Environmental Technologies Industries

Environmental Technologies Industries

Market Plans

Thailand Environmental Export Market Plan

Part 2

Sector Priorities

This section reviews the opportunities in the major sectoral areas, including analysis of upcoming project opportunities as well as more overview information on the sectors offering the best opportunities for U.S. companies.

Water Supply and Wastewater Treatment

Major Opportunity: Water Supply

The Chao Phraya River and the neighboring Mae Klong River Basin provide water supply for the Bangkok Metropolitan Region (BMR). A link between the two is currently under construction. These systems provide BMR with nearly 9 million cubic meters per day, which is adequate for approximately 30 million people.

Water is abundant in most parts of the Eastern Seaboard Region except in the Chonburi, Rayong, and Chachoengsao Provinces. Rapid industrialization in this region has increased the demand for water faster than the government has been able to supply it.

In the upper northern region of Thailand, many watersheds originating from the main rivers supply water for the central plain. Such watersheds are being invaded by commercial and industrial development, causing a deterioration in the water quality and other problems. The main reservoirs in the north are the Bhumibol Dam and Sirikit Dam.

The northeast provinces obtain most of their water supply from the Mekong River and its branches, the Chi and Mool. The southern provinces have numerous small and short rivers, which supply sufficient water for all uses, although some specific areas, such as Phuket Island, have a water shortage.

It is important to note that although water is supplied throughout most of the nation, it is not always treated. Most industrial estates and other sites receive raw water from the authorities and then treat it themselves to ensure sufficient supply of treated water. Other industrial estates tap into surface or groundwater that they treat before piping it to their clients.
Responsible Organizations. The organizations responsible for water supply in the country are as follows:
The Metropolitan Waterworks Authority (MWA), the state agency responsible for developing and implementing water supply in Bangkok and its surrounding environs, in 1995 had capacity to provide about 3.2 million cubic meters per day through a piping system that reaches about 75 percent of the population of metropolitan Bangkok.
The Provincial Waterworks Authority (PWA) in 1995 had the capacity to serve approximately 60 percent of the 10 million people living in the 220 cities and towns under its jurisdiction, with a total production capacity of about 1.2 million cubic meters per day. Other organizations that are responsible for water supply in rural areas such as point sources or simple piped schemes include the Public Works Department, Department of Health, Department of Mineral Resources, Office of Accelerated Rural Development, Royal Irrigation Department, and Department of Local Administration. As this description indicates, overlapping governmental responsibilities often constrain the development of water systems, with agencies often competing for the same water resources.
Market Size. Thailand suffered from droughts between 1992 and 1995, prompting the Thai Government to prioritize development in water supply, wastewater management, and sewerage development. MWA and PWA spent $2 billion between 1989 and 1995 for water supply and planned to spend about $3 billion on major water projects during 1995–2000. Due to the economic downturn, spending is expected to decrease in 1998–99, but all major projects are expected to be implemented. In March 1996, the United States-Asia Environmental Partnership (US-AEP) estimated the environmental investment potential for water supply at $594 million annually. As water supply remains deficient, the investment budget in the water sector can be expected to increase enormously over the coming years, particularly outside of Bangkok. The combination of industrial growth, increasing population, and rising incomes (particularly in urban areas other than Bangkok) has led to an increased demand for water supply, which PWA has not been able to fulfill through its investment program. Existing demand will require a dramatic increase in water supply of about 20 percent per year, compared with an actual growth of about 12 percent in recent years.

Major Opportunity: Municipal Wastewater

Water pollution in Thailand, especially in Bangkok, is severe and represents a serious threat to public health and economic prosperity. The Department of Drainage and Sewerage in 1986 revealed that none of the klongs (canals) in Bangkok contain more than 25 percent of the natural oxygen content. It has been estimated that 1.4 million cubic meters of wastewater is dumped in the Chao Phraya River every day. Of this amount, 25 percent comes from industrial users, 40 percent from households, and 30 percent from restaurants and food vendors.

Similar problems are being addressed in northern and eastern Thailand. The effects of releasing raw sewage into the water can be seen in both the Ping River and the Mae Klong River. Pesticide runoff from agricultural production has already caused deterioration of the Mool, Thachin, and Bang Pakong rivers.

