand in the future will be increased, and it is urgent to construct water supply / sewage system to meet the future water demand and respond to secure industrial water which is lacking due to the prior allocation of water resource to water supply. In response to these urgent issues, Sumitomo Electric Industries, Ltd. (SEI) has been selling PTFE "Poreflon 1 Membrane Module" proprietary developed / manufactured, however, it is concerned low price competition with recent emerging companies and the rise of overseas major companies expected in the future, and new strategies are required as water solution companies. The issues of the proposed project are shown below.
1.2 Issues on the Target Field of the Survey Status of the rise of overseas major companies and low price competition with emerging companies Japanese manufacturing companies trying to get opportunities to enter the project for water supply system, sewerage system and reclaimed water system, have quality and superior water treatment equipment, however, it is forced to struggle in tender for the project which the initial cost is emphasized. In the future large scale water supply and sewage projects, Japanese manufacturing companies related to water treatment, which had been aiming at product sales only so far, cannot compete with overseas major companies which cover design, EPC and O&M at one stretch, therefore, the market share in Thailand will be threatened.
Dissatisfaction with product quality of emerging companies and aftercare Especially, membrane treatment technology, even if the operation is smoothly performed
1 PTFE: Polytetrafluoroethylene
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immediately after installation, if the product quality of the membrane module for water treatment is poor, troubles such as membrane’s clogging and breakage occur in the short term. As a result, equipment operation is not properly implemented, water treatment is not performed satisfactory and water quality deteriorates, so that negative impact occurs in the people’s health, the Japanese companies in Thailand, the manufacturing activities of the local enterprises and water environment. Overseas emerging water treatment manufacturers make excellent proposals in terms of initial cost, however, there are cases which it is forced to replace all of membranes ultimately due to inadequate after-sales service for operation’s problems, and then it is increasing dissatisfaction of customers.
Concern of water resources shortage in the future for industrial waterworks for industrial park In EEC, there is concern about shortage of water resources against the increase in water demand due to the further development in the future. In this area, construction of new reservoirs, save water, construction of desalination plant, use of groundwater, etc. can be considered as measures, however, the sufficient effect cannot be expected by increase in burden on users due to high construction cost, limited impact and problems in water environmental conservation aspect, and then it is necessary to examine alternatives.
1.3 Purpose of the Survey In order to solve above issues, propose new business model of Japanese water treatment manufacturers and achieve following purposes, the survey team carries out feasibility study.
Propose of straight service of water solution companies for waterworks company In the field of waterworks, sewage works and reclaimed water works, based on our overseas bases, we proposed technical service of design for water treatment system with membrane system as core technology, as well as service on financing and project management. Especially, in terms of O&M system, in addition to formulating plans (roadmap) for evaluating membrane filtration performance and building maintenance systems for membrane modules for customers (ex. East Water and Thai Tap Water) who need technical support, we plan to study on possibility of JBIC's export finance and investment finance, and the competition from overseas majors in the reclaimed water supply business including the investment to SPC from us.
Appeals of merit in case of application of membrane technology and treated water with high added value FS survey team studies on beneficial effect through case study, such as advantage of lifecycle
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cost, energy saving and ease of O&M by using membrane technology of Japanese water solution companies and explain it to the customers. Especially in regions where concerns about future water resources shortage, FS survey team proposes add value project, such as reclaimed water supply which treated water from sewage treatment plant is used as raw water in the time of replacement demand of sewage treatment plant and stabilizes industrial water supply to industrial park where many Japanese companies enter.
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CHAPTER 2 OUTLINE OF THE SURVEY 2.1 The Contents of the Survey The contents of the survey is described below. Initially, FS survey team targeted only East Water, however, since business scale of is large, Thai Tap Water is also included in the survey target. In addition, the waterworks in Lamphun area is selected as case study target area. This waterworks has been operated by PWA and FS survey team carried out field survey to PWA branch office No.9 which is direct management organization of the waterworks in Lamphun area for case study.
1) Data collection, survey and analysis for propose of new business model Investigation of the needs and issues of membrane treatment technology in the future water and sewage works, and reclaimed water works. Interview survey to competent authorities in the field of water and sewage works and industrial water works is also conducted after approval from East Water. Survey on issues of application of membrane treatment technology and commercialization in the future The waterworks in Lamphun area is selected as case study target area. This waterworks has been operated by PWA and FS survey team carried out field survey to PWA branch office No.9 which is direct management organization of the waterworks in Lamphun area for case study.
2) Study on benefit to partner country by proposal of “Comprehensive Service” Study on benefit effect to partner country by “Comprehensive Service”. Especially, study on benefit effect, such as smooth progress of water supply, sewage and reclaimed water project.
3) Confirmation of consistency between policy trends of government and municipality in the partner country Interview survey to municipality in the target area of case study to clarify development policy in the field of water at municipality level and the competent authorities in the field of water and sewage works and industrial water works
4) Preliminary design of infrastructure system (Implementation of case study) In this survey, FS survey team selects water supply and sewage projects with high priority and urgency, and carries out preliminary design of water treatment system using membrane technology as a case study according to the following survey items. In the past meeting with East Water, water supply projects of local municipality (Chiang Mai province etc.) has been listed as
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priority project. According to the result of the meeting with East Water, the replacement plan of the waterworks in Lamphun area is considered as priority project. Therefore, FS survey team selected this plan as case study. FS survey team carried out field survey of waterworks in Lamphun area and confirmed that this waterworks has been managed by PWA not municipality. Therefore, FS survey team carried out field survey to PWA branch office No.9 which is direct management organization of the waterworks in Lamphun area.
Basic condition and design policy: Interview survey to municipality in the target area of the target project, confirmation of the planned water amount, supplied area, required water quality and condition of land acquisition, study on policy of plan of membrane treatment system which has advantage of footprint and O&M In this survey, the waterworks in Lamphun area is selected as case study target area. This waterworks has been operated by PWA and FS survey team carried out field survey to PWA branch office No.9 which is direct management organization of the waterworks in Lamphun area for case study. Equipment plan of water treatment plant and pipeline: Preliminary design of water treatment plant and pipeline based on design standard in Thailand, especially, in consideration of “PTFE Poreflon membrane” proprietary developed / manufactured as a core technology O&M plan of a water treatment system: Confirmation of the required technical aspects for O&M of membrane treatment system Preliminary cost estimation and implementation plan: Preliminary cost of the project, preliminary trial calculation of O&M cost by using function of cost estimation, study on rough implementation schedule of construction Environment and Social Consideration: Study on the specific items of environment and social consideration based on environmental check list of JBIC or JICA (If the applicable law concerning local environmental and social considerations is clear, consideration items are studied based on it.) Study on commercialization: Study on flame work of various contract/procedure of PPP project, and economical and financial analysis, study on technological competitiveness regarding for “PTFE Poreflon membrane” proprietary developed / manufactured and reduction effect of consumption energy Risk analysis: Implementation of interview survey to Chaing Mai Province municipality and East Water In this survey, the waterworks in Lamphun area is selected as case study target area. This waterworks has been operated by PWA and FS survey team carried out field survey to PWA
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branch office No.9 which is direct management organization of the waterworks in Lamphun area for case study. Issues regarding for project proceeding: Confirmation of issues for project proceeding based on current situation by interview survey for municipality in the target area and relevant organization In this survey, the waterworks in Lamphun area is selected as case study target area. This waterworks has been operated by PWA and FS survey team carried out field survey to PWA branch office No.9 which is direct management organization of the waterworks in Lamphun area for case study
5) Calculation of project scale Implementation of the following items regarding for project scale in this survey Latest (Project scale of case study: Preliminary cost of the priority project selected in this survey (overall project cost and relevant equipment of membrane system) After this survey (Trial cost estimation of expected order by “Comprehensive survey”): Preliminary cost of water supply and sewerage and reclaimed water projects that are expected to apply own products (Yearly) Maintenance work of membrane treatment system and membrane module after receiving order (Yearly) Profit by entering to management of the reclaimed water works (Yearly) Study on implementation organization structure and implementation schedule Study on implementation organization with the viewpoint of collaboration with East Water by mainly overseas base in Thailand and development department of water treatment business, and roadmap of establishment of own technical centre to realize maintenance work
6) Study and propose of finance Data collection of project finance utilizing JBIC and NEXI in consideration of establishment of SPC to manage water supply, sewage and the reclaimed water works Study on applicability of JBIC Global Facility to Promote Quality Infrastructure Investment for Environmental Preservation and Sustainable Growth Introduction of financial options to respond to East Water’s needs based on above study (FS survey team introduced to Thai Tap Water in the final report seminar.)
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7) Study on prospective utilization of governmental support etc. Preparation of training plan for local engineers in Japan to utilize “Carbon Reduction Technology Promotion Programs” implemented by AOTS (The Association for Overseas Technical Cooperation and Sustainable Partnerships) Training shall be implemented depending on East Water’s request after this survey. FS survey team also considered request from government managing waterworks and sewage works. Utilization of knowledge through interview to Team E-Kansai (Kansai-Asia Environmental and Energy Saving Business Promotion Forum) supported by Kansai Bureau of Economy, Trade and Industry In the survey, FS survey team requested consultant in charge of Thailand an appointment with government organization and received introduction of JETRO.
8) Trial calculation of reduction of CO2 emission from energy use, and survey on the environmental and social impact / environmental improvement effect Survey on the current revising points referring to past result of survey regarding for required process of environmental impact assessment in the time of the project and consideration of the expected items from environmental and social side Study on reduction of CO2 emission from power generation due to filtration with low Trans- Membrane Pressure (TMP) in the operation time of membrane system, reduction of the required aeration volume and high recovery rate of permeated water for membrane treatment system introduced as core technology in this survey Study on items for environmental improvement effect by waterworks and sewage works, and the reclaimed water works
9) Confirmation of advantage for Japanese companies, expectation of profit (economical effect) to Japan Study on advantage for Japanese company by collaboration of comprehensive service proposed in this survey, municipality, consultant general construction company and trading company, etc.
10) Implementation of the required survey to realize proposal of the project, such as reconsider items requested and pointed out by the partner country in the period of progress of implementation Reconfirmation of the projects information in which adoption of membrane treatment technology is expected Confirmation of progress of the target project in the past project of “Study on Economic
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Partnership Projects in Developing Countries” Study on the future policy based on customer’s request toward to commercialization of each project Study on expansion promote measures and possibility of horizontal expansion to the other countries Study on differentiation from emerging companies by enhancement of the technical support aspect of establishment of technical centre proposed in this survey
11) Study on enhancement measure of cost competition to be taken in case that Japanese companies participant to the project Confirmation of project structure that combines cost competitiveness by utilization of own manufacturing factory in China in addition to comprehensive service
12) Implementation of the meeting in Thailand Implementation of the two meeting in Thailand of kick-off meeting and final report explanation meeting, Implementation of one progress meeting with East Water In addition to East Water, the relevant governmental officials are assumed as participants of the meeting. Since it was difficult to arrange schedule for each participants for kick-off meeting, FS survey team didn’t set conference room and held meeting with East Water and government related organization separately. As for the final report meeting, FS survey team prepared conference room and implement meeting on 29th January, 2019 and received thirty participants. In this meeting, FS survey team proposed “Comprehensive service”, reported the result of case study, got opinions and evaluation from water supply companies, governmental organization related to waterworks and sewage works, and private company. Therefore, FS survey team confirmed issues for comprehensive service and commercialization of case study and study on the counter measures
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2.2 Survey Method and Structure of the Survey
Ministry of Economy, Trade and Industry
Sumitomo Electric Industries, Ltd.
TEC International Co., Ltd. International Development Center of Japan Co., Ltd.
Figure 2-1 Structure of FS Survey Team
2.3 Survey Schedule The Table 2-5 shows overall schedule of FS survey. The period of survey is from 25th October 2018 to 28th February 2019. Furthermore, the Table 2-1 to the Table 2-4 show detailed schedule of field survey.
Table 2-1 Schedule of 1st Field Survey (October to November, 2018) Date Contents of the activity
28/Oct. 2018 Sun Moving (Japan to Thailand)
29/Oct. Mon SET, JBIC 30/Oct. Tue Japanese Chamber of Commerce, Bangkok, JETRO, EnviX Asia Siam Commercial Bank、Frost & Sullivan, 31/Oct. Wed Sumitomo Mitsui Banking Corporation Bangkok branch, PCD-MONRE 1/Nov. Thu MOIn, DDS-BMA, East Water WMA, MWA, PM: Study on collected data 2/Nov. Fri Moving (Thailand to Japan) 3/Nov. Sat Moving (Arriving at Japan)
※Appointment with JETRO was made through the Japanese consultant of Team E-Kansai who is in charge of Thailand.
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Table 2-2 Schedule of 2nd (1) Field Survey (November to December, 2018)
Date Contents of the activity
26/Nov. Mon Moving (Japan to Thailand) 27/Nov. Tue AM: Internal meeting, AOTS, Preparation of the revised NDA Preparation of the revised NDA and BQ table, Meeting with local 28/Nov. Wed company 29/Nov. Thu Preparation of human resource development plan and BQ table Chonburi water treatment plant operated by UU company which is 30/Nov. Fri subsidiary of EW, Moving (Thailand to Japan) 1/Dec. Sat Moving (Arriving at Japan)
Table 2-3 Schedule of 2nd (2) Field Survey (December, 2018) Date Contents of the activity Preparation of letter to PWA and presentation materials 16/Dec. Sun PM: Documentation of draft progress report, Moving (Japan to Thailand) 17/Dec. Mon Internal meeting, SCMA Moving (Bangkok to Chaing Mai), Saha Group Industrial Park, Sumipol 18/Dec. Tue PM: Preparation of questionnaire to PWA AM: Chaing Mai PWA No. 9 19/Dec. Wed PM: Visiting to PWA’s water treatment plant, Moving (Chaing Mai to Bangkok) AM: PWA HQ, 20/Dec. Thu PM: Analysis of data and information, One Start One Stop Investment Center Moving (Thailand to Japan), Analysis of data and information and request 21/Dec. Fri of data collection 22/Dec. Sat Moving (Arriving at Japan)
Table 2-4 Schedule of 3rd Field Survey (January 2019) Date Contents of the activity 20/Jan. Sun Moving (Japan to Thailand) 21/Jan. Mon Finalization of OM cost and preliminary cost 22/Jan. Tue TTW, Sumipol Finalization of financial analysis, preparation of final seminar 23/Jan. Wed (Confirmation of the expected participants) Preparation of final seminar (Presentation materials, reception tools, straps 24/Jan. Thu for participants 25/Jan. Fri Preparation of conference room for final report seminar (Pullman hotel) 26/Jan. Sat Preparation of final report seminar 27/Jan. Sun Preparation of final report seminar 28/Jan. Mon Preparation of final report seminar (Practice for translator) , DDS-BMA 29/Jan. Tue Final report seminar
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Date Contents of the activity Preparation of minutes of meeting 30/Jan. Wed PM: Sumipol, moving (Thailand to Japan) 31/Jan. Thu Moving (Arriving at Japan)
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Table 2-5 Overall Schedule of FS Survey
Categories Survey Items Oct. 2018 Nov. Dec. Jan. 2019 Feb.
Agreement Kick-off meeting with Ministry of Economy, Trade and Industry Domestic work Data collection, survey and analysis for propose of new business model Kick-off meeting Study and proposal of financing (METI)
Data collection, survey and analysis for propose of new business model Confirmation of consistency between policy trends of government and Kick-off meeting municipality in the partner country (Water supply company) 1st Field survey Confirmation of basic condition and design policy Equipment plan of water treatment plant and pipeline Implementation of the meeting in Thailand Report of the field survey (METI) Study on benefit to partner country by proposal of “Comprehensive Service” Report of the field survey O&M plan of a water treatment system (METI) Analysis in Japan Environment and Social Consideration Study on prospective utilization of governmental support etc Progress report meeting Preparation of preliminary survey report (METI) Progress report meeting (METI) Progress meeting with water supply company 2nd Field survey Trial calculation of reduction of CO2 emission from energy use, and survey on the environmental and social impact / environmental improvement effect Preliminary cost estimation and implementation plan Study on commercialization Risk analysis Analysis in Japan Calculation of project scale and preparation of Study on implementation organization structure and implementation schedule survey report Confirmation of advantage for Japanese companies, expectation of profit (economical effect) to Japan Study on enhancement measure of cost competition to be taken in case that Japanese companies participant to the project Issues regarding for project proceeding Final report meeting Implementation of the required survey to realize proposal of the project, such as in Thailand reconsider items requested and pointed out by the partner country in the period of 3rd Field survey progress of implementation Study on expansion promote measures and possibility of horizontal expansion to the other countries Final Report meeting Revision of in Japan survey report and Implementation of the meeting in Thailand (METI) final report Preparation of report seminar
Final report Report Preliminary survey report
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CHAPTER 3 WATERWORKS, SEWARAGE WORKS AND RECLAMED WATERWORKS IN THAILAND
3.1 Waterworks 1) Administration of waterworks As indicated in the Figure 3-1, the Ministry of Interior (MOI) has a jurisdiction over the water supply works, and Metropolitan Waterworks Authority (MWA) and Provincial Waterworks Authority (PWA) take charge of the respective territory. Meanwhile, local municipalities operate water supply works in areas where both authorities do not service. Water supply authorities can, in general, be classified into three organizations. MWA operates water supply works in Bangkok metropolitan and its two adjoining provinces (Nonthaburi and Samut Prakan Provinces), on the other hand, PWA manages water supply works in 74 Provinces. In addition to that, local municipalities oversee water supply in areas where the two authorities do not supply water.
Competent Ministry of Interior Ministry (MOI)
Metropolitan Provincial Authorites Local Waterworks Waterworks Municipalities Authority Authority in charge (MWA) (PWA)
Water supply, Water supply, Water supply for the constduction / O&M constduction / O&M Responsibility local residents of water facilities in of water facilities in Bangkok Metropolitan rural areas
Source: FS survey team Figure 3-1 Organization Chart of Water Supply Works in Thailand MWA Besides the water supply works in Bangkok metropolitan area, the MWA also takes charge of the water supply services in the adjacent Nonthaburi and Samut Prakarn Provinces. MWA was established in 1967 and has now employed 5,403, of which 1,018 are contract workers2. The MWA operates four water treatment plants, Bang Khen, Samsen, Thonburi and Mahasawat, and the total water production per year is about 2.1 billion m3 (2017) and it has tended to increase
2 MWA Annual Report 2017
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in the last five years3. In the fiscal year of 2017, the total revenue and expenses were THB 199 million (-1% year-on-year) and THB 124 million (-4% year-on-year) respectively and thus profit was THB 75 million (+5% year-on-year). Public–private partnership (PPP) businesses are not implemented by the MWA.
