The department will act as treasurer, responsible for dispensing, recording and monitoring the soft loans.

In addition to the low interest rates, borrowers will be exempted from principal repayment for the first two years.

Piyapan Nimmanhaemin, director-general of the department, believes that local authorities, state enterprises and the private sector will benefit from the economic incentive.

KTB is looking for any projects  concerned with environmental protection . These projects may include waste-water management, waste management and air-quality management. Related business initiatives, such as the commercial use of animal faeces as alternative energy fuel, are also qualified to apply for the loans.

With interest rates lower than the market's average, Preecha hopes to attract at least 100 applications.

For local authorities, applying through municipality councils, interest will be the minimum lending rate (MLR) minus 3 per cent. Loans can be repaid for up to 10 years, with an unrestricted amount and without any collateral.

State enterprises can enjoy similar privileges but with interest rates of the MLR minus 2.5 to 3 per cent and a payment period of no more than seven years.

Private enterprises can borrow only 20 per cent of the long-term asset, which is restricted to no more than Bt400 million. The payment period will be seven years at 1.5 to 2 percentage points below MLR.

Some businesses will be given a further privilege of 5 per cent of the principal repayment exempted from interest. So if one invested Bt100 million, only Bt95 million would be charged with interest.