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Thailand: Hin Krut Coal Plant FAQ

Hin Krut Coal-Fired Power Plant Project, Thailand and
Japan Bank for International Corporation's (JBIC) Involvement

The gate at the entrance to the public land at Ban Krut. It was built by the local community campaigning with green campaign flags on the land. The public road has been claimed for the project by the private company and access denied to the public. Just near the entrance to the public raod the company has put a video camera high in a tree to record who uses the road.

1. What is Hin Krut Coal-Fired Power Plant Project?

Hin Krut Coal-Fired Power Plant has been proposed to be built in Tongchai Sub-District, Bang Saphan District, Prachuab Kiri Khan Province, Thailand. The developer of the project is Union Power Development Co. Ltd. (UPDC), an independent power producer (IPP). Japan's Tomen Trading Company, Chubu Electric Company, and Toyota Trading Company are major shareholders of UPDC, each having 34%, 15%, and 15% of the company shares respectively, while Union Energy of Thai-based Saha Union Conglomerate owns 36%.*

If completed, Hin Krut Coal-Fired Power Plant will produce 1,400 mega watt of electricity, which will be purchased by Electricity Generation Authority of Thailand (EGAT) in four phases. Phase I was set in October 2002 with the amount of 700 mega watt, Phase II in January 2003 with another 700 mega watt, but Phases III and IV have never been decided. Due to the delay in the construction, however, the current expected date for the plant to start producing electricity is 2005. To meet this deadline, the construction must begin within the year 2002. UPDC and EGAT have signed a 25-year power purchase agreement (PPA). Coal will be imported from Australia, Indonesia, and South Africa.

The total cost needed to construct the power plant is 1.2 billion US$. Japan Bank for International Corporation (JBIC), the former Japan Export Import Bank (JEXIM), at one point planned to offer 500 million US$ investment finance to the project, but due to the Thai Government's move to reexamine the project, the investment plan has never been materialized.

*Fortnum, Finland and CEPA, USA once owned UPDC shares. The two companies, however, withdrew from the project because of their concerns over economic viability and environmental impacts. Their shares were sold to Chubu Electric Company and Toyota Trading Company.

2. What are Problems of the Project?

a) Massive hot water, used as coolant, will be discharged into the ocean. This will damage the environment, especially fisheries in the area.
b) A 3.5 kilometer pier will be constructed for unloading imported coal. This will hinder fish migration and villagers' fishing activities.
c) Solid waste and hot water will negatively affect a near-by coral leaf.
d) Ashes emitted from the plant will pollute the air, affect villager's health, and damage local tourism industry.
e) A large amount of greenhouse gas will be released into the environment.
f) The project may lead to an electricity price hike, given the current excessive power reserve in Thailand.
g) Opposing villagers have been excluded from decision-making processes.
h) Many flaws have been spotted in Environmental Impact Assessment (EIA).
i) UPDC collaborates with Tomen in using unjustifiable means to suppress local opposition. The Bangkok-based Japanese Embassy has been urging the Thai Government to launch the project to protect the profits of the concerned Japanese companies.
j) A corruption allegation over the land acquisition has been filed. The Thai National Counter Corruption Committee (NCCC) is currently investigating the case.

3. Flaws in Environmental Impact Assessment (EIA)**

a) The number of fish species is underestimated: EIA has identified only 164 species, while an expert at the Bureau of Fisheries has found 470.
b) The number of fishing households is underestimated: EIA claims that there are only 99 families practicing fishing and are fewer than 100 fishing boats in the communities, whereas in fact there are over 500 fishing families and 300 boats. EIA has missed fisher folks in neighboring areas. EIA also does not consider impact on villagers working in related industries, such as food processing and fishing-gear making.
c) EIA does not mention the proposed plant's impact on the watershed area for the District.
d) A mitigation scheme is insufficient: EIA proposes cultivation of seven fish species as a compensation measure. This is too few to protect the existing fish diversity.
e) EIA undermines the value of a coral reef in the area. Some academics have pointed out that the value of a coral reef cannot be measured only by its appearance.
f) People participation is lacking: EIA has not been conducted in participatory manners. Consequently, it has not been able to capture the socio-economic dynamics of the affected local communities.
g) Whales and dolphins have recently been witnessed in the area. EIA does not mention the power plant's impact on them.

**EIA has been modified several times. The above-mentioned flaws are based on the recent versions.

4. Hin Krut Chronology
4-1. Thai Government

1997: The Thai Cabinet approved the project.
2000: The Democrats-led Government confirmed the 1997 cabinet approval. The government established a committee to investigate social impact, while facilitating the project implementation.
2001
January: The Democratic Party lost a general election. The Thaksin-led Thai Rak Thai Administration came into power.
May: The Senate Committee on Environment passed a proposal to shift the construction site and the fuel. The proposal was later voted down at a Parliament meeting.
November: Prime Minister's Office Minister Chaturon Chaisaeng visited Ban Krut, as well as Bor Nok, a construction site for another coal-fired power plant.
2002
January:
-Two senate sub-committees, the Sub-Committee on State Enterprise Privatization and the Sub-Committee on Public Participation, passed a resolution to oppose the project.
-Prime Minister's Office Minister Chaturon announced in a press conference that the PPA might have disadvantaged the state.
-Prime Minister Koizumi Jun'ichiro of Japan visited Thailand.
-The National Energy Policy Committee proposed to relocate the project.
-Prime Minister Thaksin Shinawatra visited Hin Krut and Bor Nok. Prime Minister Thaksin later announced that his administration would make a decision before Thai New Year's Day, which is April 12.