PWA PWA manages water supply works in 74 Provinces except the service areas handled by the MWA. The authority was established in 1979 in the form of the authority transfer from local branches of both the then Department of Public Works and Department of Health. 6,743 out of 7,730 total employees in the PWA are, hence, deployed at 10 local offices or 233 water supply facilities across the country4. In the fiscal year of 2017, the total revenue and expenses were THB 29.7 billion (+1% year-on-year) and THB 21.8 billion (-2% year-on-year) respectively and thus profit was THB 7.9 billion (+11% year-on-year)5. The PWA actively promotes the PPP projects in order to reduce the financial burdens and, in fact, six PPP businesses (BOOT: 2, BOO: 3, BTO: 1) are now in progress6.
2) Water resources competent authority Approximately 30 departments are involved in water resources in Thailand, such as Royal Irrigation Department, Water Resource Department of Ministry of Natural Resources and Environment, Ground Water Resource Department, Natural Resource and Environment Policy and Planning Office, etc. Dams to be used as water resources are owned by the Royal Irrigation Department. PWA and MWA, public water utilities, and other private enterprises, etc. have to purchase raw water from the Royal Irrigation Department.
3) Outline of waterworks in Thailand Future strategy on waterworks In Thailand's SDG 6 "Water and Sanitation" of the Sustainable Development Goals (SDGs), In order to achieve the goal as "It will be possible for all people to access universal, fairly safe and inexpensive water by 2030", on June 2018, the Thai royal government formulated a water resource management plan from year 2015 to 2026. Among the six water resources management strategies, Strategy I stipulates the following items.
• Development of villages and water supply in country side
3 MWA Annual Report 2017 4 PWA website (www.pwa.co.th) 5 PWA Annual Report 2017 6 PWA Annual Report 2017
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• Improvement of the existing waterworks • Expansion of pipe network for supply to the school including water supply to neighborhood • Secure safe and inexpensive water usage in the whole country
Water coverage situation The safe water access ratio in Thailand is as high as 98% as shown in the Figure 3-2, and the access ratio to tap water also exceeds 50%. In the comparison between urban and rural areas, although there is no significant difference in terms of safe water access ratio, the disparity in access ratio to tap water is large. It is 76% in urban areas, whereas it is 37% in rural areas, which is twice as wide. In Thailand, the spread of water supply in the non-urban areas, including the Bangkok city is said to be a challenge.
Source：WHO/UNICEF Joint Monitoring Program for Water Supply and Sanitation (updated January 2015) Figure 3-2 Safe Water Access Rate by Water Source in whole Thailand
Urban areas Rural areas Source：WHO/UNICEF Joint Monitoring Program for Water Supply and Sanitation(updated January 2015) Figure 3-3 Safe Water Access Rate by Water Source (Comparison between Urban and Rural Areas)
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Outline of Water Supply of MWA and PWA MWA handles raw water procurement, water treatment to produce tap water, and the distribution of tap water in Bangkok, Nonthaburi, and Samut Prakarn. MWA has 18 offices. MWA produces annual tap water of 2,063 million cubic meters by MWA’s own water treatment plants.
Table 3-1 Outline of the water supply work of MWA 2013 2014 2015 2016 2017
Total Water Production (million m3) 1,804.5 1,797.8 1,835.1 1,965.9 2,063.8
Total Water Consumption (million m3) 1,361.0 1,377.2 1,406.3 1,406.3 1,408.6
Number of Customers at Year End 2,113,674 2,171,371 2,226,707 2,281,058 2,328,598
Average Water Consumption per Customer 53.34 52.49 52.34 50.88 49.85 per Month (m3)
Average Water Tariffs per m3 (Baht) 12.01 12.00 12.02 12.02 12.01
Number of Personals at Year End (Person) 5,303 5,347 5,339 5,386 5,403 Source: PWA annual report (2017)
PWA handles raw water procurement, water treatment to produce tap water, and distribution of tap water in 74 provinces in Thailand (except Bangkok, Nonthaburi, and Samut Prakarn). Each branch office is supervised by ten district offices, and five regional offices oversee two district offices each. The five areas are as shown in the Figure 3-10. PWA has tap water producing by both in-house water treatment plants and purchasing from private water suppliers under the BOT, BTO, and BOO schemes. In 2017, the water users of the PWA were 4.28 million persons, and the water production capacity was annually 1232 million m3.
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PWA district office 1～10 places PWA branch office 234 places
No.2 district office Areas 6&7
No.1 district office Areas 9&10
No.3 district office Areas 1&8
No.4 district office Areas 2&3
No.5 district office Areas 4&5
Figure 3-4 PWA administrative area map in 74 provinces of Thailand
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3.2 Sewage Works and Reclaimed Water Works 1) Public administration of sewage works (Central and Local Government) As shown in the Figure 3-5, swage works in Thailand is presently under the jurisdiction of the Ministry of Interior (MOI). In the past, the sewerage system had been constructed by the central government and then transferred to the local government. After that, the local government had maintained and managed the facilities. In 1999, the Decentralization Act was enacted and the central government transferred the authority on implementation of sewerage projects to local governments. Since then the local governments are responsible for the management and maintenance of sewerage projects as the project implementing body. The budget for the sewerage project is allocated to local governments through the Department of Local Administration (DOLA) in MOI. Under the supervision of MOI, the Wastewater Management Authority (WMA) supports sewerage projects of local governments, and based on the request of local governments, conducts the operation maintenance of 26 sewage treatment plants throughout the country. BMA is given the authority and responsibility by the special law, BMA Service Administration Regulations Act, to fulfill the function of municipal drainage, flood prevention and sewerage (to provide good environment and public health), while coordinating with related organizations.
Competent Ministry of Interior Ministry (MOI)
Department of Drainage and Wastewater Authorities Local Sewerage- Management Municipalities Bangkok Metropolitan Authority in charge Administration (WMA) (DDS-BMA)
O&M of 26 sewerage O&M of 8 sewerage O&M of 71 sewerage treatment plants treatment plants in Responsibility treatment plants throughout Thailand Bangkok (except Bangkok)
Source: FS survey team Figure 3-5 Organization Chart of Sewerage Works in Thailand
Meanwhile, the sewage works of the Thai government had been under the jurisdiction of the Public Works Department (PWD) in MOI. However, following the enactment of the Enhancement and Conservation of National Environmental Quality Act in 1992, the MONRE was established
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in the administrative reform of the central government in 2002, and it was decided for MONRE to take charge of sewage works. Also, in 1995 WMA was established with the aim of promoting rural sewerage projects and supporting the local governments. Furthermore, in November 2018, administration for sewage works was again transferred from MONRE to MOI, and the supervisory authority of WMA also changed from MONRE to MOI.
WMA The objective of WMA is to provide the management and services for sewage treatment systems in the Bangkok Metropolis excluding BMA area, the lower Chao Phraya river basin and any other areas, namely throughout Thailand, and so contribute to improvement of the water environment. The responsibilities/policies of WMA are as follows.
1. To plan the development and preparation of sewage works strategies corresponding to the national sewage works strategy. 2. To conduct survey, planning, design and construction related to sewerage system. 3. To manage the sewerage system appropriately and compliance with water quality standards. 4. To conduct activities related to the effective management that will contribute to future economic benefits. (Accumulation of know-how on asset management, collection of user charge, capacity development etc.)
It is expected that results of know-how, knowledge and various technologies obtained in these activities of WMA will be reflected in other municipalities in order to rationally implement and manage sewerage projects in Thailand. The performance of WMA is as follows in the fiscal year 2018;
Management of sewage treatment plant: 26 municipalities Management of the royal project: 8 plants Construction and O&M of small-scale sewage treatment plant: 12 plants
The number of staff of WMA is 128 (WMA Annual Report 2017), and it is assigned to three categories with seven departments as shown in organization chart (Table 3-3). According to the Annual Report 2017, WMA's revenue in 2017 is THB 278 million (-21% compared to the previous year), of which THB 221 million is a government subsidy. As for expenditures in the same year, THB 286 million (-15% compared with the previous year), therefore net profits is THB 8 million deficit. Meanwhile, the budget of WMA is increasing year by year in the past five years,
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as shown in the following Table.
Table 3-2 Trend in WMA Budget Fiscal year (October to Budget September next year) (THB Million) FY 2019 371 FY 2018 356 FY 2017 350 FY 2016 322 FY 2015 320 Source: FS Survey Team DDS-BMA Department of Drainage and Sewerage (DDS) was established in BMA in 1967 as a department responsible for rainwater drainage, flood protection and sewerage. Currently, the number of full-time staff is about 700 people, which is assigned to eight divisions including drainage system development department, drainage system control department and water quality management department. Currently, DDS-BMA operates eight sewage treatment plants.
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WMA Committee
Audit Committee Director General Consultant
Office of Director
Office of Internal Audit - Legal Division -Central Division - Special Project Division
Deputy Director General Deputy Director General For Deputy Director General For Administration Technical and Planning For Operation
General Administration Accounting and Finance Organization Development Engineering Wastewater Management Wastewater Management Fee Collection Department Department Department Department Department 1 Department 2 Management Department
- Asset and Service Division - Accounting Division - Polocy and Planning Division - Engineering Standard - Coodination Division 1 - Coodination Division 2 - Fee Collection Division - Personnel Division - Finance Division - Risk Management and Control Division - Branch offices - Branch offices - Fee Collection Analysis - Public Relations Division - Budget Division Division - Project Development and Development Division - Information System and and Management Division Assessment Division
Source: WMA Annual Report 2017 Figure 3-6 Organization Chart of WMA
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2) Outline of sewage works and reclaimed water works Sewage works long-term plan In September 2018, the Thai government announced the "20-year National Strategy (2018- 2037)" aiming to become a developed country with a vision of "stability", "prosperity" and "sustainability". Under this strategy, in the sewage works field, “Community Sewerage Plan in Thailand (2018-33)” for 15 years (emergency plan: 1-3 years, medium term plan: 4-8 years, long term plan: 9-15 years) is about to be prepared, which specifies the area by the following categories; Category 1: Important islands and tourist sites Category 2: Province declared tourist sites Category 3: Middle and large cities (Over 50,000 people) Category 4: Small cities (more than 10,000 to less than 50,000 people) Category 5: Town and village (less than 10,000 people)
Generated and Treated Sewage Quantity and Sewage Treatment Plant The amount of sewage generated in Thailand is 9.5 million m3/day, of which 3.2 million m3/day (34%) are treated in 105 sewage treatment plants and 6.3 million m3/day (66%) are individually treated. (See the Figure 3-7)
Centralized treatment 34% Decentralized treatment 66%
Source: WMA Figure 3-7 Percentage of Centralized and Decentralized Treatment
Currently there are 105 sewage treatment plants in Thailand, of which 8 plants are under the management of DDS-BMA, 26 plants under WMA, 70 plants under municipalities and 1 plant is pausing, as shown in the Figure 3-8. Besides that, there are 8 plants of royal project and 12 small-scale plants managed by WMA.
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Source: WMA Figure 3-8 Sewage Treatment Plants in Thailand (105 plants: 2018)
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Sewage Treatment Plants in Bangkok The Table 3-3 shows the summary of existing sewage treatment plants and implementing projects in Bangkok. Eight sewage treatment plants have been constructed and managed since 1994. Currently, except for the community treatment plants transferred from National Housing Authority (NHA), 1,112,000m3/day of sewage amount is treated in Bangkok, which is about 45% in sewerage system service rate (sewage treatment rate). In addition, the sewage treatment plans to be constructed in the future are as follows.
· Min Buri I (10,000 m3/day): designed, securing BMA budget · Min Buri II (40,000m3/day): under designing · Thonburi North (155,000m3/day): under designing (MBR will be adopted, because the site area is limited to 8,000 m2) · Khlong Toei (360,000m3/day): under consideration of PPP · Nong Bon (134,000m3/day): JICA FS completion
Table 3-3 Sewage Treatment Systems in BMA in 2018 Sewage Treatment Area Population Capacity Start Source of Fund Area (km2) (people) (m3/d) Operation (BMA : GOV.) 1. Si Phraya 2.7 120,000 30,000 1994 BMA 100 %
2. Rattanakosin 4.1 70,000 40,000 2000 GOV. 100%
3. Din Daeng 37.0 1,080,000 350,000 2004 25 : 75
4. Chong Nonsi 28.5 580,000 200,000 2000 40 : 60
5. Nong Khaem 44.0 520,000 157,000 2002 40 : 60
6. Thung Khru 42.0 177,000 65,000 2002 40 : 60
7. Chatuchak 33.4 432,000 150,000 2005 60 : 40
8. Bang Sue 21.0 250,000 120,000 2013 BMA 100 %
(Community Plant) (12 plants) (25,700) transferred from NHA Total 212.7 3,229,000 1,112,000
Implementing Sewage Treatment Project
1. Min Buri I 4.4 20,000 10,000 2021 BMA 100 %
2. Min Buri II - - 40,000
3. Thon Buri North 36.4 - 155,000
4. Klong Toei 71.0 485,000 360,000 PPP
5. Nong Bon 63.9 265,000 134,000 JICA FS
Total 699,000 Source: FS Survey Team
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Reclaimed Water Works Water shortage in Thailand in the dry season has become serious. According to PWA, the drought damage in January 2016 occurred in 60 districts in 13 provinces, mainly in northern and northeast Thailand. However, in 2017/18 the damages drastically increased to 339 districts in 47 provinces, according to Ministry of Agriculture and Cooperatives. Due to this reason, treated sewage is used as irrigation water in paddy fields around sewage treatment plants in rural areas, and WMA has an action plan to promote the use of treated sewage for irrigation. Meanwhile, in urban areas such as Bangkok Metropolis, treated sewage is used for landscaping water and road watering in the dry season. In addition, several PPP initiatives that utilize large amount of treated sewage generated in Bangkok Metropolis have been studied in order to supplement the shortage of industrial water for factories in industrial parks in eastern and northern region of Bangkok where there are remarkable advancements of the factories. Demand for treated sewage to be used for industrial water and business water other than drinking water is large. As a task to promote the treated sewage reuse projects, it is pointed out that related laws and regulations on reclaimed water works are not well developed, and coordination with MOIn is required. As a result of the survey, "The treated sewage reuse project of Pattaya City", which was planned as a high-priority reclaimed water project over the past ten years, was in a situation where the progress was not achieved, due to the no decision making by Mayor's switch (from Mr. Anan Charoen (February 2016 - September 2018) to incumbent Mr. Sontaya Khunpluem).
3.3 Current Situation of Installation of Membrane Technology and its Issues for the Water Business According to the result of an interview survey to related ministries and public/private enterprises on relevant to waterworks and sewage works, and private-sector water treatment projects (water and wastewater treatment) in Thailand, FS survey team obtained the current status and future possibility of membrane treatment equipment as shown in the followings. In the field of sewage works, the plans which the method of membrane bio-reactor (MBR) is adopted, are being implemented. The detail of the result for interview survey is shown from the Table 3-4 to the Table 3-6.
Table 3-4 Current Situation of Installation of Membrane Technology to Waterworks and Future Possibility of Installation Target organizations and EW, TTW, MWA, PWA, Frost & Sullivan (Thailand) companies to be surveyed
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Current status and future No introduction of membrane treatment at present possibility of installation of As there are many aged facilities such as water membrane treatment equipment treatment plants, renewal projects are expected in the future. In the case of site constraint or accompanied by expansion of water volume, introduction of membrane treatment is room for consideration Requests for membrane Since knowledge and knowledge on membrane manufacturers to install membrane treatment are insufficient, it is necessary to start with treatment equipment, and issues explanation including initial cost, maintenance cost, for membrane treatment influence of water price level setting etc. technology There are many small water treatment plants in the local water supply, technical knowledge, operation and maintenance capability etc. are insufficient technically
Table 3-5 Current Situation of Installation of Membrane Technology to Sewage Works and Future Possibility of Installation Target organizations and BMA, WMA, PCD-MONRE, Frost & Sullivan companies to be surveyed (Thailand) Current status and future In island, it is high possibility to install membrane possibility of installation of treatment system to individual wastewater treatment membrane treatment equipment in resort hotel and WTP which desalination treatment system is applied. Regarding industrial parks along the coast (Amata, Map Ta Phut, etc.), since the wastewater standard value of total dissolved solids (TDS), which was a barrier to reclaimed water works, was mitigated, the demand for wastewater treatment and reclaimed water treatment facilities from private companies in the future is expected. Being studied on MBR system in Thonburi North (155 thousand m3/d) No experience to install membrane treatment system to use the reclaimed water using the sewage treated water as raw water. FS survey team confirmed the
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progress of "The treated sewage reuse project of Pattaya City", however, any progress are not confirmed. Requests for membrane Since knowledge and knowledge on membrane manufacturers to install membrane treatment are insufficient, it is necessary to start with treatment equipment, and issues explanation including initial cost, maintenance cost, for membrane treatment influence of water price level setting etc. technology There is request to confirm possibility to install packaged type of treatment system in canal of important location such as around Royal Palace and the canal in front of Thai Air’s HQ The knowledge and knowledge on membrane treatment are insufficient. There was a question as to whether the maintenance and management expenses are higher than the conventional method There was a question as to feasibility of pilot test for membrane treatment system
Table 3-6 Current Situation of Installation of Membrane Technology to Private Water Treatment Works (Process Water Treatment and Wastewater Treatment) and Future Possibility of Installation Target organizations and Frost & Sullivan (Thailand), MOIn, Private Companies companies to be surveyed Current status and future The membrane treatment system has been installed possibility of installation of for process water treatment and comprehensive membrane treatment equipment water treatment in industrial park of Thailand. Concerning the reclaim of wastewater so far, it was difficult to realize because TDS is concentrated and exceeds wastewater standards. Requests for membrane There is a request for establishment of engineering manufacturers to install membrane center to respond immediately to O&M of membrane treatment equipment, and issues modules. for membrane treatment technology
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3.4 Outline of Water Supply Companies Water supply companies manage some water supply works in Thailand as PPP businesses. In this Study, the SEI, as a water treatment equipment manufacturer, proposes a comprehensive service to the water supply companies and explores the possibilities of the followings; 1) Promotion of membrane treatment facilities, 2) Getting orders of the development project and 3) Participation of business operation after the completion of facilities. Outlines of Eastern Water Resources Development and Management Plc. (East Water) and TTW Public Company Limited (TTW), both of which are supposed as targets of the proposed project, are summarised as below.