The main sources of water pollution in Thailand can be summarized as follows:

Untreated domestic and municipal wastewater from municipalities and tourist resorts
Untreated industrial wastewater
Solid waste dumping
Leacheate from solid waste open dumping
Runoff from agricultural land, including pesticides, herbicides, and fertilizers
Dumping of agricultural wastes
Soil erosion due to extensive deforestation
Oil and chemical spills from marine traffic
Stormwater runoff from urban areas into rivers and oceans
Illegal dumping of hazardous waste materials

The development of sewerage capabilities is at least 20 years behind water supply in Thailand, and treatment is further behind than collection. Bangkok and a few other provinces became equipped with formal systems only within the past few years. A few cities in Thailand have water sewerage infrastructure—Bangkok (partial), Pattaya, Patong Beach, Phuket, Chonburi, Nakorn Pathom, Hua Hin (partial), Khon Kaen, Nakorn Ratchasima, and Sakol Nakorn (partial). Nearly all of these systems provide collection only and do not treat collected sewage. Bangkok is implementing sewage treatment systems and commissioned its first treatment plant last year. Some industrial facilities have waste treatment systems installed.
Responsible Organizations. Presently, three government agencies are primarily responsible for municipal wastewater treatment: the Bangkok Metropolitan Administration (BMA), the Public Works Department (PWD), and the Pollution Control Department (PCD). BMA is responsible for municipal wastewater treatment in BMR, which covers the five-province area of Samut Prakarn, Samut Sakorn, Pathum Thani, Nonthaburi, and Nakhon Pathom. It launched six wastewater treatment projects in seven areas, covering a total of 191.7 square kilometers (sq.k). The projects, which are expected to have the combined capacity of about 992,000 cubic meters per day (m3/day) when completed, are as follows:

Si Phraya Wastewater Treatment Project and Rattanakosin Wastewater Treatment Project: two smaller central Bangkok wastewater treatment projects that were initially launched. The first was completed in April 1996 and the second was completed in October 1997.

BMA Phases I, II, III, and IV, which will provide wastewater treatment and collection systems covering areas of 37 sq.k., 28.5 sq.k., 86 sq.k., and 33.4 sq.k., respectively (see table 2 and Case Study 1).

Due to the economic crisis, BMA’s budgets for these projects have decreased in U.S. dollar value. BMA is considering various alternatives, including privatization and corporatization, to overcome the budget shortfall.

BMA Phases V, VI, and VII, which will be bid out on build-own-operate (BOO) basis. The $190 million (at a rate of 45 baht per $1) Phase V covers 57.3 sq.k. and will have the capacity of 320,000 m3/day. The $162 million Phase VI covers 44.2 sq.k. and will have the capacity of 475,000 m3/day. Phase VII, covering about 55 sq.k., will have the capacity of 125,400 m3/day.

PWD, under the control of the Ministry of Interior, oversees wastewater treatment in provincial cities. PWD has allocated its budget to install wastewater treatment systems in 21 provinces. It also plans to implement municipal wastewater treatment projects in 84 communities in 62 provinces by 1998. The funds come from (1) the Environmental Fund, which was established under the 1992 National Environmental Quality Act; (2) provincial municipal funds; (3) international funding from organizations such as the Asian Development Bank; and (4) grants or soft loans from foreign governments.

PWD is implementing a master plan of wastewater management along the Chao Phraya River from the Chai Nat province in central Thailand to Nonthaburi (northern Bangkok), which requires more than $100 million in investments. The feasibility studies for central wastewater treatment facilities for the municipalities of Nakorn Sawan, Chai Nat, Sing Buri, Ang Thong, and Ayutthaya have been completed. Plans for these provinces are gradually being implemented. To implement the urban provincial projects, PWD must work closely with provincial governments (under the Department of Local Administration). The plans also must be approved by the OEPP. The money needed to start new projects is not available in 1998 because of the economic crisis.

Projects in pollution control zones, which include the five provinces surrounding Bangkok—Pattaya, Phuket, Songkhla, Pi-Pi Island, and Hat Yai—are the responsibility of PCD and are partially funded by the Environmental Fund. The PCD may also be called upon by OEPP and PWD to provide technical advice or enforcement in other provinces.