4-2 Local and National Opposition

2000
October: The Ban Krut City Council passed a resolution to oppose the power plant project.
2001
March: More than 1,000 protestors rallied in Bangkok.
April: The Ban Krut City Council sent a letter to JBIC Governor, Mr. Yasuda Hiroshi, requesting him not to fund the project.
2002
January:
-The Students Federation of Thailand demanded full disclosure of the power purchasing contract.
-At the time of Prime Minister Koizumi's visit about 1,200 villagers rallied in front of the Government House, demanding Koizumi not to be involved in the Hin Krut and Bor Nok projects.
-A poll conducted by an Assumption University research institute showed that 53.4% of the respondents supported the villagers' anti-power plant movement (12.4% did not support the movement).
-The People's Rights and Freedom Protection Group called for a corruption investigation against the chief of the National Energy Policy Office (NEPO). The office has been promoting the power plant project.
-More than 500 academics nation-wide signed a petition, demanding the Government to scrap the Hin Krut and the Bor Bok projects.

5. JBIC's Involvement and Reactions

In 1998 JBIC, then JEXIM, was ready to fund the Hin Krut power plant, but ended up canceling the deal due to strong local opposition against the project. The Thai Government also started re-examining both the Hin Krut and the Bor Nok power plants. A JEXIM official said in a Diet meeting that they would wait for the Thai Government's further decision. After the Thai Government cabinet meeting on October 10, 2001, JBIC was informed by Tomen that the meeting had given a green light to the projects.

JBIC, while saying that it will need fact-finding processes, especially with regard to EIA, local governmental bodies' decisions, and the status of the PPA between UPDC and EGAT, it basically sees the projects worth supporting. The reasons for this include that the Tongchai Sub-District Administration Organization (SAO) has passed a resolution to welcome the Hin Krut project and that the tri-partite committee, consisting of government officials, villagers, and the developer, has been set up.***

In August 2001 a JBIC official visited Prime Minister's Office Minister Chaturon, urging the Thai Government to approve the project. In contrast, JBIC declined Ban Krut villagers' invitation to visit the construction site. They said in the response, "Our current positioncis to wait and see how the concerned parties, especially the Royal Thai Government, will consider the prospect of the project in response to the local people's opinions, and how the situation develops among them. As such, we believe that it is not the right time for us to meet you."

***Opponents of the power plant project have been boycotting the tri-partite committee. Thus, it is not at all participatory.

6. Developer/Tomen Intensifies Local Conflicts

Villagers have reported that UPDC President, Mr. Atsuta, sent by Tomen, had hired a Thai office head with an unreasonably high salary. This person since then has been in charge of dealing with opposing villagers. UPDC guards, armed with an M16 rifle, started to be seen patrolling in Ban Krut City, while riding on the back of a pick-up truck. When the local opposition movement became very strong, the home of one of the opposition leaders' was shot at by an M16 rifle. Villagers have also reported that UPDC offered a community development fund to concerned local administration organizations and demanded in return from them a letter to support the project. Such tactics have only led to more conflicts in the local communities as well as within families and relatives.

7. The Japanese Embassy Involves

The current Thai Government has been trying to be careful about making any decisions regarding the project. JBIC as well as the Ministry of Finance of Japan have officially been extremely cautious. However, the Bangkok-based Japanese Embassy, especially the former ambassador, Mr. Akao, has been very outspoken and explicit about his support for the project. Mr. Akao, accompanied by Embassy staff, visited Thai Ministers in charge of energy policies to urge the Thai Government to approve the project. In response to a question pressed by a senator at a Japanese Diet meeting, the Ministry of Foreign Affairs, which supervises embassies, responded that it is one of the roles of the Japanese Embassy to protect Japanese companies' profits.

For further information, contact:

Mekong Watch-Japan (Mr. Matsumoto, Satoru and/or Mr. Fukuda, Kenji)
5 Fl. Maruko Building, 1-20-6 Higashi-Ueno, Taito-ku, Tokyo, Japan 1108605
Tel: 81-3-3832-5034, Fax: 81-3-5818-0520
E-mail: mekong-w@co.xdsl.ne.jp
Website: http://www.jca.apc.org/mekongwatch/
In Thailand (Mr. Doi, Toshiyuki)
Mobile phone: 090-502-4963
E-mail: toshi-doi@mtd.biglobe.ne.jp