3.4.1 East Water East Water was established in 1992. PWA, which take charge of local water supply throughout Thailand, is the major stockholder with 40.2% of shareholding, and Industrial Estate Authority of Thailand (IEAT), an authority on construction and management of state-owned industrial parks also shared 4.7% of shareholding. The company has developed a strategy to especially contribute to the expansion of water supply services in response to the development of the Eastern Economic Corridor (EEC) area, and also focuses on a technical innovation of water supply, sanitation and reclaimed water fields in order to meet the demand from customers. The Figure 3-9 shows the group composition of East Water. East Water, as the parent company mainly dealing with raw water business, affiliates with the Universal Utilities Plc. (UU) which takes a leading role in overall water supply works. In addition, four Special Purpose Companies (SPCs) are placed under the umbrella of the UU for the operation of water supply works in the respective areas of responsibility. The affiliated companies, except one, are wholly- owned subsidiaries.
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Source: East Water Annual Report 2017 Figure 3-9 Group Composition of East Water
East Water’s main revenues are from sales of raw and tap water accounting for THB2,452.05 million and THB1,422.75 million respectively. In the last three years, the revenue from raw water has decreased, on the contrary, tap water has increased profits. The following points can be given as reasons for that: 1) Supply amount of the raw water has been on a downward trend. 2) Regarding the tap water business, the water supply companies were acquired by East Water and became affiliates of the corporate group. Although the high profitability, around 30%, has been kept in recent years, both revenues and profits have been declined.
3.4.2 TTW TTW was established in September 2002 as a subsidiary company of CH. Karnchang Public Company Limited, a leading engineering company in Thailand. At present, Mitsui Water Holdings (Thailand) Company Limited (25.98%), Bangkok Expressway and Metro Public Company Limited (19.45%), and CH. Karnchang Public Company Limited (19.45%) are the major shareholders. The company operates water supply works in two provinces where the PWA serves: Nakhon Pathom province in 3 districts which are Nakhon Chaisri, Sampran and Putthamonthon
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districts; and Samut Sakhon province in 2 districts which are Muang Samut Sakhon and Krathumban districts. Furthermore, as indicated in the Figure 3-10, TTW’s two subsidiary companies, Pathum Thani Water Company Limited and Thai Water Operations Co., Ltd., take charge of water supply works in Pathum Thani-Rangsit province which is on the north side of Bangkok. As for the CK Power Public Company Limited, investment activities aiming to enter the energy market in the future are the main purpose.
Source: TTW Annual Report 2017 Figure 3-10 Group Composition of TTW
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TTW, including its subsidiary companies, supplies 282 million m3 water per year to the PWA. The supply amount is equivalent to 15% of the total amount of water supply by the PWA, which make the TTW the biggest private water supplier for the PWA. The total revenue in 2017 is THB5,747 million (+4.5% year-on-year) and the profit is THB2,680 million (+7.6% year-on- year). Total number of employees is 324 (including subsidiary companies)
3.5 Outline of Environmental and Social Considerations and PPP Projects 3.5.1 Environmental and Social Considerations 1) Scheme of environmental and social consideration of Thailand Implementation procedure of environmental and social consideration is decided based on the description of the project and status of the project site. The conditions for implementing an environmental and social consideration are described below; a) Projects requiring environmental and social consideration The Table 3-7 shows projects requiring Environmental Impact Assessment (EIA). Thirty six (36) types and sizes of projects are listed. The Table 3-8 lists projects require Environmental and Health Impact Assessment (EHIA). EHIA is required when a serious environmental impact is expected by implementation of the project.
Table 3-7 Lists of Projects Requiring Environmental Impact Assessment (EIA) No. Type of project Size of project 1 Mining defined by the Mineral Act All sizes 2 Petroleum industry All sizes 3 The petroleum and fuel oil pipeline system All sizes 4 Industrial park as defined by the Industrial All sizes Estate Authority of Thailand Act or Projects with identical feature or Land allocation project for industrial development 5 Petrochemical industry using chemical Productivity is 100 tons / day or more process in production 6 Petroleum refining industry All sizes 7 Natural gas separation industry or Natural gas All sizes reforming industry 8 Chlor-alkaline industry that required sodium Productivity each or total products chloride as raw material to produce sodium are 100 tons / day or more carbonate, sodium hydroxide, hydrochloric
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No. Type of project Size of project acid, chlorine, sodium hypo-chloride and bleaching powder. 9 Cement industry All sizes 10 Pulp industry Productivity is 50 tons / day or more 11 Pesticide industry or industry producing active All sizes ingredient by chemical process 12 Chemical fertilizer industry using chemical All sizes 13 Sugar industry Producing raw sugar, white sugar and refine All sizes sugar Producing glucose, dextrose, fructose or Productivity is 20 tons / day or more other products alike 14 Iron or steel industry Productivity is 100 tons / day or more 15 Mineral smelting industry, mineral dressing Productivity is 50 tons / day or more industry or metal melting industry except iron or steel 16 Liquor and alcohol industries Productivity is 40,000 L / month or more (calculated as 28 degrees)
Wine industry Productivity is 600,000 L/ month or more
Beer industry Productivity is 600,000 L/ month or more 17 Central waste treatment plant defined by the All sizes Factory Act 18 Thermal power plant Production of electricity is 10MW or more 19 Express way as defined by the Express way All sizes and rapid transit authority of Thailand act or other projects alike 20 Highway road which defined by the Highway All sizes act, passing through Wildlife sanctuaries, National park, Class 2 Watershed area, Mangrove forests, Coastal area, Areas located next to (within 2km) RAMSAR sites or World
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No. Type of project Size of project heritage sites and Areas located next to (within 2km) ancient remains, Archaeological resources, Historical resources or Parks 21 Rail –type mass transit system All sizes 22 Port With capacity of vessels for 500 gross tons or more or
With the total length of the front port is 100 m or more or
With the total port area is 1,000 m2 or more 23 Recreational port With capacity of 50 vessels or more 24 Land reclamation All sizes 25 Construction or expansion of structures close All sizes to or in the sea 26 Aviation transportation system Construction or expansion of commercial The runway length is 1,100m or more airport or temporally air strip for commercial purposes
Land aerodrome All sizes 27 Building which defined by the Building control act that has location or building utilization as follows; Building located near rivers, seacoast, lakes With 23 m height or more or the total or beaches, vicinity or inside national parks, floor area or individual area in the historical parks same building is equal to10,000 m2 or
Building used for wholesale or rental more business
Building used for private office 28 Land allocation for residential or commercial 500 plots of land or more or total purposes which defined by the Land allocation allocated area is more than 16 ha (100 act Rai) 29 Hospitals and nursing homes that defined by the Medical service act located in the
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No. Type of project Size of project following area; Areas are near rivers, seacoast, lake or Total 30 in-patient’s bed or more beaches within 50m distance
Areas other than listed above Total 60 in-patient’s bed or more 30 Hotels or resort which defined by the Hotel act Total 80 rooms or more or total utilization areas is 4,000 m2 or more 31 Residential building which define by the With 80 rooms or more or utilization Building control act area is 4,000 m2 or more 32 Irrigation Irrigated area of 12,800 ha (80,000Rai) or more 33 All projects located in the areas classified as All sizes Class 1 watershed area by the cabinet resolution 34 Trans watershed diversion; All sizes Trans major watershed diversions as temporarily operated except for disaster or impact to public security International trans watershed diversions as temporarily operated except for disaster or impact to public security 35 Sluicegate in the major river All sizes 36 Coke production All sizes Source: Environmental Impact Assessment in Thailand, ONEP, MONRE, Thailand, August, 2015.
Table 3-8 Lists of Projects Requiring Environmental Health Impact Assessment (EHIA) No Type of project Size of project 1 Land reclamation in the sea or lake except it is More than 48ha (300 Rai) of land done for seashore improving purpose 2 Mining with defined by the Mineral act as follow; Underground mining which the structure has All sizes been specifically designed for subsidence after stopping operation without being
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No Type of project Size of project suspended or without refilling substituted material to avoid subsidence.
Lead mine, Zinc mine or other metal which All sizes used Cyanide or Mercury or Lead nitrate in production process
Other metal mine which used Arsenopyrite All sizes as associated mineral
Coal mining which is specifically loaded More than 200,000 ton / month or coal from the area by trucks 2,400,000ton / year
Marine mining All sizes 3 Industrial park in accordance to Industrial park act or Project with identical characteristics of industrial park mentioned below; Industrial park or project identical All sizes characteristics of industrial park which is established to support Petrochemical industry (See No.4 ) or Ironworks industry (See No.5) more than 1 factory
Industrial park or project with identical All sizes characteristics of industrial park which is expanding area to support Petrochemical industry (See No.4 ) or Ironworks industry (See No.5) 4 Petrochemical industry Upstream petrochemical industry All sizes or extensive productivity more than 35% of the existing production
Intermediate petrochemical industry 1) Manufacture carcinogenic chemical Productivity is more than 100 ton /day substance (IARC Group 1) or use or total extensive production is more carcinogenic chemical substances as than 100 ton /day raw material
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No Type of project Size of project
2) Manufacture cancer stimulant chemical Productivity is more than 700 ton /day substance (IARC Group 2A) or use or total extensive production is more cancer stimulant chemical substances as than 700 ton /day raw material 5 Mineral smelting industry or melting industry Ironworks industry Quantity of ore input of production is more than 5,000 ton / day or total quantity of ore input in production process is more than 5,000 ton / day
Ironworks industry which is manufactured All sizes coke coal or provided with sintering process
Mineral smelting industry of copper, Gold or Quantity of ore input of production is Zinc more than 1,000 ton / day or total quantity of ore input in production process is more than 1,000 ton / day
Smelting Lead All sizes
Melting metal industry (except Iron and Quantity of output is more than 50 ton Aluminum) / day or total output is more than 50 ton / day
Melting Lead industry Quantity of output is more than 10 ton / day or total output is more than 10 ton / day 6 Manufacturing, disposal or modification of All sizes radioactive substances 7 Central waste treatment plant or disposal site All sizes or waste treatment facility which defined by Factory act (Dumping site or Incinerator)
Except cement oven that used hazardous waste as substituted raw material or additional fuel 8 Project of aviation transportation system Construction or expansion or extension of runway is longer than 3,000 m
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No Type of project Size of project 9 Port Berth length is 300m or more or port area is 10,000m2 or more (Except port that local people use daily and for tourism purpose)
Digging of water course is 100,000 m3 or more
Used in loading hazard material or hazardous waste (IARC Group1) in total quantity of 25,000 ton / month or more or 250,000 tons / year or more 10 Dam or Reservoir Capacity is 100 million m3 or more
Reservoir area is 15 km2 or more 11 Thermal power plant Coal fired power plant Plant capacity : more than 100 MW
Power plant that uses biomass fuel Plant capacity : more than 150 MW
Gas fired power plant with combined cycle Plant capacity : more than 3,000 MW or co-generation
Nuclear power plant All sizes Source: Environmental Impact Assessment in Thailand, ONEP, MONRE, Thailand, August, 2015. b) Project in environmental protected area All projects in environmental protection area (8 areas, listed below) have to implement EIA or Initial Environmental Examination (IEE) Doonlampan forest, Mahasarakham Province Pattaya, Chonburi province, Islands and territorial water Phuket Province, Islands and territorial water Coastal area of Bang Taboon Dusdistrict, Baaan Leam District of Phetchaburi Province through Pak Nam Sub district, Pranburi District of Prachuaprikhan Province Phi Phi islands and territorial water, parts of Aow Nang Sub district, Sai Thai Sub district, Nong Thaley Subdistrict and Pak Nam Sub district, MuangKrabi District, Krabi Province Kuraburi, Takuapa, Tai Muang, Tub Pud, Muang Phang-nga, Ta Kua Tung and Koh Yao Districts, Phang-nga Province Aow Luk, Muang Krabi, Nuea Klong Tom and Koh Lan Ta Districts, Krabi Province
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Taling Ngam, Bo Phut, Maret, Mae Nam, Na Mueang, Ang Thong, Lipa Noi, Koh Samui Districts, Koh Pha-nga, Ban Tai, Koh Tao and Amphole, Koh Pha-ngan Districts, Surat Thani Province Source: Environmental Impact Assessment in Thailand, ONEP, MONRE, Thailand, August, 2015. c) Project in forest conservation area Project required EIA report Dam and reservoir: flooded area is 80 ha (500 Rai) or more Hydroelectric power plant dam type or weir type (non-reservoir) over 10 MW Transmission line project for power plant (need to report with power plant) Petroleum survey project by seismic wave measure according to Petroleum act The 3rd category factory project (according to Factory act, permission is necessary before operation) Source: Environmental Impact Assessment in Thailand, ONEP, MONRE, Thailand, August, 2015.
Project required IEE report Dam and reservoir: flooded area is 8ha (50 Rai) – 80ha (500 Rai) Hydroelectric power plant dam type or weir type (non-reservoir) , 200kW - 10 MW Transmission line project Road construction or expansion project over 5km Pipe construction project or irrigation system project over 5km Mineral survey project according to the Mineral act Mine project according to the Mineral act in case of concession extension The 2nd category factory project (according to Factory act, notification to authority is necessary before operation) Source: Environmental Impact Assessment in Thailand, ONEP, MONRE, Thailand, August, 2015.
Projects other than those listed above require Environmental check list with environmental impact mitigation and preventive measures and environmental monitoring measures.
2) Implementation method of environmental social consideration Implementation method of environmental social consideration in Thailand is decided based on the project proponent and degree of expected environmental impact (Table 3-9).
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Table 3-9 Implementation Method of Environmental and Social Consideration of Thailand Serious Serious environmental impact environmental impact is not expected is expected Project proponent (EIA) (EHIA) Approval of cabinet Approval of cabinet is not necessary is necessary Private company A-1 B-1 Government agency / State enterprise JV of government agency / state enterprise A-1 or A-2 B-1 or B-2 and private company Source: FS survey team
Implementation flow of A-1, A-2, B-1 and B-2 are shown in the Figure 3-11 to Figure 3-14. EIA report, EHIA report and IEE report are developed by the cooperate body which approved by ONEP (Office of Natural Resources and Environmental Policy and Planning). Expert review committee (ERC) who evaluates EIA and EHIA report is organized by ONEP (chairperson), representative of relevant ministry / government Corporation and experts appointed by MONRE. The Table 3-10 shows considerable item and scope of study in environmental social consideration, and the Table 3-11 shows related laws and regulations.
Table 3-10 Considerable item and scope of study in environmental social consideration Item Scope of study Abiotic Geomorphology Topography, Elevation and Unique physical feature (island, resources cliff, etc.) Soil Profile of soil type, Extent of sedimentation and erosion, Physical and chemical characteristic Geology General description of geology, Seismicity Resource Type and quantity of mineral resources Surface water and Water source, quality, quantity, flow rate ground water Sea water Oceanographic characteristic, water quality, current, water stratification Air Climatic characteristic (rainfall and intensity, temperature) Incidence of inversions, fog, storm
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Air quality Noise Intensity and frequency Biotic Animal / Plant Ecology, species, number, distribution, habitat and migration resources Rare species Species, number, importance Human use Drinking water, Sources, quantity, quality and adequacy value domestic water Transport Transit route (highway, railway, water route) Electricity and Source, type, adequacy energy Flood control / System and efficiency drainage Agricultural Agricultural development / promotion, irrigation system, activity reforestation Industry Type of industry Mining Type of mining Recreation Type and use of the green space or recreation area Land use Existing land use, area specific zoning Quality of Socio-economic Information of population (occupation, income, language life value and religion) Health Sickness rate, infectious diseases, endemic sickness, condition of health services Occupational Occupational diseases, work related accident, health risk health Historical Historical site, archaeological site, traditional custom, traditions and culture Recreational Beauty value of recreational area, important natural value landmark, preservation or conservation area Source: Environmental Impact Assessment in Thailand, ONEP, MONRE, Thailand, August, 2015.
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Table 3-11 Related laws and regulations Item Laws and regulations ・ Air quality standards (Ambient and emission) Atmospheric environment ・ Odor standards (Ambient and emission) ・ Noise standard (Ambient and emission) ・ Surface water quality standards ・ Groundwater quality standards Water quality ・ Groundwater quality standards for drinking purpose ・ Industrial effluence standard Soil ・ Soil quality standards Biodiversity and natural ・ Biodiversity guideline (Draft) environment Landscape and amenity ・ Visual impact assessment guideline ・ Factory act ・ Hazardous substance act Waste management ・ Public health act ・ Public health ministerial odor for infectious waste management Climate change and ・ Climate change strategy plan Source: Assessing EIA in Thailand: Implementation Challenges and Opportunities for Sustainable Development Planning (Working Paper), AECEN, 2015.
3) Environmental protection measure and monitoring To monitor the environmental impact and effectiveness of environmental protection measure during project operation period, the monitoring plan has to be attached on EIA report. Following items have to be included;
Location of monitoring, monitoring item, frequency and method Available laws and regulations, reference information Reporting (monitoring) period
Reporting (monitoring) period includes both construction period and operation period. For mining, oil / gas production and hazardous waste project, monitoring after facility closed is required. In addition, mining project has to prepare a restoration plan. Monitoring for climate change is not fundamental (implement arbitrarily). If relocation is necessary, implementation of impact assessment and consideration of
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mitigation of impact are necessary. Monitoring by third party may be implemented. In this monitoring, preparation and submit of the report of environmental mitigation measure are obligated every 2 years.
Reference Environmental Impact Assessment in Thailand, ONEP, MONRE, Thailand, 2015． Assessing Environmental Impact Assessment (EIA) in Thailand: Implementation Challenges and Opportunities for Sustainable Development Planning (Working Paper), Asian Environmental Compliance and Enforcement Network (AECEN), 2015. Environmental assessment guidebook for the business development in the foreign countries for the Japanese company (Thailand), IGES, 2015.
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Examination period (Review period by ONEP and ERC, not including report preparation, etc.); Over 75 days
Figure 3-11 EIA flow of Thailand (A-1) Project proponent; Private Company Government agency / State Enterprise JV of Private Company and Government agency / State Enterprise
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Examination period is not clear.
Figure 3-12 EIA flow of Thailand (A-2) Project proponent; Government agency / State Enterprise JV of Private Company and Government agency / State Enterprise
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Examination period (Review period by ONEP and ERC, not including report preparation, etc.); Over 75 days
Figure 3-13 EIA flow of Thailand (B-1) Project proponent; Private Company Government agency / State Enterprise JV of Private Company and Government agency / State Enterprise
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Examination period is not clear.