Table 2: Summary of BMA Projects, Phase I Through Phase IV

Project Title	Period	Budget (US$)	Partners	Project Description & Status
BMA Phase I Wastewater Treatment & Collection System	Nov. 1, 1993–Dec. 31, 1997 (50 months)	-Turnkey: est. $142 mil. (6.383 bil. baht) -Supervision: est. $4.4 mil. (200 mill. baht)	-Turnkey: NOSS Consortium -Supervision: Dorsch Consult & Associates	-Capacity of 350,000 cubic meters/day -Covers: Pomprab Satroopai, Sampanthavong, Patumwan, and Rajathevi -About 85 percent completed
BMA Phase II Wastewater Treatment & Collection System	July 24, 1995– July 23, 1999 (48 months)	-Turnkey: est. $101 mil. (4.552 bil. baht) -Supervision: est. $3.4 mil. (155 mil. baht)	-Turnkey: Samsung & Lotte -Supervision: Metcalf & Eddy Inter. Co., Ltd. and TEC	-Capacity of 200,000 cubic meters/day -Covers: Bangrak, Yannawa, Sathorn, and Bang Khorlaem -About 65 percent completed
BMA Phase III Wastewater Treatment & Collection System	Sept. 19, 1996–Sept. 18, 2000 (48 months)	-Turnkey: est. $107 mil. (4.8 bil. baht) -Supervision: est. $4.8 mil. (214 mil. baht)	-Turnkey: Premier, Pate Engin.; Lockwood Andrews and Newnam, Inc.; St. Environ. Service, Inc.; BRH-Garver -Supervision: CH2M Hill Inter. Co., Ltd. and Epsilon Co.	-Capacity: first area-157,000 cubic meters/day, -Covers: Nong Khaem, Ratburana, and Phasicharoen; -About 30 percent completed
BMA Phase IV Wastewater Treatment & Collection System	1997–2001 (48 months)	-Turnkey: est. $89 mil. (4.025 bil. baht) -Supervision: est. $2.7 mil. (120 mil. baht)	To be announced in 1998	-Capacity: 150,000 cubic meters/day -Covers: Dusit, Phayathai, Huay Khwang, and Jatujak -PQ closed since the middle of 1996 -The preparation of tender document for the bidding of construction is expected to be announced by February 1997.

Note: The exchange rate of 45 baht per US$1 was applied to this chart

PCD is also carrying out development plans for the central river, northeastern, eastern, and southern basins and coastal areas. These development plans include efforts to establish a national pollution sources database, predict changes in the water quality of various receiving water sources, measurably improve water quality over a 10-year period, and identify water quality investment opportunities. Market Size. The wastewater volumes and treatment capacity in BMR from 1996 to 2000 is expected to increase substantially, with collection volumes growing from 1,510,000 m3/day in 1996 to 1,600,000 m3/day in 1998 and treatment capacity rising from 70,000 m3/day in 1996 to 965,000 m3/day in 2000. In total, Thailand spent $1.6 billion on wastewater collection and treatment facilities in 36 provinces through 1995. According to a US-AEP report of March 1996, the environmental investment potential is about $2.56 billion, and the needs will continue to grow. To address this growing problem, the Thai Government established the Wastewater Management Authority (WMA) in July 1995 with the aim of coordinating wastewater treatment efforts. WMA is responsible for wastewater collection and treatment nationwide. This agency is being phased in, however, first taking responsibility for Bangkok and the five surrounding provinces, and later extending to cover the rest of the country.

Major Opportunity: Industrial Wastewater

The quantity of wastewater generated by industrial and domestic sectors in the 10 most industrialized provinces, with a total of 34,000 factories, is reported at 235,000 and 127,000 tons of biochemical oxygen demand (BOD) per year, respectively. Typically, Thai factories use activated sludge systems and aerated lagoons to treat industrial wastewater. Many factories that have installed on-site waste treatment facilities do not use them, opting to decrease operating costs by simply dumping untreated waste into a nearby river or canal.

Roughly 20,000 of the factories registered with the Department of Industrial Works (DIW), Ministry of Industry, are classified as water polluting industries. With the BOI’s new emphasis on industrial decentralization, these problems are now spreading to outlying provinces. For example, increased industrialization around the northern city of Chiang Mai has led to serious degradation of the Ping Rive

The release of untreated wastewater generated by the commercial sector (hotels and major office or residential buildings) is also severe. In 1994, the government began requiring major domestic wastewater polluters to comply with building effluent standards by installing their own waste treatment equipment or using central treatment facilities where available.
Responsible Organizations. Three governmental agencies—DIW, the Industrial Estate Authority of Thailand

