Ample reason to put Stung Nam plans on hold

opinion September 08, 2017 01:00

By The Nation

Questions of transparency and economic viability need to be resolved before Thailand finalises the deal with Cambodia

The Prayut government appears to have learned an important lesson from the controversial Bt40-billion Stung Nam hydropower-water supply project. Just before Prime Minister Prayut Chan-o-cha was due to visit Cambodia on September 7, the project became controversial, with critics sharply questioning the feasibility and transparency of the scheme.

In addition, there appears to be a conflict within the Prayut administration regarding the scheme, which was originally proposed some time ago for Thailand to divert water resources from neighbouring Cambodia to ease a potential domestic shortage, especially for industrial and service-sector users in the eastern region. The Eastern Economic Corridor (EEC) special economic zone, which covers Rayong, Chon Buri and Chachoengsao provinces, is going to be a major user of fresh water.

The Stung Nam project includes a 24-MW hydropower dam in Cambodia costing an estimated Bt9 billion-Bt10 billion and a 200km pipeline to deliver 300 million cubic metres of fresh water annually across the border to the Thai province of Rayong. The water transport system – the pipeline – would require a further Bt30-billion investment.

The National Energy Policy Committee earlier ordered the Electricity Generating Authority of Thailand to negotiate details of a plan to buy electricity from Cambodia at the relatively high price of Bt10.75 per unit, while the water would be supplied free of charge.

However, Prayut temporarily suspended the Thai-Cambodian project earlier this week after the Agriculture and Cooperatives Ministry deemed in unnecessary, since Thailand would have enough fresh water to meet demand for the next 12 years. Besides the project’s economic viability, critics also questioned its transparency, especially with regard to competitive bidding to award large and lucrative contracts for construction and related services.

In terms of viability, the government needs to present a credible case for the Stung Nam project, especially regarding its massive water-diversion plan to ease a potential shortage in Thailand in coming years. In fact, water, electricity and other crucial components of the infrastructure for EEC investors need to be planned well into the future – beyond the 12-year timeline cited by the Agriculture Ministry, which is probably less familiar with rates of water consumption in non-agricultural sectors.

Once the demand side is clearly established, the government can make a sound decision as to whether the project is economically worthwhile in the long term, while the huge cost of building the long-distance water pipeline also needs to be reviewed.

Next, the government needs to ensure that the project is implemented with transparency to avoid accusations of corruption and undue favouritism. Open and competitive bidding is required to protect the public’s interest and ensure taxpayers’ money is wisely used to boost the country’s long-term international competitiveness.

Buying fresh water from neighbouring countries is a good option to avoid domestic shortages. It is similar to buying electricity from Laos or Malaysia, of which Thailand has long been a customer. However, the infrastructure to support the transportation of fresh water across the Cambodian border appears to be more expensive than that for electricity purchases.

Still, it’s not too late for the government to come clean in handling this project.