Figure 3-14 EIA flow of Thailand (B-2) Project proponent; Government agency / State Enterprise JV of Private Company and Government agency / State Enterprise
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3.5.2 Trend in the PPP Projects 1) Track record of PPP projects in the water field in Thailand The Table 3-12 shows the list of major PPP water supply and sewerage projects in Thailand. All the PPP projects have been conducted by the PWA, conversely the MWA has never implemented the PPP project. Although the type of contract and implementing body vary, most of the projects can be categorized as bulk water supply or treated water supply, and actual distribution of the water is executed by the PWA. With regard to the trend of contractors, East Water and TTW, both of which are introduced in the clause 3.4, have a strong track-record in the PPP field.
Table 3-12 List of the major PPP projects in Thailand
Water Commen- Type of Contract No. Project Name Scope Contractor Amount cement Contract Period (m3/d) Year Water Bangpakong Water East Water/Other private 1 Treatment BOT 43,200 2000 25 Treatment Plant shareholders Works (WTW) Nakhonsawan Water East Water/Other private 2 WTW BOT 14,400 2000 25 Supply Project shareholders 3 Borwin Waterworks WTW BOT East Water 2,400 2008 - 4 Rayong Waterworks WTW BOT East Water Group 86,400 2006 25 Chachoengsao Water East Water/Other private 5 WTW BOT 37,200 2000 25 Treatment Plant shareholders Utility Water supply 6 Sattahip Water works concession/ East Water 31,200 2001 - works lease 7 West of Bangkok WTW BOO Thai Tap Water 354,000 2004 30 Pathum Thani Water supply 8 BOOT Pathum Thani Water 488,000 1998 25 Waterworks works Sewerage 9 Pathum Thani WWTP BOT Ranhill Berhad 1,500 2005 - works East Water/Electricity Samut Songkhram 10 WTW BOO Generating Company 36,000 1999 30 Waterworks (EGCO) Phuket Water Supply 11 WTW BOO Aqua Flow Co., Ltd. 3,000 2012 5 Project(II) Industrial Water Panasnikhom-Banbueng 12 WTW BOO Resources Management 30,000 2004 15 Water Supply Project Co., Ltd. Wastewater Phuket Wastewater treatment for 13 BOO WOG Group 25,000 2012 30 Recycle Project reclaimed water Phuket Desalination Seawater REQ Water Service Co., 14 BOO 12,000 2005 18 Plant desalination Ltd. Koh Samui Water Seawater 15 BOO East Water 3,000 2004 15 Supply Project desalination Source: Global Water Intelligence, modified and added by FS survey team
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2) Approval process from the project formulation of PPP project The approval process from the project formulation of PPP project prepared by State Enterprise Policy Office, Ministry of Finance is shown below. In case that the project cost is more than THB100 million, it is necessary to receive cabinet approval. There is consideration for standardization, facilitation and transparency of PPP project by” Private Investment in State Undertaking Act 2013 (PISU Act)”
Figure 3-15 Approval Process from the Project Formulation of PPP project
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CHAPTER 4 PROPOSAL OF COMPREHENSIVE SERVICE
4.1 Target Field of the Comprehensive Service Sumitomo Electric Industries, Ltd. (SEI) which is the execution company of this survey, has been working as Water Solution Company and manufacturing “Poreflon@ membrane module” made by PTFE. Therefore, the target project for comprehensive service is that membrane treatment technology is adopted as core technology of water treatment in the project. The membrane treatment has generally the following advantages compared with conventional treatment.
The demerit of membrane treatment is that electricity consumption is larger than conventional method, and there is impact to O&M cost due to replacement of membrane modules. However, the modules which is expected energy saving has been developed and improvement in durability of the membrane module is achieved, therefore, these issues concerned in the past time has been solved. Furthermore, it is necessary to increase treatment capacity in the same area of water treatment plant and sewage treatment plant and the necessity of membrane treatment system has been risen. The followings show the target project using membrane treatment system for comprehensive service and its purpose. The application methods of membrane treatment system are alternative of sedimentation and rapid sand filtration method and usage for pre-treatment of RO system and for MBR.
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Table 4-1 Target Project using Membrane Treatment System for Comprehensive Service and its Purpose
Type of treatment Categories Purpose of membrane treatment system facillity Water treatment Alternative of sedimentation and rapid Waterworks plant sand filtration Desalination plant Pre-treatment of RO membrane system Process water Omission of sedimentation and rapid Industrial water works treatment plant sand filtration Sewage treatment Usage for MBR treatment and omission plant of sedimentation Sewage works Reclaimed water Pre-treatment of RO membrane system system Process water Omission of sedimentation and rapid Private company's treatment plant sand filtration wastewater treatment Wastewater Usage for MBR treatment and omission and the reclaimed treatment system of sedimentation water treatment Reclaimed water Pre-treatment of RO membrane system system
4.2 Outline of Comprehensive Service The Figure 4-1 shows the outline of comprehensive service proposed by SEI in Thailand along with the project flow. In addition to general service, new proposed contents in this survey are shown below. The following items are explained in other clause.
Study on financing option and its proposal Immediate response by engineering support center Entry to the project and establishment of SPC Invitation to Japan of operators in customer utilizing supporting programme Invitation to Japan of decision makers at customer’s side
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Figure 4-1 Outline of the Comprehensive Service
In this survey, the project which replacement project has been considered, is selected as a case study, FS survey team carries out preliminary design in case of membrane treatment system and shows advantages compared with conventional system, and then it aims to install membrane treatment system in the future project which water supply company will entry.
4.3 Beneficial effect to the Partner Country by Comprehensive Service The contribution to sustainable project operation by formulating a project plan based on technical assistance, human resource development and project investment after sales of membrane treatment equipment is the main beneficial effect to Thailand through comprehensive service. The followings show beneficial effect for each items newly proposed in the survey as comprehensive service.
By proposing and utilizing financial options to water supply companies that are difficult to procure project cost, it is possible to realize a construction plan that meets with the future increases in water demand. Especially, in case that PWA has difficulty to secure the project cost, the implementation of PPP project becomes urgent. At this time, the proposal of the financial option is useful for realizing a smooth project promotion for a water supply company in the partner country.
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According to the result of interview survey for the government organizations managing waterworks and sewage works, many opinions were heard concerning O&M of the membrane treatment facility. Especially, the chemical washing condition, frequency of membrane module replacement and daily O&M work for membrane treatment system are unclear. By implementing comprehensive service, it is possible to support O&M of membrane treatment system of the engineering support center, human resource development related to O&M even after delivery of membrane treatment system, and deepen customer's knowledge and know-how for membrane treatment system. Furthermore, it contributes to promote installation of membrane treatment system in large-scale water treatment plant and sewage treatment plant. By proposing establishment of SPC in the PPP project, the burden on the water supply company in the partner country that propose PPP project will be reduced and the number of PPP projects in Thailand in the field of water will increase. This effects upgrading of water supply, sewage and the reclaimed water facilities and finally contributes to improvement service in the project.
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CHAPTER 5 CASE STUDY (PRELIMINARY DESIGN)
5.1 Target Project of Preliminary Design FS survey team carries out preliminary survey for the target project having possibility to install membrane treatment system as case study in this survey, explains the design contents to water supply company in Thailand, deepens knowledge of membrane treatment system and improves feasibility of the project.
5.1.1 Selection of the Target Project According to the information from water supply company, it is expected that water demand will be increased due to current development in Chaing Mai and Lamphun province in the northern area and the replacement or expansion project has been planned to meet the increased water demand. The target project is waterworks centered on Lamphun water treatment plant (Treatment capacity: 24,000 m3/d). (The location is indicated by red marks in the Figure 5-1.) The target of the field survey in this project is PWA branch office No.9 managing waterworks in Chaing Mai and Lamphun province. The location of the existing water treatment is shown in the Figure 5-1. The applicability of membrane treatment technology is high due to the following reasons and it is judged that the implementation organization has been set to realize the project.
Since expansion of treatment capacity is as large as 34,000 m3/d and merit of membrane treatment system (Regarding for the required area and treatment cost) is realized easily. River water is taken as raw water and fluctuation in water quality is large and the existing coagulation management is an insufficient. By installation of membrane treatment technology, automatic operation will be planned and the treated water quality will be stable. The required land for expansion of water treatment plant is acquired. The location of new service reservoir is confirmed to distribute water by gravity. The service area is near the industrial park and it is expected that water demand will be increased. Currently, industrial water is supplied from water treatment plant in the industrial park, however, given the risk of a damage caused by a shortage of water resources, the feasibility of industrial water supply is high and stable project management can be realized by obtaining reliable income from industrial parks.
5.1.2 Target Area Lamphun area where is the target area of case study, is located at approximately 20km from the center of Chaing Mai. Location map is shown in the Figure 5-1.
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PS for low elevation are and Mae Taeng WTP Capacity: 100 + 100 + 40 m3/ hr
Mae Faek WTP Capacity: 1,000 + 1,000m3 /hr
Mae Rim 2 WTP Mae Rim 1 WTP Capacity: 623m3 /hr Capacity: 500 + 80m3 / hr
Mae Kuang WTP Capacity: 2,000m3 / hr
Sansai SR 4,000m3 and 500m3
San Kamphaeng WTP Pa Tan WTP Capacity: 150m3 / hr Capacity: 1,000m3 /hr
Tunnel WTP Capacity: 1,000+250m3 / hr
Pa Daet WTP Capacity: 500m3 / hr
Yuwah WTP Capacity: 50m3 / hr
Lamphun WTP (Rim Ping) Capacity: 500+500m3 / hr Lamphun WTP Capacity: 50+100m3 / hr
Pa Sang WTP Capacity: 80m3 / hr
Figure 5-1 Location Map of the Existing Water Treatment Plants in Chaing Mai and Lamphun Area
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5.2 Current Water Supply Condition, Existing System and its Issues The current water service area is same as the target area of the preliminary design, and it is shown in the Figure 5-2. As of 2018, the estimated population of Lamphun is 199,000 persons, the served population ratio is 59%, the served population is 116,000 persons, and the water supply is about 24,000 m3 /day. Raw water is taken from the Pin River at the intake facility, and after sedimentation at the grid chamber, it is led to the Lamphun water treatment plant by the pumps. The water treatment plant consists of sedimentation and rapid sand filtration system with a facility capacity of 24,000 m3/day. Regarding the sludge treatment, the sludge is sent to the lagoon, the supernatant water is returned to the receiving well, and the settled sludge in the lagoon is discharged by the vacuum car. In addition, 30% of treated water is supplied to the water supply area from the elevated water tank in the plant, and 70% is supplied to the water supply area by pumps. Since iron and manganese are present in raw water and they exceed the drinking water standards, chemical injection and stable water treatment are required.
Table 5-1 Outline of the Present Status of Water Service and Existing Water Supply Facilities Items Description Service area Area shown in the Figure 5-2 Population in the service 199,093 persons (Estimated from population census of Mueang area Lamphun) Population served 116,640 persons Population served as % of the population in the service 59% area Design daily maximum 24,000m3/day water service volume Intake from the Ping River, intake, grid chamber, raw water Water intake facilities transmission umping station Method of water treatment: Precipitation + filtration method Facility capacity 24,000 m3/day Main facilities: Chemical sedimentation basin (500m3/h), Rapid Water treatment facilities sand filters（500m3/h), Clearwater well (2000m3), Elevated tank, Distribution pump station, Chemicals feeding facilities, lagoon Water is supplied by gravity from the elevated water tank in the Distribution facilities water treatment plant and by pumps. The distribution pipe networks are as shown in the Figure 5-2. Source: Facility related; PWA, Population related; https://www.citypopulation.de/php/thailand-admin.php
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Source: prepared by FS survey team based on PWA’s website Figure 5-2 Design Service Area and Present Status of Water Pipelines
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Figure 5-3 Layout Plan of Lamphun Water Treatment Plant
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5.3 Preliminary Design of Water Treatment Plant applied Membrane Technology 5.3.1 Design Condition (Target Area, Water Quality and Population Served, etc.) Planning conditions for the projects targeted for preliminary design is as below.
Table 5-2 Planning Conditions for the Projects Targeted for Preliminary Design Items Planning conditions Design service area Eastern area of the Figure 5-2 (The area surrounded by the light blue line) Design year The year 2028 Design population served 233,280 persons (Existing: 116,640persons, Extension: 116,640persons) Design daily maximum 58,000m3/day water service volume Existing: 24,000m3/day Expansion capacity: 34,000m3/day (including the northern industrial park of 10,000m3/day) * Design daily maximum 206L/person*day water service volume per capita per day Water source Ping river (Surface water) Source: prepared by FS survey team based on the information provided form PWA * The water supply amount of 10,000 m3/day to the northern industrial park is added to the amount of purified water treated for expansion in anticipation of future water shortages such as drought.
Table 5-3 Raw Water Quality at Lamphun Water Treatment Plant and Water Quality Standard Items Ping river water Water Quality water quality items Unit quality (Raw water)1) Standard Items 2) Turbidity NTU 129 <1.00 pH - 7.8 6.5~8.5 Conductivity 261 Total hardness as CaCO3 113 Total alkalinity mg/L 121 Total dissolved solids mg/L 170 <1000 Chloride mg/L 9 <250 Iron mg/L 19 <0.30 Manganese mg/L 3.2 <0.10 Copper mg/L 0.3 <1.00 Zinc mg/L 0.1 <3.00 Sulfate mg/L 22 <250 Free residual chlorine mg/L Not analyzed 0.2～2.0 Coliform Bacteria presence - Not analyzed Not to be detected
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Ping river water Water Quality water quality items Unit quality (Raw water)1) Standard Items 2) absence/100mL presence - E. coli Not analyzed Not to be detected absence/100mL Source: 1) PWA, 2) MWA
5.3.2 Overall Water Supply Facility Plan 1) Water intake facilities The raw water shall be taken from the Ping River, and the water intake point shall be a point adjacent to the existing water intake point. The design intake flow shall be set at the design daily maximum flow with about three percent of the water loss during water treatment in the plant.
Design flow of raw water intake = 34,000 x 1.033= 35,122m3/day
Water intake facility shall be installed the same type of intake and grid chamber as the existing intake facility. After settling and removing the sand which flows in together with the raw water at the grid chamber, raw water shall be led to the Lamphun water treatment plant through the raw water transmission mains.
2) Raw water transmission facilities The design flow of raw water transmission facilities shall be based on the design flow of raw water intake. The raw water transmission shall be pumping type, the pumping facilities are required to supply the raw water with the difference elevation between its beginning point, i.e., the raw water intake facilities and its terminal point, i.e., the water treatment facilities, topography and geography of the transmission route and so on. The route of raw water transmission mains was selected as the shortest route from the water intake facility to the water treatment plant shown in the Figure 5-4. The raw water transmission main was determined in consideration of the economical correlation between the pipe diameter and the pump head calculated, assuming that the beginning point is the intake point elevation, and the terminal point is the water treatment facility elevation.
Raw water transmission pump: 6.1m3/min x 20.0m x 30kW x 5units (Including one standby) Raw water transmission mains: HDPE, diameter 500mm x 1.96km
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Source: FS survey team Figure 5-4 Planned routes of raw water transmission mains and treated water transmission mains
Table 5-4 Determination of Pump Head and Pipe Diameter of Intake (Raw Water Transmission) Pump and Raw Water Transmission Mains Require Pipe velocity friction Length velocity Hydraulic d pump flow rate diameter coefficien head loss Evaluation gradient head t (mm) (m) (m/sec) (m) (m) (m3/day) (m3/sec) D L C V I hf=L×I 35,122 0.4065 φ700 1,960 110 1.057 0.0019 3.72 3.72
35,122 0.4065 φ600 1,960 110 1.453 0.0041 8.04 8.04
35,122 0.4065 φ500 1,960 110 2.085 0.0099 19.40 19.40 adopted
35,122 0.4065 φ450 1,960 110 2.571 0.0165 32.34 32.34
35,122 0.4065 φ400 1,960 110 3.255 0.0293 57.43 57.43 Note: Calculated by the Hazen-Williams formula. Source: FS survey team
3) Water treatment facilities (1) Design water treatment capacity The design water treatment capacity shall be set based on the total of the design maximum daily demand. Design water treatment output = design maximum daily demand =34,000m3/day
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(2) Water treatment process As the raw water from the Pin River contains iron and manganese in higher level than the ordinary river water, firstly, rapid mixing basin, flocculation basin, rapid filtrations shall be installed as iron and manganese removal equipment. Thereafter, processing is carried out with UF membrane filtration equipment to produce drinking water of high quality. Discharge Water from Sewage System
Overflow Raw water tank
Backwash water Sand filtration
Backwash water UF Membrane
Concentrated RO Membrane water
pH adjustment and Wastewater disinfection basin
Distribution Discharge
Figure 5-5 Water Treatment Process Flow
(3) Receiving well, rapid mixing basin, flocculation basin, rapid filtrations The receiving well is provided to stabilize the level of raw waster arriving from the raw water transmission main; that the raw water is measured and regulated the inlet flow. The water treatment processes of chemical application, sedimentation, filtration, etc. is mainly aimed at removing iron and manganese in the raw water and ensuing not to apply an excessive iron / manganese load to the membrane filtration equipment.
(4) Filtered Water Tank The filtered water tank is a water tank for storing the filtered water and for stably feeding to the membrane filtration equipment. Also, it is used for backwashing water for rapid filtration. Structure: semi-underground setting, reinforced concrete structure (RC structure) Shape：20mL x 5mW x 6m x 2basins、water depth 5m Volume：V=500m3、Retention time：T=21.2min
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(5) Membrane Filtration Equipment (Membrane Module) For selection of the UF membrane, the FS survey team firstly compared the PTFE membrane (Polytetrafluoroethylene) and PVDF membrane (Polyvinyl fluoride), which are commonly used as water treatment membranes. The Table 5-5 shows the result of comparison. PTFE membrane is superior in durability, anti-blocking property, chemical resistance, and space saving because it has a product line-up with a membrane area of 100 m2 per one module. In addition, since operating pressure of filtration can be kept low, energy saving effect can be expected. Regarding the evaluation related to energy conservation, the result of the trial calculation of the CO2 reduction amount is shown in the next section.