Case Study 1: Wastewater: Bangkok Metropolitan Authority (BMA) Phase III Wastewater Collection and Treatment System
The BMA Phase III Wastewater Collection and Treatment Project is a turnkey project aiming to upgrade Bangkok’s wastewater treatment facilities serving 12 million residents. It is worth more than US$200 million, with US$8 million going toward construction supervision. The project secured 60 percent of its financing through the central government and the remaining 40 percent through BMA. The environmental goal of the BMA Phase III Project is to treat 60 percent of the domestic wastewater currently discharged into the Chao Phraya River from the Nong Khaem, Phasi Charoen, and Ratburana areas. The case illustrates the careful coordination required in securing partners for a competitive consortium and in maintaining outreach to the Thai procurement agencies. Premier Enterprise Public Co., Ltd., a well-established Thai contractor, had unsuccessfully bid on the first two phases of Bangkok’s wastewater treatment and collection systems. Premier joined with BHR Garver of Texas and Thames Water (UK) to bid on BMA I, but was unsuccessful due to difficulties encountered in coordinating the bid with Thames. Premier-BHR Garver then bid on BMA II with Wales Water but experienced many of the same difficulties.

In putting together the consortium for BMA III, facilitation was provided by the U. S. Thailand DevelopmentPartnership—USTDP (managed by the Kenan Institutes)—in cooperation with the United States—Asia Environmental Partnership (US-AEP). Kenan and US-AEP persoonel determined that Premier would make a strong partner for a U.S. firm but wanted to first make sure that the team would be technically acceptable to BMA.

In order to highlight U.S. technology and expertise, four BMA officials and two Premier Enterprise personnel were invited by Kenan/US-AEP to attend WEFTEC ’95, a professional meeting and trade exhibition, in Miami Beach. In addition to meeting with U.S. firms and learning of their capabilities, the trip provided Premier Enterprises’ representatives an excellent opportunity to strengthen their working relationship with their future client, BMA.

For BMA Phase III, Premier Enterprises again decided to team with BHR Garver but also chose to included a U.S. consultant. At Premier’s request, BHR Garver recommended Pate Engineers, a firm it had worked with previously. Premier initially felt that, although Pate had appropriate technical qualifications, Pate was too small to complete work on BMA III. Pate then introduced Lockwood, Andrews & Newman, Inc., into the consortium, which resulted in the formation of a joint venture, Pate/LAN. Premier Enterprises approved the U.S. Pate/LAN team, tunneling specialists BHR Garver, and ST Environmental Services. The partnership was equipped with the right experience and technology, including a low-cost tunneling technology brought to the team by LAN/PATE, and was the right size to facilitate the smooth preparation of a proposal for both the technical and financial package. The Premier-Pate Partnership submitted the lowest bid, which edged out 10 teams of international competitors. Premier-Pate won the BMA Phase III project and signed the contract in October 1996.

(IEAT), and PCD—are primarily responsible for regulating wastewater generated by the industrial sector. DIW has been assigned to oversee the environmental performance of factory operators throughout the country, with the exception of the industrial estates, which are under IEAT’s control. Private firms must submit their wastewater plans to DIW for approval. DIW has the power to enforce regulations under the Factory Act.

IEAT regulates industrial estates that fall under its dominion to ensure that all developers and operators conform to environmental criteria. Central wastewater facilities are often installed in IEAT’s industrial estates. Factories on IEAT estates usually follow stricter environmental standards because enforcement is stricter. Also, many of the companies in the estates are multinationals and therefore have higher internal standards than the small, locally owned firms outside the estates. IEAT may call in PCD for assistance, particularly for technical and enforcement support.

BMA is responsible for enforcing standards in the Bangkok Metropolitan Area, while provincial governments under the Ministry of Interior are responsible for enforcing the standards in their individual municipalities. Many buildings have poorly maintained septic systems that, like industrial treatment facilities, are frequently bypassed, resulting in the dumping of untreated wastes into canal and drainage systems.

PCD’s building effluent standards, enacted in 1995, cover the following structures:

Condominiums of more than 500 units
Hotels with more than 200 rooms
Hospitals with 30 beds or more
Schools or universities with a campus space of 25,000 square meters (sq.m.) or more
Office buildings with working space of 55,000 sq.m. or more
Commercial complexes with working space of 25,000 sq.m. or more
Private markets of 2,500 sq.m. or more
Restaurants and food outlets of 2,500 sq.m. or more

Factories with substandard wastewater treatment systems were to be given 15–30 days to upgrade, while factories without installation systems were to have up to 180 days to comply. Otherwise, the ministry can impose penalties as high as 100,000 baht ($2,222 at the exchange rate of 45 baht per $1). In addition, recently passed standards are expected to force gasoline stations to treat wastewater, which is often highly toxic.