Table 5-5 Comparison between PTFE membrane and PVDF membrane
Items to be compared PTFE membrane PVDF membrane
PTFE PVDF Material (Polytetrafluoroethylene) (Polyvinyl fluoride ) Specifications Membrane area per Excellent Good module (m2) 50, 70, 100 50, 70
Hydrophilicity Excellent Fair
Excellent Good Porosity of membrane 80% 60%程度 Anti-blocking property Oil contact angle in the Good Fair water (120 degrees) (30 degrees)
Absorption resistance Good Fair of organic matter
Chemical resistance Excellent Good （Allowable pH） (0-14) (2-10) Durability Warranty period 15 years 8 years (Comparison by past (Water amount and (Only water quality) similar project) Water quality) Energy consumption Good Fair Energy saving of UF membrane 1,284kWh/d 1,626kWh/d system Excellent Fair Ease of use Storage method Can be stored in dry To be stored in wet condition condition Comprehensive evaluation Excellent Good
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Table 5-6 Outline of Poreflon Membrane Module Items Contents Name of membrane module SEI Poreflon Membrane Module (OPMW-12B100) Method of membrane Dead-End filtration Type of membrane Pressurized type (Casing type), hollow fibber Dimension φ212 × 3,300 mm Weight 45kg (dry), 140kg (wet) Membrane area per module 100m2 pH application range 0～14 Operation flux of this 55.9LMH (1.34m/d) system
Image
(6) Clearwater well・pump well The clear water well is the facility to alleviate the imbalance between the filtration flow and the transmission flow during the operation of the water treatment plant. Structure: semi-underground setting, reinforced concrete structure (RC structure) Shape：15mL x 20mx 6m x 2basins、water depth 5m Volume：V=1500m3、Retention time：T=1.0 hr
(7) Treated water transmission pumping station (In-plant): Refer to the treated water transmission mains The treated water transmission facilities shall have two lines. One line is to supply the treated water for the service reservoir and the other line is for the northern industrial park.
Treated water transmission pumping station in the plant To the new service reservoir: 5.6m3/min x 60.0m x 75kW x 4 units (including, one standby) To the northern industrial park: 3.5m3/min x 50.0m x 45kW x 3units (including, one standby)
(8) Lagoon for wastewater and desludge Wastewater from removing iron/manganese removal equipment and membrane filtration
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equipment, shall be discharged to the existing lagoon. The settled sludge from the lagoon shall be removed by the vacuum cars.
(9) Chemical feeding facility The chemicals to be used at the water treatment facility are shown below.
Table 5-7 Chemicals to be used at the Water Treatment Facility and its Use Chemicals Purpose of use of chemicals Chlorine Liquefied chlorine Chemicals for oxidation of organic matter, iron and agents gas manganese in raw water and disinfection Coagulants Polyaluminum Chemicals for forming flocs from suspended matters in chloride (PAC) raw water to make easy the suspended matter to be trapped in membrane filters. Chemicals Sodium Chemicals necessary for chemical cleaning of used for hypochlorite, membranes to be carried out on site cleaning of chlorine, sodium membrane hydroxide
(10) Layout plan of Lamphun water treatment facilities The layout of expansion facilities is shown on the next page.
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New Water Treatment Facility
Figure 5-6 Layout Plan of Lamphun Water Treatment Plant
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4) Treated water transmission mains The treated water transmission facilities shall have two lines which are supplied to the service reservoir and the northern industrial park, and the design flow of treated water transmission of each line is based on each design maximum daily demand.
Design flow of treated water transmission for the new service reservoir = design maximum daily demand =24,000m3/day Design flow of treated water transmission for the northern industrial park = design maximum daily demand =10,000m3/day
The route of treated water transmission mains was selected as the shortest route from the water treatment plant to two water transmission points shown in the Figure 5-4. The treated water transmission main was determined in consideration of the economical correlation between the pipe diameter and the pump head calculated, assuming that the beginning point is the water treatment facility elevation, and the terminal points are two water transmission points’ elevations. Treated water transmission pumping station in the plant To the new service reservoir: 5.6m3/min x 60.0m x 75kW x 4 units (including, one standby) To the northern industrial park: 3.5m3/min x 50.0m x 45kW x 3units (including, one standby) Treated water transmission mains To the new service reservoir: HDPE 550mm x 11.3km To the northern industrial park: HDPE 350mm x 8.36km
Table 5-8 Determination of Pump Head and Pipe Diameter of Transmission Pump and Transmission Mains (for the Northern Industrial Park) Required Pipe Friction head Length Velocity Velocity Hydraulic pump Flow rate diameter loss Evaluation coefficient gradient head (mm) (m) (m/sec) (m) (m) (m3/day) (m3/sec) D L C V I hf=L×I 10,000 0.1157 φ500 8,360 110 0.605 0.0010 8.36 10.36 10,000 0.1157 φ450 8,360 110 0.729 0.0016 13.38 15.38 10,000 0.1157 φ400 8,360 110 0.934 0.0029 24.24 26.24 10,000 0.1157 φ350 8,360 110 1.213 0.0055 45.98 47.98 adopte d 10,000 0.1157 φ300 8,360 110 1.647 0.0116 96.98 98.98 Note: Calculated by the Hazen-Williams formula. Source: FS survey team
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Table 5-9 Determination of Pump Head and Pipe Diameter of Transmission Pump and the Transmission Mains (for the New Service Reservoir) Pipe Friction Required Length Velocity Velocity Hydraulic Evaluat Flow rate diameter head loss pump head coefficient gradient -ion (mm) (m) (m/sec) (m) (m) (m3/day) (m3/sec) D L C V I hf=L×I 24,000 0.2778 φ800 11,300 110 0.559 0.0005 5.65 27.65 24,000 0.2778 φ700 11,300 110 0.706 0.0009 10.17 32.17 24,000 0.2778 φ600 11,300 110 0.986 0.0020 22.60 44.60 24,000 0.2778 φ550 11,300 110 1.183 0.0031 35.03 57.03 adopt ed 24,000 0.2778 φ500 11,300 110 1.426 0.0049 55.37 77.37 24,000 0.2778 φ450 11,300 110 1.751 0.0081 91.53 113.53 Calculated by the Hazen-Williams formula. Source: FS survey team
Summarized above, the main facility plan outline is shown in the Table 5-10.
Table 5-10 Summary of the main facilities plan Main facilities Specifications Intake of surface water 35,122m3/day Water intake Grid chamber 35,122m3/day facilities Intake (raw water 6.1m3/min x 20.0mx 30kW x 5units transmission) facilities (including, one standby) Raw water Raw water transmission transmission HDPE OD550mm x 1.96km mains facilities Underground setting, Reinforced concrete structure (RC structure), 750m3 (effective Receiving well capacity) 15mL x10mx 6mx 2basins, H＝5m Membrane filtration 34,000m3/day, including iron and manganese facilities removal facilities Semi-underground setting, Reinforced Clear water well / pump concrete structure (RC structure)750m3 well (effective capacity) 15mL x10mx 6mx2basins、H=5m Water treatment For a service reservoir: 5.6m3/minx60.00mx facilities 75kWx4units Treated water (Including, one standby) transmission pumping For northern industrial park: station (In-plant) 3.5m3/minx50.00mx 45kW x 3units (including, one standby) Injection equipment for pre-chlorine, Chemical feeding facility coagulants, membrane cleaning Power facilities Lump-sum In-plant piping・plan for Lump-sum landscaping Treated water For a service reservoir HDPE OD550 x 11.3km
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Main facilities Specifications transmission For northern industrial HDPE OD350 x 8.36km mains park:
5.3.3 Effectiveness of Reduction in CO2 Emissions by Application of Membrane Technology In the water treatment facility using water treatment membranes, the electricity cost of membrane treatment in operation cost is approximately 25% of the total operation cost for MF / UF membrane equipment. Especially, power consumption of pumps and compressors is large.
In this study, the FS survey team compared the amount of reduction in CO2 Emissions by using SEI PTFE made Poreflon® membrane (hereinafter referred to as PTFE membrane) for UF membrane equipment proposed as the water treatment facility with other company's material membranes. As a case study, FS survey team estimated the amount of CO2 reduction when the water treatment capacity is 34 thousand m3/d. As a precondition for the UF membrane equipment, the net filtration flux is 1.34 m/d, the membrane area is about 29,000 m2, and the operation time is 21.4 h. In addition, FS survey team compared with UF membrane of other material and compared the amount of CO2 emissions as
UF. For the CO2 conversion coefficient, substitute value 0.512 (December, Heisei 30) of the emission coefficient by the Ministry of the Environment is used. Comparison of CO2 emissions between PTFE membranes and other material membranes is calculated for each month, year and long-term operation period with 25 years.
The result of comparison of CO2 emissions between PTFE membranes and other material membranes (hereinafter referred to as PVDF membrane) is shown in the Table 5-11. When the
PTFE membrane is used, a trial calculation result of 3,003,348 kg-CO2 reduction effect was obtained over 25 years. The reasons for this reduction effect are considered as follows.
Because the PTFE membrane has a three-dimensional membrane structure, it has anti- blocking property and excellent water permeability, it can obtain equivalent amount of permeated water with lower Trans-Membrane Pressure (TMP) than PVDF membrane. Because the washing by aeration is effective, the power consumption of the compressor tends to be larger than PVDF membrane, however, since the water amount used for backwashing is smaller than PVDF membrane, there is a characteristic that the recovery rate is high. Therefore, the total energy consumption is lower than that of the large layer. Further, since the recovery rate of the permeated water of the UF membrane treatment is high, the filtration water recovery rate of the RO membrane in the latter stage is set lower than that of PVDF membrane, and the energy consumption can be reduced. By reducing the pressure of the filtration pump to be lower than PVDF, power consumption is reduced.
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Since the backwashing water amount of the PTFE membrane module is reduced to be less than that of PVDF membrane, the power consumption of backwashing is reduced.
Table 5-11 Comparison of the Amount of CO2 Emissions between SEI PTFE made Poreflon® Membrane and PVDF made Other Company’s Membrane SEI PTFE made PVDF made Other Unit Poreflon® Membrane Company’s Membrane
kg-CO2/month 48,941 58,972
kg-CO2/year 586,083 706,217
kg-CO2/25 year 14,652,077 17,655,425 Difference of 25 years - ▲ 3,003,348 kg-CO2
5.3.4 Risk Analysis in the Project According to the result of interview survey to PWA Branch No.9, two items of risks are considered in this project. Currently, it is planned to take raw water from river, however, the measure for risks is required in case of water shortage in the future. PWA plans to use reservoirs located at eastern area of Lamphun WTP as alternative water resource. However, the negotiation with owners for right to use of reservoirs and this point is considered as a risk of the project. By implementation of this project, the service area of municipality will be included in the PWA’s service area. In this service area, municipality has carried out service by simple water supply equipment. Although this project has the effect of stabilizing the water supply flow and improving the water quality, water tariff will be the PWA standard, therefore, there will be areas where water tariff will rise and dissatisfaction of the residents may increase. It is necessary to carry out sufficient briefing for public hearing in the implementation stage.
5.4 Estimated Project Cost and Schedule of the Project The estimated project cost of the target facility for preliminary survey is explained in this section. The Table 5-12 shows the main items for construction works. Firstly, the estimated project cost was calculated by the cost function, and the value was calculated proportionally to the price level of Thailand. Regarding for proportion, it is determined based on the result of quotation of main facility prepared by cooperate company in Thailand.
Table 5-12 Contents of the Estimated Project Cost Items of Facilities Construction Works Water intake Intake of surface water Civil, mechanical, electrical and facilities instrumentation equipment
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Items of Facilities Construction Works Grid chamber Civil, mechanical, electrical and instrumentation equipment Intake (raw water Architecture, mechanical, electrical and transmission) facilities instrumentation equipment Raw water Raw water transmission Civil transmission mains facilities Water treatment Receiving well Civil, mechanical, electrical and facilities instrumentation equipment Membrane filtration Civil, mechanical, electrical and facilities instrumentation equipment Clearwater well・pump well Civil Treated water transmission Architecture, mechanical, electrical and pumping station (In-plant) instrumentation equipment Chemical feeding facility Architecture, mechanical, electrical and instrumentation equipment Power facilities Electrical and instrumentation equipment In-plant piping ・ plan for Civil landscaping Treated water Treated water transmission Civil transmission mains mains for a service reservoir and northern industrial park:
5.4.1 Cost Estimation The estimated project cost is shown in the Table 5-13. The construction cost is estimated about THB 835.2 million, and the total project cost is estimated approximately THB910.4 million by adding the costs for design, construction supervision and contingency to the construction cost.
Table 5-13 Estimated project cost Amount Item Description Breakdown Qty. (THB Remark Mill.) A:Design Preliminary 1 set 8.4 1% of “B” Design Detailed 1 set 25.1 3% of “B” design Subtotal 33.4 B: Construction Water intake Intake of surface water 1 set 16.2 Cost facilities Grid chamber 1 set 36.9 Intake (raw water 1 set 48.0 transmission) facilities Raw water 1 set Raw water transmission transmission 44.9 mains facilities Water Receiving well 1 set 11.1 treatment Filtration facilities 1 set 137.8 facilities Clearwater well / pump well 1 set 15.9
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Amount Item Description Breakdown Qty. (THB Remark Mill.) Treated water transmission 1 set 33.6 pumping station (In-plant) Wastewater pool / Desludge 1 set 12.4 basins Chemical feeding facility 1 set 16.4 Power facilities 1 set 37.3 In-plant piping / plan for 1 set 2.1 landscaping Treated water treated water transmission 1 set transmission main for a new service 325.4 mains reservoir Treated water transmission 1 set main: Northern industrial 97.1 park Sub-total 835.2 C: Supervision 1 set 16.7 2% of “B” D: Contingency 25.1 3% of “B” Excluding Total 910.4 taxes
5.4.2 Implementation Schedule The Table 5-14 shows the whole project schedule. The project formulation will start on March 2019 after completion of this survey. The period of the project formulation is assumed as approximately two years. Furthermore, it takes approximately twenty-four months from application of PPP project approval to receipt of its approval and approximately four years as design and construction period. It results the commencement of water supply from year 2025
Table 5-14 Implementation Schedule
Item／Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
PPP Project formation Procedure of approval of the Project Basic/ Detail Design Construction/ Trial Operation Commencement
5.4.3 O&M Cost The Table 5-15 shows the calculation of operation and maintenance cost of the preliminarily designed facility.
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Table 5-15 Scope of Cost Estimation for O&M No. Items Description Range of cost estimation 1 Labor cost Labor cost for operation for the membrane system 2 Electricity cost Intake (raw Electricity cost for intake (raw water water transmission) pump transmission) pump Operation for Electricity cost for Membrane filtration supply membrane pump, admixer, circulation pump, suction pump, facilities a backwash pump, filtration water pump, flushing pump, chemical injection pump, CIP pump, neutralization tank pump, concentrating tank inflow pump, collector, excess sludge withdrawal pump, return pump compressor, wash blower, etc. Treated water Electricity cost for treated water transmission transmission pump pump 3 Chemical cost Chlorine agent Chemical costs for oxidizing and disinfecting organic matter, iron and manganese in raw water Coagulants Chemical costs to aggregate suspensions in raw water in the form of floc and to facilitate capture by membrane filtration 4 Chemical cost On-site cleaning: cost required for membrane cleaning on site including chemical, waste disposal, personnel, transportation, and necessary expenses 5 Maintenance Expenses for maintaining functions of pumps, cost automatic valves attached to membrane filtration devices, instrumentation equipment, etc. 6 Replacement Replacement cost for the whole membrane of membrane 7 Sludge Cost for sludge disposal disposal cost 8 Sub-contract Sub-contract cost for water quality analysis
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No. Items Description Range of cost estimation cost
The Table 5-16 shows the calculation results of operation and maintenance costs. The O&M cost per 1 m3 of purified water was calculated as THB2.86 / m3.
Table 5-16 O&M Cost Items Cost (THB Thousand Remark No. /year) 1 Labor cost 900 3 engineers 2 Electricity cost 8,371 Chemical cost 16,539 Pre-chlorination, coagulation, 3 disinfection 4 Chemical cost 699 Membrane chemical washing Maintenance & 7,434 5 replacement cost 6 Sludge disposal cost 1,400 7 Contract 96 Water quality analysis 8 Total 35,439 9 OM cost per m3 (THB) 2.86
5.5 Financial Analysis The financial analysis of the Project is carried out in order to examine the financial validity. The analysis is conducted by means of comparison between estimations of the additional financial benefits (Income) stemmed from the project implementation during the project period and that of the necessary costs (Expenditure). Also, when it comes to the comparison, a discount rate is applied for the expected value in the future so as to convert to the value into the present value. Finally, based on the above comparison, the financial analysis is completed through the calculation of Financial Internal Rate of Return (FIRR) and Net Present Value (NPV).
1) Precondition The financial analysis is carried out on the basis of the following preconditions;
Project period: Plan A: 25 years or Plan B: 30 years (Period for design, construction and trial operation is supposed as 2.5 years and it is excluded from the project period) Residual value: It is not taken into consideration. Price escalation: It is not taken into consideration. Value added tax and excise tax, etc.: It is excluded from any calculations. Payment schedule of construction costs: 1st year - 50% of total amount, and the rest of 60% shall be paid back in 2nd and 3rd years.
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Forecast of Income and Expenditure Regarding the Income, only water charges from operation are considered in the analysis, on the other hand, miscellaneous revenues from operation such as water inspection charges and incidentals are excluded due to its small proportion in the total Income. Water charges are estimated based on the sum of construction costs, O&M costs and the expecting profits, which is shown in the Table 5-17. Since the Project is premised on the independent financing, the discounted rate of the financial analysis shall be in accordance with the internal standard of the SEI, as an executing agency of the independent financing project, which is set to 8%. As a result of the estimation, the water charges range THB 10.16/m3 at the Plan A, and THB 9.64/m3 at Plan B.
Table 5-17 Setting of Water Charges Item Plan A: Project Period-25 years Plan B: Project Period-30 years Total Construction Cost 910,000,000 THB 910,000,000 THB Operation and Maintenance 2.86 THB/m3 2.86 THB/m3 Cost Project Period 25 years 30 years Annual Amount of 12,410,000 m3/年 12,410,000 m3/年 Recycling Water Unit Price of Construction 2.93 THB/m3 2.44 THB/m3 Cost Unit Price of Water 5.79 THB/m3 5.3 THB/m3 Production Sales Unit Price 10.16 THB /m3 9.64 THB/m3 Source: FS survey team
As for the Expenditure, initial investment (construction) costs and O&M costs estimated in the clause 5.4.1 and 5.4.2 respectively are applied for the analysis.
Evaluation of sales price calculated In terms of the sales price of water, it is assumed as the sales price for PWA who supplies water to residents and industrial park directly. Based on approximately 500L/d per household, water tariff per household is calculated as the Table 5-19. As a result, the monthly water tariff per household is THB182, THB 12.13 /m3 is obtained. Comparing with PWA’s sales price (THB10.16), the profit rate is approximately 16%. (Assuming of the project with a period of 30 years, the sales price and its profit rate are THB 9.64 and 20%, respectively)
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Table 5-18 PWA’s Water Tariff (Lamphun) 2. Government agencies and 3. State enterprises and Large Volume of use 1. Residential Unit Small business business ( m³ / Month) Price Amount Total Price Amount Total Price Amount Total Minimum Water Minimum 50 Bath / Minimum 150 Bath / Month Minimum 300 Bath / Month Tariff Rate Month(4 m³) (9 m³) (15 m³) 0 - 10 10 10.20 102.00 102.00 16.00 160.00 160.00 18.00 180.00 180.00 11 - 20 10 16.00 160.00 262.00 19.00 190.00 350.00 21.00 210.00 390.00 21 - 30 10 19.00 190.00 452.00 20.00 200.00 550.00 24.00 240.00 630.00 31 - 50 20 21.20 424.00 876.00 21.50 430.00 980.00 27.00 540.00 1,170.00 51 - 80 30 21.60 648.00 1,628.00 29.00 870.00 2,040.00 81 - 100 20 21.65 433.00 2,061.00 29.25 585.00 2,625.00 101 - 300 200 21.70 4,340.00 6,401.00 29.50 5,900.00 8,525.00 301 -1,000 700 21.75 15,225.00 21,626.00 29.75 20,825.00 29,350.00 1001 - 2,000 1,000 21.80 21,800.00 43,426.00 29.50 29,500.00 58,850.00 2,001 - 3,000 1,000 21.85 21,850.00 65,276.00 29.25 29,250.00 88,100.00 > 3,000 21.90 29.00 Source: PWA water tariff, Table3
Table 5-19 Comparison between Water Tariff calculated based on the Average Water Consumption in Household and Sales Price for PWA Category Unit Water Amount of water price tariff (m3) amount (THB) (THB) 0-10 10.2 10 102 11-20 16 5 80 Total 15 182 Water tariff per 1m3 (THB) 12.13 Sales Price for PWA (THB) 10.16 PWA’s profit (THB) 1.97 PWA’s profit rate (%) 16.3%
According to operator in Chonburi WTP managed UU which is subsidiary of East Water, UU sales water to PWA with THB10/m3 and it is proved to be close to pricing according to the current situation. However, FS survey team got a response from PWA that it is slightly higher, and it is necessary to consider further reduction of sales price. The following two items can be considered as a measure. The scope of transmission pipeline shall be in the PWA’s scope and water production cost is reduced by reduction of construction unit cost The discount rate of 8% used for financial analysis is relatively high as the value as a capital investment and it is newly set up internally as business investment, and it is necessary to keep it below 8%.
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The industrial water supply with 10 thousand m3/d has been planned in this case study and its sale price is THB29.11/m3 (Profit rate: 65%). Considering for the project including industrial water supply work, the total profit rate is as high as approximately 30%, and the project sustainability as PWA can be ensured.
Table 5-20 Sales Price of Industrial Water per Month Unit price Amount Total (THB) (m³) (THB) 18.00 10 180 21.00 10 210 24.00 10 240 27.00 20 540 29.00 30 870 29.25 20 585 29.50 200 5,900 29.75 700 20,825 29.50 1,000 29,500 29.25 1,000 29,250 29.00 7,000 203,000 Total (Except for meter usage and 291,100 VAT） Water tariff per 1m3 29.11
Table 5-21 Calculation of Water Tariff Income and its Profit in Lamphun WTP Expansion Plan Income Profit Total profit （THB） （THB） rate Domestic 8,736,000 1,420,800 16.3% Industrial 3,493,200 2,270,580 65.0% Total 12,229,200 3,691,380 30.2%
2) Calculation of FIRR and NPV The Table 5-22 and the Table 5-23 indicate the FIRR and NPV in each plan calculated in line with above conditions.
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Table 5-22 Financial Analysis (Plan A)
Total Cost (THB) [D] [E] [F] Annual Income Benefit - Cost Net Present Project [A] [B] [C] Year (THB) / (THB) Value (THB) Period Investment O & M Total excluding tax =[D] - [C] =[E] / Cost Cost =[A] + [B] (1+OCC)t-1 2023 364,000,000 364,000,000 -364,000,000 -364,000,000 2024 273,000,000 273,000,000 -273,000,000 -252,777,778 1 2025 273,000,000 26,097,500 299,097,500 92,710,000 -206,387,500 -176,944,016 2 2026 29,229,200 29,229,200 103,835,200 74,606,000 59,224,648 3 2027 32,360,900 32,360,900 114,960,400 82,599,500 60,713,098 4 2028 35,492,600 35,492,600 126,085,600 90,593,000 61,656,074 5 2029 35,492,600 35,492,600 126,085,600 90,593,000 57,088,957 6 2030 35,492,600 35,492,600 126,085,600 90,593,000 52,860,145 7 2031 35,492,600 35,492,600 126,085,600 90,593,000 48,944,579 8 2032 35,492,600 35,492,600 126,085,600 90,593,000 45,319,055 9 2033 35,492,600 35,492,600 126,085,600 90,593,000 41,962,088 10 2034 35,492,600 35,492,600 126,085,600 90,593,000 38,853,785 11 2035 35,492,600 35,492,600 126,085,600 90,593,000 35,975,727 12 2036 35,492,600 35,492,600 126,085,600 90,593,000 33,310,858 13 2037 35,492,600 35,492,600 126,085,600 90,593,000 30,843,387 14 2038 35,492,600 35,492,600 126,085,600 90,593,000 28,558,692 15 2039 35,492,600 35,492,600 126,085,600 90,593,000 26,443,233 16 2040 35,492,600 35,492,600 126,085,600 90,593,000 24,484,475 17 2041 35,492,600 35,492,600 126,085,600 90,593,000 22,670,810 18 2042 35,492,600 35,492,600 126,085,600 90,593,000 20,991,491 19 2043 35,492,600 35,492,600 126,085,600 90,593,000 19,436,566 20 2044 35,492,600 35,492,600 126,085,600 90,593,000 17,996,820 21 2045 35,492,600 35,492,600 126,085,600 90,593,000 16,663,722 22 2046 35,492,600 35,492,600 126,085,600 90,593,000 15,429,373 23 2047 35,492,600 35,492,600 126,085,600 90,593,000 14,286,456 24 2048 35,492,600 35,492,600 126,085,600 90,593,000 13,228,200 25 2049 35,492,600 35,492,600 126,085,600 90,593,000 12,248,333 910,000,000 1,306,864,000 5,468,779 FIRR= 8.1%
Source: FS Survey Team
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Table 5-23 Financial Analysis (Plan B)
Total Cost (THB) [D] [E] [F] Annual Income Benefit - Cost Net Present Project [A] [B] [C] (THB) / (THB) Value (THB) Year Period Investment O & M Total excluding tax =[D] - [C] =[E] / Cost Cost =[A] + [B] (1+OCC)t-1
2023 364,000,000 364,000,000 -364,000,000 -364,000,000 2024 273,000,000 273,000,000 -273,000,000 -252,777,778 1 2025 273,000,000 26,097,500 299,097,500 92,710,000 -206,387,500 -176,944,016 2 2026 29,229,200 29,229,200 103,835,200 74,606,000 59,224,648 3 2027 32,360,900 32,360,900 114,960,400 82,599,500 60,713,098 4 2028 35,492,600 35,492,600 119,632,400 84,139,800 57,264,134 5 2029 35,492,600 35,492,600 119,632,400 84,139,800 53,022,346 6 2030 35,492,600 35,492,600 119,632,400 84,139,800 49,094,765 7 2031 35,492,600 35,492,600 119,632,400 84,139,800 45,458,116 8 2032 35,492,600 35,492,600 119,632,400 84,139,800 42,090,848 9 2033 35,492,600 35,492,600 119,632,400 84,139,800 38,973,007 10 2034 35,492,600 35,492,600 119,632,400 84,139,800 36,086,118 11 2035 35,492,600 35,492,600 119,632,400 84,139,800 33,413,072 12 2036 35,492,600 35,492,600 119,632,400 84,139,800 30,938,030 13 2037 35,492,600 35,492,600 119,632,400 84,139,800 28,646,324 14 2038 35,492,600 35,492,600 119,632,400 84,139,800 26,524,374 15 2039 35,492,600 35,492,600 119,632,400 84,139,800 24,559,606 16 2040 35,492,600 35,492,600 119,632,400 84,139,800 22,740,376 17 2041 35,492,600 35,492,600 119,632,400 84,139,800 21,055,903 18 2042 35,492,600 35,492,600 119,632,400 84,139,800 19,496,207 19 2043 35,492,600 35,492,600 119,632,400 84,139,800 18,052,043 20 2044 35,492,600 35,492,600 119,632,400 84,139,800 16,714,855 21 2045 35,492,600 35,492,600 119,632,400 84,139,800 15,476,717 22 2046 35,492,600 35,492,600 119,632,400 84,139,800 14,330,294 23 2047 35,492,600 35,492,600 119,632,400 84,139,800 13,268,791 24 2048 35,492,600 35,492,600 119,632,400 84,139,800 12,285,917 25 2049 35,492,600 35,492,600 119,632,400 84,139,800 11,375,849 26 2026 35,492,600 35,492,600 119,632,400 84,139,800 10,533,194 27 2027 35,492,600 35,492,600 119,632,400 84,139,800 9,752,957 28 2028 35,492,600 35,492,600 119,632,400 84,139,800 9,030,516 29 2029 35,492,600 35,492,600 119,632,400 84,139,800 8,361,589 30 2030 35,492,600 35,492,600 119,632,400 84,139,800 7,742,212 910,000,000 1,585,592,600 2,504,114 FIRR= 8.0%
Source: FS Survey Team
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FIRR is calculated by using the following formula.
n t1 Rt1 (1 d) = 0 t1
Where d : FIRR t : The t th year th R : The value in each year n : The 5 year
FIRR should, in general, preferably be better than the Opportunity Cost of Capital (OCC). Based on the discussion with the counterpart (C/P) of Thai side, the Weighted Average Cost of Capital (WACC)7 of 6.5% which is used for the preceding feasibility study by water supply companies is adopted as a substitute for OCC. As shown in the Table 5-22 and the Table 5-23, each FIRR is more than 8% which exceeds the normative WACC, and in any case the Project appears to be worth investing from the financial viewpoint.
In addition to the FIRR analysis, NPV is also calculated by using the following formula, for the reference in evaluating the investment.
n Ct i - C0 t1 (1 r)
Where Ct : Net cash flow at that point in time t : The t th year
C0 : Cost of the project at the beginning r : Discounted rate n : The 5th year
The NPV were calculated as THB 5,468,779 (Plan A) and THB 2,504,114 at the aforementioned discounted rate of 8%. It is, thus, expected that the Project could make a profit worth investing in terms of the NPV.
5.5.1 Economic Analysis of the Project As the socio-economic survey was not conducted in the Study, the economic analysis is, thus, qualitatively assessed the potential benefits caused by the Project as follows;
7 Weighted Average Cost of Capital (WACC): is the weighted average of the costs of liability and costs for equity financing.
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Improvement of living environment of the population Impact on health and prevention of disease of the population Rise in land prices in the target water distribution areas Increase of tourist and tourism revenue, etc.
5.6 Operation and Maintenance Plan 1) Method of Operation and Maintenance The main items of operation and maintenance (O&M) consists of recording of water quality, checking of equipment for membrane filtration facilities and confirmation of instruments. With regard to the method of O&M, in addition to checking instruments in the monitoring room, confirmation by patrol of each facility, input in the recording form, and the trend of operation condition of the system and the water quality is confirmed by these methods.
2) Items of Operation and Maintenance of Membrane Filtration Facilities The items of operation and maintenance of reclaimed water facility are shown below. It is necessary to change the items depending on the target site’s condition.
Table 5-24 Items of Operation and Maintenance of Membrane Filtration Facilities Items Frequency Contents Confirmation of alert, equipment condition, system’s operation condition (Water level in each tank, TMP, air Daily checking 1 time/day volume of blower, water temperature, etc.) and confirmation of instruments Scrapping of screen Scrapping of screen residues and washing of box for 1 time/day residues and washing screen residues Cleaning of screen 1 time/day Cleaning of screen and washing with water Confirmation of remaining of chemical, replenishment of Replenishment of chemical chemical, visually confirmation of aeration condition, 1 time/week and weekly checking visually confirmation of blower and pump equipment, confirmation of TMP and filtration test by filter paper 2 Treated water analysis Water quality items for membrane filtration water times/month Greasing and confirmation 1 time/3 Greasing of motor, blower and deodorizing equipment of belt *1 months and oil change and confirmation of belt slack
Measure insulation 1 time/3 Measure insulation resistance of pump and blower resistance *1 months (motor) and confirmation of current Best change *1 1 time/year Belt change of blower
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Items Frequency Contents Instruments for EC, pH, Temperature, TOC, SS, 1 time/year Proofing by manufacturer or specialist Turbidity, etc. Cleaning of membrane (In Less than 1 the time of TMP Dismount, cleaning and reinstall of membrane time/year increasing) 1 time/2 Overhaul of submersible pump, ground pump and blower Overhaul*1 years (Greasing, seal change and bearing change, etc.) *1: Details of maintenance method for each equipment follows equipment instruct manual.
5.7 Environmental and Social Considerations The Lamphun Water Treatment Plant Expansion project (hereinafter, the case study project) includes following 4 sub-construction projects; (1) Expansion of raw water intake facility and conveyance pipe. (2) Installation of membrane water treatment facility and .ancillary facilities (3) Construction of new industrial water transmission pipeline to Northern industrial park. (4) Construction of new potable water transmission pipeline to new service reservoir
Considering these sub-construction projects, the necessities for implementation of environmental and social considerations and items to be considered are described below.
5.7.1 Implementation of Environmental and Social Consideration to obey Relevant Laws and Regulations of Thailand In the laws and regulations of environmental and social considerations of Thailand, construction project of waterworks facility is not required to implement EIA and EHIA. However, if the case study project site (Chaing Mai – Lamphun area) locates in the areas classified as Class 1 watershed area by cabinet resolution, implementation of environmental and social considerations is necessary (see No.33 in the Table 3-7). The project implementation entity of this case study project is organized by PWA and SPC JV. Therefore, environmental and social consideration is implemented accordance with the process A-1 (Figure 3-11) or A-2 (Figure 3-12) For the case study project, items to be studied in environmental and social consideration are expected as follows (see Table 3-10);
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1) Water quality of backwash wastewater of membrane system Water quality of backwash wastewater by the membrane system operation is assessed with the Industrial Effluent Standards, B.E.2560. Especially, following water quality items should be concerned.
Table 5-25 Points to be considered in the Water Quality Assessment Item Standard value Remarks color 300 ADMI ADMI：American Dye Manufacturer's Institute (Standard methods, 2120F) Total dissolved 3,000mg/L When discharged to receiving water with TDS < solids (TDS) Or 3,000mg/L, TDS in discharged water must not exceed 3,000mg/L TDS in the receiving water When discharged to receiving water with TDS > ＋5,000mg/L 3,000mg/L, TDS in the to-be-discharged wastewater can exceed the TDS already found in the receiving water but not higher than 5,000mg/L. Total 50mg/L suspended solids (TSS) Source: Industrial Effluent standards, B.E. 2560.
Following clause mentions an example of application of abovementioned TDS standard. When water quality is classified by TDS, the classification is expressed as follows;
Table 5-26 Classification of waterbody by TDS TDS mg/L Classification 0 - 1,000 Fresh water 1,000 – 10,000 Brackish water 10,000 – 100,000 Salt water (sea water) Source: The Open Hydrology Journal, 2011, 5, 51-57
When wastewater is discharged into fresh water or brackish water (TDS <3,000mg/L), the TDS value in wastewater is not exceeds 3,000 mg/L. On the contrary, when wastewater is
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discharged into brackish water or salt water (TDS > 3,000mg/L), the TDS value in wastewater is allowed until TDS in receiving water + 5,000mg/L. In the former industrial effluent standard in Thailand, it was difficult to introduce RO and membrane technologies to generate reused water because the TDS in backwashing water easily exceeded the standard value (TDS: 3,000 – 5,000 mg/L). However, through this revision of the Industrial Effluent Standards, introduction of water recycle system using membrane and RO technology will be accelerated.
Expansion of raw water intake and conveyance pipeline, and construction of industrial water transmission pipeline and potable water transmission pipeline. In the construction of raw water transmission pipeline and industry water transmission pipeline, following assessment items are to be concerned; Effect on biotic resources (animal and plant) Effect on scenery Consistency with existing land use plan Noise, vibration and dust during construction period
(1) Expansion of Lamphun WTP and installation of membrane water treatment system The membrane water treatment system is installed in the existing site of Lamphun WTP. Therefore, an additional land expropriation is not necessary. Moreover, these construction works is implemented in the existing WTP site. Therefore, possibility of significant change of landscape is not expected. Following items should be monitored and managed during construction period.
Noise, vibration and dust during construction period
5.7.2 Environmental and Social Consideration The project area of this case study project is limited within the part of Lamphun city; therefore, the occurrence of a serious environmental impact is not expected. In addition, a resettlement for this project is not expected. The important items to be concerned are as follows;
Construction period Noise and vibration by construction work Emission of air pollutant (NOx, SOx, Dust)
Operation period
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Safety management of chlorine injection facility Appropriate treatment of water treatment sludge
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CHAPTER 6 STUDY ON PARTICIPATION INTO OPERATION BUSINESS AND SETTING-UP OF ENGINEERING SUPPORT CENTER (ESC) 6.1 Purpose During the Feasibility Study (FS), one of the common suggestions given to us by the governmental and municipal bodies in charge of water supply and sewage in Thailand (hereinafter called as “Public Sector(s)) was to participate the business in the scheme of Public-Private Partnership (PPP) to reduce their burden of the financial problems. At the same time, we understood that Public Sectors do not have enough experience to operate the water treatment plants with Membrane Bio-Reactor (MBR) and, therefore, they suggested us to provide end to end support covering pre-engineering, installation supervision, trial run, Operation and Maintenance (O&M), training and human development of operators and so on in addition to the supply of the products and equipment. Their suggestions were in line with our strategy. If we stay within the supply business, what we can do is to fight with the competitors, many of them from low-cost evolving countries, to cut down the initial cost to meet the simple and therefore imprudent demand by the buyers. The opportunities to propose our business concepts as high functions, low failure rate, efficient running, small foot print, low life cycle cost could be limited, then, consequently, Public Sectors may opt to select the plants only by initial costs. By this cycle, as the result, their water/wastewater treatment plants cannot be upgraded or modernized, which would not necessarily be enough to meet their environmental essentials. To break such unfavourable cycles, we considered to start the FS in the purpose of stepping into the water supply/sewage treatment business in the scheme of PPP by setting up a Special Purpose Company (SPC) in Thailand. The SPC will be utilized to achieve our goals to “export Quality Infrastructure Systems” so that the Public Sectors would enjoy our long term and wide range of quality services and support. Noted that, we were explained in the course of the interviews that the Public Sectors, both water supply and sewage would not have clear or organized rules in the selection of PPP. They opt to select PPP only when their own resources in financing and operation would not be sufficient, but when selecting BTO, BOT and BOO, they are requested in accordance with the Cabinet Decision to consult with The Board of Investment of Thailand (BOI) in advance.