Enforcement has lagged considerably behind this ambitious target, but the standards have alerted firms that enforcement is forthcoming. Existence of these standards means, in effect, that firms caught in violation can be forced to comply, but neither voluntary compliance nor enforcement are universal practices at present.

Market Analysis for Water Supply and Wastewater Treatment

Market Drivers in Water Supply. The forces driving market demand for the products and services in the water supply sector are the following:

Lack of central water treatment facilities and its increasingly detrimental effect on quality of life in Thailand.
Inadequacy or depletion of existing sources such as groundwater, surface water reservoirs, rivers, and canals.
The perception that the local municipality’s tap water is unreliable and unsafe for drinking. Tap water in Thailand is often contaminated by wastewater infiltrating through pipelines in the ground. This situation provides an opportunity for investors offering safe water to consumers or upgrades to municipal systems.
An anticipated rising demand for brackish water treatment, as salt water intrusion into the Chao Phraya River and groundwater in Bangkok becomes more severe. Many hotels in Bangkok supply their own tap water by drawing raw water from rivers and wells, creating demand for package treatment systems.
An increased demand for water, coupled with urbanization and higher average income, which increases the ability to pay for services, and enables water supply agencies to expand services.
Rapid growth in industry, which creates significant demands for maintenance of water systems by either industry or government agencies and their subsidiaries.
Awareness of citizens and tighter government control on the environment, which result in a large number of new environmental improvement projects.
A large budget for implementing municipal water supply projects funded by the central government and the Environmental Fund, which creates bidding opportunities.

Investment opportunities involve all aspects of the water cycle, including water management, pipeline inspection, maintenance, and cleaning. Ongoing development of water supply systems offers opportunities for producers and suppliers of pipes, pumps, valves, compressors, screen filters, control equipment, clarifiers, aerators, and disinfection equipment. Opportunities also exist for producers of parts for pumps, valves, and compressors. However, local manufacture of most basic equipment is well established. U.S. companies will be competitive only if they have a superior design or lower cost.

BMA, provincial authorities, private industries, and industrial estates are all major customers for water supply, treatment, and distribution equipment. The increasing demand for these goods and services is propelled by a new legislative emphasis to ensure clean and safe water supplies, including targeted initiatives to reduce the spread of waterborne diseases. There is an immediate need for expertise in water treatment processes, maintenance, and related services.

In urban areas, the government has announced plans to streamline the responsibility of each agency to improve efficiency of water supply services to urban areas, industrial facilities, and new economic development zones. Streamlining measures will include developing and managing water resources, increasing production capacities, improving water quality, and extending distribution networks to cover targeted areas and construction of new water supply systems.
Water Supply Opportunities. Opportunities for the private sector to be involved in projects regarding water supply exist in many forms.
Government-sponsored projects. Major government projects remain the main channel for U.S. companies wishing to participate in this market. Private sector involvement can take the form of:

Project consultants, particularly in project preparation, engineering services, management, monitoring, and evaluation
Contractors and subcontractors
Operators under management contracts
Equipment suppliers

As noted above, U.S. firms are generally most competitive on major projects and where they can bring special technology to the table. Thailand has an extensive array of highly competent engineers and builders, which have the inside track on routine local procurements.
Privatized projects. As in many other countries, privatization of urban services is spreading in Thailand. Although the Thai Government is much stronger financially than many developing country governments and regularly runs a financial surplus, it lacks the resources to close Thailand’s gap in basic services. As a result, the government is turning to the private sector to fund “mega projects” that require immediate, large investments.

Several water supply projects fit this category, and build-operate-transfer (BOT) schemes are emerging as the favored solution. MWA privatized its West Bank Project, while PWA initiated two projects (Pathum Thani and Small-Towns Water Supply) that cover approximately 300 communities nationwide. Government subsidiary companies such as East Water, and new state enterprises such as WMA, have been established to operate like private companies. They will also seek financing and technical partners from the private sector for future projects.
Private sector projects. Even though opportunities for purely private water supply projects are limited, there are niche markets for water supply equipment and accessories. The market for groundwater development, although still small, offers growth potential probably comparable to other major environmental fields. Growth in this market is expected to parallel other major environmental markets. The opportunities for the groundwater development market can be divided into products and services.