6.2 Classification of PPPs PPP involves wide concepts ranging from Design Build Operate (DBO) to Full Private Operation. In this report, we basically followed the descriptions of “Guidance on Public-Private Partnership in Water Services” published by Water Supply Division, Health Service Bureau,
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Ministry of Health, Labour and Welfare in March 2014 (and its addendum of December 2016) with minor adjustments. After having known the understandings of public and private sectors, we classified PPPs into the patterns by the sharing of cost elements among Public Sectors and private investors as shown in the Figure 6-1. Note that the said Guide classifies BTO, BO(O)T, BOO and Concession as the models of Private Finance Initiative (PFI).
Type of PPP by Cost Elements in Total Revenue/Consideration
Portion of Type Consideration Total Revenue by Elements
$/Plant EPC $/Plant Contract on Spec., Payment upon Plant Transfer
by Municipality (Muni)
DBO Admi & Service Fee $/Period OPEX Chem, O&M, Spare Contin- Profit OPEX Finance S/V Elec Parts gency
$/Plant EPC $/Plant Contract on Spec., Payment upon Plant Transfer
Muni $/Period Chem, BTO O&M, Spare Consideration or OPEX Elec, Admi & Profit Contin- Parts OPEX Finance S/V $/m3 etc gency
N/A. Undertaker to be Responsible for EPC incl its performance. EPC $/Plant EPC Protion to be paid as a part of $/m3.
Muni EPC Portion Chem, BOT
BOOT O&M, Spare Contin Consideration $/m3 $/m3 x m3/Period x OPEX Elec, Admi & Profit Parts gency Contract Period etc S/V
EPC $/Plant N/A. Use existing Plants
Plant Muni Chem, O&M, Spare Lease Contin Consideration $/m3 OPEX Elec, Admi & Profit EPC & Finance
Concession Parts (Paid to gency etc S/V Muni) at Initial Construction
N/A. Undertaker to be (or not to be) Responsible for EPC. When responsible, EPC Protion to be paid as a part of EPC $/Plant $/m3. When not, use exiting plant and pay Plant Lease in place of EPC
EPC Portion Muni Chem, $/m3 x m3/Period x O&M, Spare Contin BOO or Consideration $/m3 OPEX Elec, Admi & Profit Business Period by Undertaker's Parts gency S/V Full Full Privatize etc Projection
Remarks: (a) No significant difference between BOT and BOOT. BOT/BOOT without Contractual (License) Period is considered as (b) BOT/BOOT/BOO supplies water to Entruster as bulk (there may be cases to supply to big users.) (c) Concession/Private Business supplies water to general users or to intermediate wholesellers (aggregators). Figure 6-1 PPP Models Classified by Cost Element Sharing
Presenting the Figure 6-1 to the Figure 6-2 major investors in this business in Thailand (East Water (EW) and Thai Tap Water (TTW)), they were generally agreeable with this figure but mentioned that they (as individuals) haven’t experienced in Concession. They understood Concession as the one similar to Consignment of Comprehensive Services to Private Sectors.
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6.3 Function and Organization of SPC in the Targeted Business of this FS Water supply business involves public infrastructure. Entering into this business area, we, as a foreign company, have to study the alliance with local partners expecting their contribution in the area of local restrictions and management. Both EW and TTW have Japanese origin shareholders, directly or indirectly, and have subsidiaries to run water supply business as SPC, hence no big hesitations to start a new joint venture with us.
6.3.1 SPC-JV as a Joint Venture between a Local Partner and Us. The Figure 6-2 shows the functions we plan to put on the JV. In this plan, only one JV will be set up to cover all the required functions by the JV. The Engineering Support Center (ESC) will become a part of this JV, too. Though this is the most natural scheme, the contributions and activities by each investors may not necessarily be reflected to their benefit strictly however precisely the JV agreement is documented. Here in this report, the payment to SPC as the consideration of water supply is to be done by the Public Sector in case of DBO, BTO, BOT and BOO in accordance with the water supply agreement; while in case of Concession and Full Private Operation by their general users as the water charge.
Figure 6-2 SPC-JV as a JV between a Local Partner and Us
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6.3.2 Functional Allotment to SPC-JV and to our own SPC (SPC-SEI) The Figure 6-3 shows the functions of each SPC. In this plan, in addition to SPC-JV, another SPC with our 100% investment (SPC-SEI) will be set up. ESC will be set up as a part of SPC- SEI. The SPC-JV will bear primary responsibility for the whole business, but the obligations particularly related to the MBR manufacturer, such as design, engineering, maintenance and human development, will be assigned and subcontracted to SPC-SEI as their responsibility. By doing this, we aim to make our responsibility clearer to carry out our obligations with our own independent decisions. EPC Contracting, Possession of Assets, Water Business Management and Financing will be done by SPC-JV. SPC-JV and SPC-SEI jointly tries to achieve Customer Satisfaction.
Figure 6-3 Allotment of Functions to SPC-JV and to SPC (SPC-SEI)
In addition to the public water supply, we plan to take care the business chances of the small scale industrial wastewater treatment and supply of reclaimed water as another area we may show our technical expertise. This may help us to avoid unnecessary outflow and disclosure of our own benefit and core technologies to the others (non-Japanese stakeholders).8 The partner may have hesitation to separate this from SPC-JV, but we need to stick to.
6.4 Applicable Investment Incentives by BOI to the SPC In 2015, the Government of Thailand announced “Thailand 4.0” as its long term vision for the economic development. BOI, as the competent authority, controls and promotes the
8 Ref. 6.7 of this report
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investment incentives to 10 major target industries and 3 eastern sea bound provinces (Chonburi, Chachoengsao and Rayong, so called Eastern Economic Corridor - “EEC”). FS Team studies such incentive plans to see the probability to obtain them to the SPC.
6.4.1 Incentive Plans Prepared by BOI “A Guide to the Board of Investment 2016 (Japanese Version)” (BOI Guidebook) shows 2 types of the incentives; a) Taxation Incentives to grant reduction or exemption of import duties on raw materials and equipment, corporate income tax for specific years, accelerated depreciation of construction expenditure on factory infrastructures; and b) Non Taxation Incentives to give non Thai entities/personnel the equivalent status to that of Thai entities/personnel such as Entry and Work Permit to non-Thai nationals Ownership of Land Remittance to Foreign Countries.
In addition, foreign companies may be granted to do the business in the restricted industries for foreign entities by the List 3 of Foreign Business Acts (including Architect, Engineering and Construction), once BOI approves as the special cases.9 The application for incentives by foreigners (company or individuals) will be examined by the combination of following criteria: a) “Activity Based Incentives”: These incentives are classified in 6 categories. “Knowledge- based activities like R&D will be treated as the most preferable, less technology oriented but supporting the value chain of higher ranked activities will receive the least. b) Area or Merit Based Additional Incentives: The investment to such areas as SEZ (Special Export Zone) 10 Provinces, Southern Boarder, Industrial Park developed and operated by
9 In Thailand, it is considered lawful, therefore widely used to secure the management right with minor shareholding by (a) securing majority in Voting Right by issuing different types of stocks, or (b) issuing stocks to silent but supportive Thai investor(s) to hold the majority in numbers, e.g., 49% by a Japanese investor + 2% by silent investor(s) to exceed Thai partner’s 49%. But when (b) is selected, as the silent investors usually request to pay the return (or reward) regardless the financial result of the company, it has to be counted into the investment business plan.
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IETA (Industrial Estate Thailand Authority) etc., will receive Additional Incentives by Area; whereas the investment to R&D, Academic/Research Institutes, Development of Local Suppliers, etc., will receive the same by Merit.
Investment to EEC 3 Provinces will be granted the additional Area Based Additional Incentives, too. Once the incentives are granted, the beneficiaries are requested to report their progress and status when they file or renew their annual Tax and non-Tax benefits. BOI set up an office called OSOS (One Start One Stop) Investment Center as their affiliate to provide the one-window services to cover applications, approvals, annual reports, tax benefit, visas and work permit to non-Thai nationals comprehensively.
6.4.2 Applicability of BOI Incentives to the SPC Water Supply and Sewage Treatment (either discharging or reuse as the reclaimed water) business by using the MBR technology was shown in the list of Activity Based Incentives in BOI Guidebook, hence high chance of eligibility. Here, taking Corporate Tax Exemption as the typical factor, the example of the incentives are listed below.
Eligible Incentive (Code No. Activities and Tax Exemption Period) 7.1.2 Production of tap water, industrial water or A3 (5 Years) steam 7.17 Recycling and reuse of unwanted materials, A2 (8 Years) Sorting/separation with additional processing of recycling or recovery of valuable substances. 7.18 Waste treatment or disposal
Additional Incentives by Area could be obtained if qualified. If invested into the industrial parks in EEC 3 provinces, additional 4 year extension (i.e. 12 years in total) might be granted in case of A2 industry, and 2 year extension (total 7 years) in case of A3. We have to take note that when 1 company has different types of activities, of which eligible incentives come different, such company has to separate the cost calculation and accounting books in accordance with the incentives given to them. In our case, our activities may be eligible to 2 different incentives, e.g. Industrial Wastewater Treatment for discharge (A3 category), and the same for water reclamation (A2), if qualified so, we have to have 2 different administration
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and accounting/tax records, which may result in higher administrative expenses. We have further learned that the cost of common production lines could be (and could not be) proportionally allocated to businesses with different incentives. The reality is to employ external consultants experienced in the area of BOI incentives.
6.5 Setting Up a Company and It`s Timeline: By summarizing the descriptions in “Investment Environment of Thailand (2017)” published by Japan Bank for International Cooperation (JBIC) and “A Guide to the Board of Investment 2016 (Japanese Version)” (Guidebook) published by BOI, the standard process and the necessary period for the BOI approval is shown in the Figure 6-4.
Figure 6-4 Standard Process and Period to Obtain BOI Approval
After the approval, the common procedures to set up a regular companies in Thailand will follow, such as the injection of capital, registration of trade names and articles of incorporation, etc. before starting the operation. In Thailand, at the stage of BOI approval, the application in temporary names, or the same in the name of individuals of the investors is allowed to avoid the unnecessary conflict etc., when the applications are turned down. In this case, the investor shall apply the changes in names at the time of their Acceptance of Approval after the Notice of Approval.
6.6 Financing 6.6.1 Approximate Scale of Finance Requirement In the Table 5-13, the Estimated Total Project Cost (for Construction) worked out as THB 910 million approximately (JPY 3,100 million), and in the Table 5-16, the O&M expenses were estimated as THB 35.4 million per year (JPY 120 million/year).
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6.6.2 Cash Requirement and Financing (DBO and BTO - Plants do not belong to SPC) In case of DBO and BTO, as the construction cost of the Plant is paid basically at the time of the completion and the take-over, SPC will not be required to bear the financial burden except the payments to the contractors in advance to the operation. SPC will be required to be ready for the cashflow mainly for the routine operation to cover the OPEX of the several months. The cash requirement to cover the construction cost would not necessarily of the burden of the SPCs (neither SPC-SEI nor SPC-JV) because SPC-SEI is responsible only for MBR technical part, and SPC-JV in DBO/BTO is entitled to be paid by the project owners (like local Public Sectors). The financial burden could be shared by EPC contractors as much as possible in the manner of the back-to-back payment to them, and the remainders could be covered by the bank loan with the guarantee by parent companies.
6.6.3 Cash Requirement and Financing (BOT, BOO, Concession, Full Private - Plants belongs to SPC) In case of BOT or BOO/Full Private with the construction of new plants, and in case of Concession or BOO without new construction, the big initial cost like construction cost (in the former case) and license fee or lease charge of the plants (in the latter case) has to be paid by the operator; SPC-JV. In addition, the OPEX during its non-revenue period, which could normally be as long as several years, is to be well planned under the financial plan of the SPC. Financing all these cost by equity would not be realistic. The regular way is to rely on bank loans with 2:1 debt-equity ratio.
Precondition Overall Cost = as shown in 6.6.1 2 year non-revenue period for construction and preparation D/E Ratio = 2/1 (1) Construction THB 910 million Cost (2) O&M Cost THB 35.4 million/year x 2 years = 70.8 million Overall Cash THB 980.8 million Requirement Debt (2/3) ≒ 650 million Equity (1/3) ≒ 330 million
In Thailand, the project financing is not prevailing as a funding method, but investors more relies on the corporate financing with the guarantee by parent companies, or funding through so
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called “parent-subsidiary loan”.10 In reality, there has to be different policies among the investors as to the funding, such as Debt Equity Ratio, selection of lending financial institutes. In addition, as shown in the Figure 6-5, there would be cases that each investors raises the fund proportionally to their shareholding ratio. Or, in another case, the investor with majority is responsible may prepare funding 100% and the minority backs it up with their percentage.
Finance by One Bank, Finance by 2 Banks by Share % Guarantee by Share %
100% Finance/Guarantee by Majority, Parent-Sub Loan by Share % supported by Minority by Share %
Figure 6-5 Several Schemes of Bank Loans and Guarantee
6.6.4 Study on Japanese Institutional Funding Support on Quality Infrastructure Export In July 2017, the institutional loan named “Global Facility to Promote Quality Infrastructure Investment for Environmental Preservation and Sustainable Growth (QI-ESG)”11 was launched by JBIC to assist the effort to preserve the global environmental and to reinforce the strength of Japanese companies in the international competition. As it covers the water supply and water pollution prevention, the business under this Feasibility Study (FS) could be considered as one of its applicable area. As we can expect better conditions and more efficient examination compared to those of normal loans by private banks though the maximum amount available under this scheme is limited to 60% of the total needs of joint financing. Knowing that, we would study it as the preferable option of our funding of our portion, and then, of the partner’s portion as well to ease the burden of the financial cost of the SPC.
10 Interviews with the Bangkok branches of The Sumitomo Mitsui Banking Corporation, JBIC, and the Japan Division of Siam Commercial Bank (in Bangkok). 11 JBIC Press Release (in Japanese and English) dated June 28, 2018, and the interview in October 2018 with JBIC Bangkok Representative Office
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We, however, have to take note that the finance agreement under this program has to be signed by the end of June 2021, but the timing of our cash injection is scheduled beyond it. We need to keep studying another programs meeting our project and milestone at the time of the implementation. As explained in the 6.6.3, we plan to make a loan of THB 650 million, either in JPY or foreign currencies including THB mainly for the cost of the construction of our plant as the main use (not as the procurement of products and equipment). At this moment, we consider QI-ESG (or its succeeding facilities) as one of our preferable options. As we will be requested to prepare back up guarantees at the time of bank loan, we also study the eligibility of Insurance for Loan of Business Funds or Overseas Investment Insurance operated by Nippon Export and Investment Insurance (NEXI) to reduce the exposure to financial risks by our parent company.
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CHAPTER 7 HUMAN RESOURCE DEVELOPMENT PLAN
This chapter explains the proposed contents for human resource development plan before and after installation of membrane treatment equipment. By implementing the training of the human resource development plan shown below, the probability of ordering our company for large-scale membrane treatment equipment projects in the future will be increased, and further ensured the realization of sustainable operation in the customer side after installation of the system.
7.1 Purpose of Human Resource Development Plan The purpose of human resource development plan is shown below, a) Implementation of class room lecture for outline of O&M method and its theory and accumulation of overall knowledge b) Implementation of On-Site training for explanation of equipment operation, and site visiting c) Implementation of the site visiting in Japan by governmental officials and improvement of possibility of receiving order in case that specific Project is studies in municipality.
7.2 Target Trainees Approximately two persons from the department in charge of O&M of water treatment equipment are the target trainees for above a) and b). Approximately three persons from the government officials such as local governments are the target trainees for above c).
7.3 Implementation Method of Training The location of the training is in Japan. The utilization of support of training in Japan by the Association for Overseas Technical Cooperation and Sustainable Partnerships and the project of AEM-METI Economic and Industrial Cooperation Committee shall be considered in the time of implementation stage. The followings show the specific training contents in case of utilization of support mentioned above.
Table 7-1 Tentative Plan of Training in Japan utilizing AOTS support Items Contents Support project name Technical cooperation utilization type / Development program of a market in the emerging countries or Supporting program of human resource development to promote low carbon technology Training type Training in Japan (Subsidy rate: one-second or one-third)
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Items Contents No. of trainees 2 persons (Assumed number of people according to the principle of one trainee per 20 full-time staff of company) Outline of training and General training (Group training in AOTS): period Introduction of Japanese circumstance, understanding of Japanese culture and life in Japan, etc. Total period: 9 days On-site training Class room: Explanation of membrane treatment system and general treatment flow, evaluation of operation data of membrane module and chemical washing condition for membrane module Site training: Explanation of operation method for membrane treatment system (at site of treatment system in Sumitomo Electric Industries, Ltd. (SEI)) Site visiting: Site visiting of the system installed by SEI in private company, and governmental water treatment plant and sewage treatment plant Total period: 10 days Keyword for allocation of Development program of a market in the emerging subsidy countries: (1) Field related to export of infrastructure system: “Water” (2) Environment and Energy: Saving energy/Product, Parts and material with environmental consideration type Supporting program of human resource development to promote low carbon technology: (1) Field related to export of infrastructure system: Projects with fierce competition
Table 7-2 Tentative Schedule of AOTS On-Site Training AM PM Locat Locat days days Training Contents Training Contents -ion -ion Explanation of outline of On-Site Type of membrane module and its 1 SEI SEI training character Explanation of membrane treatment Explanation of membrane treatment 2 SEI SEI system (Water supply and sewage) system (Industrial wastewater)
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AM PM Locat Locat days days Training Contents Training Contents -ion -ion Site visiting to evaluation test of water 3 SEI Site visiting to SEI’s MBR system SEI treatment Condition of chemical washing and 4 SEI SEI Site visiting of MBR system evaluation of operation data Site visiting of MBR and RO recycling 5 Moving Private system 6 Holiday Holiday 7 Holiday Holiday
8 Moving Private Site visiting of MBR system Site visiting of water treatment plant 9 Moving Public using membrane system Site visiting of sewage treatment plant 10 Public Tokyo Closing remarks using membrane system
Table 7-3 Tentative Plan of Training in Japan utilizing AMEICC project Items Contents Support project name Project on “AEM-METI Economic and Industrial Cooperation Committee” Training type Invitation No. of trainees 3 to 5 persons Outline of training and Site visiting of SEI: Explanation of development of period membrane module, evaluation test, such as filtration test and O&M for membrane treatment system of SEI at the site Site visiting: Site visiting of the system installed by SEI in private company, and governmental water treatment plant and sewage treatment plant Total: Maximum 7 days Keyword for allocation of Water treatment system subsidy
Table 7-4 Tentative Schedule of AMEICC AM PM Locat Locat days days Training Contents Training Contents -ion -ion Explanation of On-Site training Type of membrane module and its 1 SEI SEI schedule character Site visiting to evaluation test of water 2 SEI Site visiting of SEI’s MBR SEI treatment
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AM PM Locat Locat days days Training Contents Training Contents -ion -ion Privat 3 Moving Site visiting of MBR system e Privat Site visiting of MBR and RO 4 Moving e recycling system Publi Site visiting of sewage treatment plant Publi Site visiting of water treatment plant 5 c using membrane system c using membrane system 6 Tokyo Tour of private recycling system Tokyo Tour of private recycling system
7 Tokyo Closing remarks
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CHAPTER 8 TECHNICAL COMPETITIVENESS OF JAPANESE EQUIPMENT AND TECHNIC FOR FEASIBILITY OF THE PROJECT
8.1 MF / UF Membrane Based on delivery results of MF / UF membranes in fiscal 2016, manufacturer share is shown in the Table 8-1. The share of the MF / UF membrane is Pentair in the US with first place, and has gained a large share in North America, Europe and the Middle East. In particular, there are many achievements of introduction such as wastewater and pre-treatment for seawater desalination. Meanwhile, the share of Japanese manufacturers is less than 20%, and there are plentiful orders for large-scale projects for water supply and sewage reclaimed water treatment applications, however, in recent years, diversification such as demand for water treatment of power plants, preliminary treatment of seawater desalination, treatment of industrial water, etc. is proceeding.
Table 8-1 Manufacturer’s Share of MF / UF membranes in FY 2016 Sales Manufacturer (JPY 100 Share million) Pentair 62 12.7% GE（Suez Group） 57 11.6% Asahi / Pall* 55 11.2% Dow Chemical 42 8.6% Inge 40 8.2% Hyflux 31 6.3% Toray* 28 5.7% Motimo 27 5.5% Litree 25 5.1% Scinor 16 3.3% Liqtech Internatinal 15 3.1% Motian 12 2.4% Memstar 10 2.0% Senuofil 10 2.0% Bangmon 10 2.0% Others 50 10.2% Total 490 100.0% Source: Current status and future prospects of related market for water resources, Fuji Economic 2017 * Japanese manufacturers
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In addition, the Table 8-2 shows manufacturer’s share of membrane for MBR. Although General Electric (Currently Suez Group) is the largest at 23.2%, this share has shrunk with the rising of Asian emerging manufacturers in recent years. Japanese manufacturers occupy about 30% or more in total and have a large track record for sewage treatment plants and private factories. Our market share is gradually increasing to 1.8%.
Table 8-2 Manufacturer’s Share of Membrane for MBR Sales Manufacturer (JPY 100 Share million) GE（Suez Group） 115 23.2% Origin Water 91 18.4% Mitsubishi Chemical * 82 16.6% Kubota* 68 13.7% Memstar 38 7.7% Motimo 36 7.3% Evoqua Water Technologies 10 2.0% Sumitomo Electric Industries, Ltd.* 9 1.8% Koch Membrane Systems 8 1.6% Toray* 6 1.2% Others 32 6.5% Total 495 100.0% Source: Current status and future prospects of related market for water resources, Fuji Economic 2017 * Japanese manufacturers
The features of SEI’s “Poreflon® membrane” of pressurized type membrane with PTFE made are summarized in the Table 8-3 and compared with other materials. Currently, there is little market share, however, "Poreflon® membrane" making use of Polytetrafluoroethylene (PTFE) material is excellent in chemical resistance to withstand strong alkaline agents, anti- blocking property for high oil content and high concentration organic matter due to high hydrophilicity, and it has specifications superior to those of foreign manufacturers. Since SEI has launched a membrane module in 2003, there has been an increase in the demand for newly installation of "Poreflon® membrane" and renewal to "Poreflon® membrane" from major manufacturer’s membrane, therefore, our market share in the future can be fully expected to expand.
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Table 8-3 Comparison between Poreflon® (PTFE) Membrane and other Material Membrane Items Manufacturer SEI A B C Type Hollow fiber Flat sheet Hydrophilic Material PTFE PVDF PVDF C-PE Membrane Membrane Specifications structure Fine fiber Flat through hole Porosity (%) 70-80 50-60 50-60 50-60 Pore size (μm) 0.1 0.04 0.1 0.4
Oil contact Excellent Fair － angle (degree) (120) Fair (30) Anti-blocking property Absorption resistance of Good Fair Fair Fair organic matter Chemical resistance Cleaning Durability property 14 2-10 1-11 2-12 (Acceptable range of pH)
8.2 RO Membrane Regarding the RO membranes, as shown in the Table 8-4, the share of Japanese companies is particularly high, which accounts for about 80% for the three major companies, among which Japanese manufacturers have a high market share of 50.3%. Toray, Nitto Denko, using a spiral polyamide composite RO membrane, has been improving the results by concentrating on large-scale projects such as desalination of seawater. Meanwhile, Toyobo uses a hollow fibber membrane made of cellulose triacetate as the material of the membrane and can be washed and sterilized with an oxidizing agent such as sodium hypochlorite, so it demonstrates its performance in seawater desalination containing oil and it has a high market share in the Middle East such as Saudi Arabia.
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Table 8-4 Share of RO/UF Membrane Manufacturer in 2016 Sales Manufacturer (JPY 100 Share million) Dow Chemical 402 35.3% Toray* 268 23.5% Nitto Denko / Hydranautics* 245 21.5% Vontron 75 6.6% Toyobo* 60 5.3% LG Chem 24 2.1% GE (Suez Group) 22 1.9% Lanxess 15 1.3% Others 29 2.5% Total 1140 100.0% Source: Current status and future prospects of related market for water resources, Fuji Economic 2017 * Japanese manufacturers
8.3 Expansion Sales Activity Plan to Third Country by Utilizing Membrane Module Manufacturing Factory (China) Regarding the manufacture of SEI’s Poreflon membrane module, SEI manufactures a PTFE sheet which is a material for hollow fiber membranes with water treatment function in SEI’s factory in Japan, and provide it to the group company factory in Zhongshan City, Guangdong province, China (Zhongshan Sumiden Hybrid Products Co., Ltd.). After that, final assembly process for membrane module will be carried out. The merit to conduct final assembly process in China is described below. Zhongshan Sumiden Hybrid Products Co., Ltd.
Cost reduction and quality assurance can be achieved by manufacturing PTFE sheet which is a hollow fiber membrane material having water treatment function in Japan and carrying out the final assembly process in China. It is possible to reduce personnel expenses by hiring staff in China, thereby reducing the manufacturing cost of membrane modules. The transportation period of membrane module and its unit from China to Thailand is shortened approximately one week compared to from Japan. Transportation cost becomes cheaper. (Figure 8-1)
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Export tax from China to Thailand is exempted. Based on the goods trade agreement in China ASEAN Free Trade Agreement (ACFTA), ACFTA preferential tax can be applied in trade transactions within the Member Area. According to this Agreement, preferential tax can also be applied in ASEAN countries other than Thailand.
Zhongshan Sumiden Hybrid Products Co., Ltd.
Osaka SEI’s factory 17~21 days
10~14 days
Figure 8-1 Comparison of Transportation Period and its Route
According to the above merit, SEI collaborate with group company in China and promote sales expansion to Thailand as third-country and ASEAN countries. Currently, in the harsh price competition in China, the experience of the project for SEI has been accumulated by manufacturing membrane module with low cost. As of December 2018, out of the 515 delivery records for membrane module, 300 records to China. It is necessary to secure customer’s trust regarding low cost of membrane module by explanation of the delivery record. Up to now, the production volume in Zhongshan Sumiden Hybrid Products Co., Ltd. was over 300,000 m2 / year, however, as of March 2018 the membrane module production volume was raised to 500,000 m2 / year, which is 1.5 times higher. Furthermore, SEI is planning to expand in the future, and it is assumed that sales expansion to ASEAN countries will become more active due to collaboration with group company in China.
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8.4 Study on Advantage by Collaboration of Japanese Companies The participation of Japanese companies in waterworks, sewage works and reclaimed water works will benefit to Japan. The strategies for enhancing the superiority of Japanese companies through collaboration with Japanese municipalities and private companies are described below.
Municipalities having O&M experience in WTP and STP, trading companies expected participation of investment to SPC for the private project, general contractor with special technique such as curve jacking method of large diameter pipeline and long distance jacking method and manufacturer with high technique of water treatment collaborate and it is possible to propose PPP project for the large-scale waterworks and sewage works in Thailand. Japan International Cooperation Agency (JICA) has carried out the preparatory survey (PPP infrastructure project) and survey which aims to formulate infrastructure plan using PPP method to meet the concept of “Quality Infrastructure Investment”. As a contractor of this survey, the collaboration with Japanese consultant companies which have a lot of experience of field survey shall be considered. 1764 Japanese companies enter in Thailand, as of April 2018. 12 Currently, towards to achieve “Sustainable Development Goals”, while corporate activities are processing, the demand for the reclaimed water treatment system is growing. In order to receive inquiries from Japanese companies, it is necessary to collaborate with machine trading company, increase the number of customers for expansion of sales and receive order of private project.
12 JETRO HP
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CHAPTER 9 OVERALL PLAN OF THE PROJECT, PROJECT SCALE AND MEASURES TOWARD TO RECEIVE ODER OF THE PROJECT
9.1 Overall Project Schedule The Table 9-1 shows the overall project schedule based on the basic process (5.4) of the Lamphun water treatment plant expansion project that FS survey team studies in the part of case study. In Thailand, SEI has already dealt with membrane module and equipment for water treatment to the field of private industrial wastewater. If it is realized to get the order of governmental project regarding to water treatment plant, it is reasonable to establish ESC which operates technical support to the both of industrial and governmental fields.
Table 9-1 Overall Project Schedule
Item／Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Lamphum Water Treatment Plant Expansion Project Private wastewater/water treatment project Governmental Project in Thailand Establishment of SPC/ESC Water business management
9.2 Trial Calculation of the Project Scale The Table 9-2 shows the result of the trial calculation of the Project scale in accordance with the plan of the comprehensive service. This table also shows the estimated sales for Lamphun water treatment plant expansion Project by joint investment. FS survey team assumes that the completion of the construction work is in 2024 and sales amount for membrane module and water treatment equipment is JPY 400 million (for only SEI’s portion). After 2025, our shareholding rate (assumed as 49%) out of total SPC’s sales (SEI’s shareholding ratio) is accounted. (Note: Our formal regular consolidation of sales doesn't include the sales in case of JVs with minor share.) FS survey team expects the sales (JPY 150 million per one project) of governmental project for water treatment or sewage treatment per two years, and the revenue of the engineering services fee by ESC.
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Table 9-2 Result of Trial Calculation of Project Scale
Millon JPY/Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Lamphum Water Treatment 400 206 206 206 206 Plant Expansion Project
Private wastewater/water Sales Approx. 160-200/Year treatment project
Governmental Project in 150 150 150 150 Thailand
SPC/ESC 40 40 40 40 40 40 40
9.3 Utilization of SEI’s Existing Organization and its Business Flow for Order 9.3.1 Sales and Maintenance Services of Industrial Wastewater Treatment Plants to Improve Cash Flow and to Build Up the Local Presence as the Secondary Effect In 6.3.2, FS survey team explained a plan to separate the functions of SPC into two for SPC- SEI to take care the technology oriented obligations particularly related to those of MBR manufacturer, such as design and engineering, maintenance and human development, by Engineering Support Center (ESC) to be set up as a part of SPC-SEI. The presence of Japanese manufactures in Thailand and surrounding countries are quite high, and it would further be extended by “Thailand Plus One” and “Sino-US Trade Conflict” effects. Japanese manufacturing plants in this area tends to be equipped with wastewater treatment plants meeting to the Japanese, or even to the worldwide standard of Environmental Protection and Saving of Water Resources by the guidance of their headquarters in Japan. The number of inquiries to show this tendency is increasing. FS survey team believes that it is necessary to grab such requirement of water treatment and reclamation by utilizing ESC as our local tool to propose high-end solutions covering pre-construction engineering study to post-sales operation and maintenance. To take up the PPP business of Large Scale Sewage Treatment Plant, by its nature, needs to absorb financial burdens as non-revenue period during its business preparation and construction. FS survey team expects to start getting revenues earlier and to improve the financial status of the SPC by this business in the private industrial sectors. At the same time, by having better reputation in the industrial field, higher presence in municipal sewage field could be expected as the side effect.
9.3.2 Contribution of Our Existing Local Company (SET) as an Investor to SPC-SEI. SEI holds a subsidiary company in Thailand.13 As their scale is relatively small and takes responsibilities to take care of wide range of businesses of SEI’s products, they may not be suitable to stand as the SPC-JV of the large scale, they would rather be suitable to keep ESC
13 Ref Note of Clause 6.4.1
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running with small number of experts as its internal organization. SEI take them as the preferable option for our ESC.
9.4 Study on Expansion Promote Measures and Possibility of Horizontal Expansion to the Other Countries The following table shows an expansion promote measures and a possibility of horizontal expansion to the other countries. In terms of expansion promote measures, there are measures, such as appeal to the customers for engineering support formulation and technical proposal from ESC (Technical Support Center) and project formulation of PPP project in the other countries by utilization of experience of project management for SPC.
Table 9-3 Expansion Promote Measures to the Other Countries Promote measures Contents Implementation schedule Engineering Support from Preliminary design of new water It is possible to start ESC’s ESC to the customers in the treatment facility, maintenance of supporting from year 2021 as per the other countries membrane modules (off-site Table 9-1. chemical washing etc.) and training for operators of membrane system Horizontal expansion to the After accumulation of know-how, It realizes horizontal expansion to other countries after such as construction contract, other countries from year 2025 at the accumulation of know-how asset, water supply business and time of commencement of water of Joint Venture (JV) finance, the entry of PPP project supply business after establishment between partner company in the other countries will be SPC as per the Table 9-1. and SEI. stated.
ESC focuses on typical work such as design of treatment facility, maintenance and training and implements technical support to not only in Thailand, but also the customers in the other countries where SEI delivers membrane modules. The main target countries are Singapore, Vietnam, Malaysia and Myanmar. SEI’s SPC-JV and partner company proposed in clause 6.3.1, accumulate know-how of asset, water supply business and finance and then, the entry of PPP project in the other countries is studied. The target countries are Malaysia.
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9.5 Issues regarding of Project Implementation 9.5.1 Political Risk In Thailand, the election will be held in 2019 and demonstration due to postponement of the schedule, etc. There are changes in the situation little by little. In the future, if the elections overlap at the time of important decisions such as project’s decisions and project management, and the subsequent political unrest will continue, there is a possibility that the implementation process may be delayed, as it may take time to make decisions. However, according to some high government officials, "The economic policy is not influenced by the political power even if there was change of government. In other words, the policies to promote inbound Foreign Direct Investment to EEC were legislated in a law and will not be suddenly discarded." As a fact, a big economic policy change has not been done even after the change of government in the history of the past 30 years in Thailand. Therefore, FS survey team may consider that it would not be a big risk as to the continuity of the policy.
9.5.2 General Risk of the Contract with the Government Agency Generally, the contents of contracts with the government agency tend to be uniform and conceptual, and an interpretation difference between trustees such as SPC and the government agency may happen, and there is finally the concern that eventually the contractor will be forced to follow them." However, FS survey team didn't obtain this kind of trouble in Thailand in our survey. Generally, fair adjudication can be provided if SEI could incorporate arbitration clause by Singapore International Arbitration Centre (SIAC) in the contract. A Japanese who has a long experience in Thailand operation says "As the law of Thailand is written in Thai, negotiating through English may cause disadvantage to foreigners ", and his advice is to hire an appropriate Thai interpreter who has ability to communicate in Japanese directly.
9.5.3 Risk of Water Shortage and Non-Revenue Water Water shortage and non-revenue water should be considered as risk factors during water supply works. The targeted SPC in FS which will be established in the future, is assumed to receive raw water supply from the government agencies, if raw water is not sufficiently supplied due to shortage, the project will be interrupted directly. Therefore, it is necessary to examine the exemption for SPC’s obligation of water supply and securement of alternative water resource in case of shortage of raw water supply. On the other hand, the reasons of non-revenue water are assumed that there is uncollected water tariff and failure of water supply facilities. The SPC which has a contract with BOT or BOO and the responsibility of water tariff collections is taken by the public sector, and the contract
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shall have a clause which protects SPC from such a risk. In order to prevent a failure of water supply facilities, it is necessary to pay attention to the selection of specifications for each equipment at the initial stage of the project and the maintenance after the commissioning.
9.5.4 Risk of the Contract with the Partner Company of SPC In case that SPC is established by JV, SEI may invest into either the existing water supply companies or the existing SPC. In this case, there is a possibility that SEI may suffer losses due to the risks inherent in the partner company before investment being expressed by environmental accidents etc. after SEI’s investment. The risks mentioned above shall be guarded by the Representation (Rep) and Warranty Clause etc. in the contract regarding for investment. According to the result of interview survey to a lawyer, the following items should be considered. a) It is mandatory that SEI makes a report within the deadline of notice of violation of Rep and warranties and cannot be reimbursed after the deadline. b) The validity of the Rep and Warranty Clause would normally be 1 to 3 years after the closing in normal cases, however, the longer period such as 5 to 7 years could be negotiable, considering to appearance of the effectiveness in case of M&A of environmental businesses. c) In any case, as it must be difficult to identify where the root causes had been generated before or after the closing, any concerns should be thoroughly investigated in detail design. d) If there are concerns for latent risks which are large in probability, special warranty clauses to attend the possible cases could be discussed in addition to the Rep and Warranty Clauses. e) However, it is difficult to identify latent risks and it may create distrust among partners to add special warranty for the risks not admitted by partners. f) In case that the environmental accidents result in legal liability, response to authorities such as detention of responsible persons will be received primarily by those with management right (if SEI is major, it will be SEI). Though SEI can request the partners to share its cost and burden, personal custody and responding to authorities cannot be evaluated in money precisely. Concerns with high risk of liabilities of this kind, such as fine, damage in operation, lawyers’ fee, etc., should be listed as the risk management items.
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