Groundwater products include all geological and geophysical equipment required to determine the extent of aquifers; existence of usable quantities of water and aquifer properties; groundwater quality; remediation equipment for approaches such as soil vapor extraction; pump and treatment technologies; aquifer sparging; heavy metals fixation; and biological treatment.

Groundwater services include chemical hazard identification and exposure assessments, risk assessments for environmental permitting, remedial investigations and feasibility studies, environmental audits, site investigations, hydrogeological and geochemical modeling, monitoring, training, and groundwater remediation. These goods and services would typically be provided to Thai Government agencies, industrial water users, and universities.

In addition, there are still investment opportunities in training and pilot projects. Three Thai universities offer a bachelor’s degree in hydrogeology through their departments of geology. However, to obtain advanced training in hydrogeology, such as a master’s degree, a doctorate, specialized short courses or certificate programs, Thai scientists and engineers must go abroad. There is a large potential market in short courses offering training in specialized aspects of modeling, monitoring, and remediation of groundwater, as well as distance learning activities that minimize the amount of time that must be spent at a U.S. institution.
Market Drivers for Wastewater. The underlying market drivers for products and services in the wastewater treatment area are the following:

Lack of adequate central wastewater treatment plants and its increasingly detrimental effect on quality of life in Thailand.
Urbanization and increased average income, which increases the ability to pay for services and enables wastewater agencies to expand services.
Rapid growth in industry, which creates significant demands for maintenance of wastewater systems, by either industry, or government agencies and their subsidiaries.
Awareness of citizens and tighter government control on the environment, which result in a large number of new environmental improvement projects.
Expected enforcement of government regulations
A large budget for implementing wastewater treatment projects funded by the central government and the Environmental Fund.

Privately owned industrial estates are following IEAT’s lead by implementing similar wastewater treatment improvements. These improvements will provide numerous opportunities for specialized systems since many of the estates focus on industries that have particular wastewater treatment needs, such as electronics, auto manufacturing, or textiles. Since the estates require pretreatment by each factory management in the estate system, the treatment company is in a strong position to win additional business.
Wastewater Treatment Opportunities. Private sector opportunities in wastewater treatment projects exist in many areas.
Government-sponsored projects. Increase in government revenue has been an important market driver; the central government now funds more projects, especially those in the provincial and rural areas, to comply with the decentralization policy. Potential for private sector involvement takes the same forms as listed earlier under water supply, with the same caveats.
Privatized projects. Because the financial crisis has decreased the government’s ability to fund projects, the private sector will be able to fill the gap through privatization schemes. However, at least for 1998-99, funding will largely have to come from abroad because of the lack of liquidity in the Thai market.
Private sector projects. Many market drivers allow opportunities for consultants, suppliers, and investors in this sector, including various water treatment systems for factories, hospitals, condominiums, hotels, schools, gas stations, and universities, which fall under the Effluent Standards Act. Table 3 describes the wastewater treatment systems currently in place. Case Study 2 shows one way the private sector can become involved in wastewater treatment.

Case Study 2: Wastewater Opportunities (NASDA)
JWI, Inc. of Holland, Michigan, sponsored by the Michigan Jobs Commission, used a NASDA Environmental Technology Fund grant to demonstrate its wastewater treatment equipment in Thailand in July-August 1994. The equipment included filter presses and dryers for municipal and industrial applications. More than 40 potential sales agents and distributors, consulting engineers, and government officials attended the meetings. As a result of the demonstration, JWI had sold about US$200,000 worth of equipment in Thailand as of the end of 1996.

Regulations and Enforcement in the Water and Wastewater Treatment Sectors

The National Environmental Quality Act (1992). The Ministry of Science, Technology, and Environment (MOSTE) has the power to choose and publish the names of companies that discharge wastewater into public water sources. Under Section 69 of the act, the owner of the polluting company must install and operate an on-site facility for wastewater treatment, as approved by the pollution control official. The pollution control official may also require that the owner commission a monitoring control operator to control the wastewater treatment facilities. In a pollution control area, a company owner may be required to send the wastewater generated to the central wastewater treatment plant or have it treated or disposed of by a licensed service contractor as specified in the act (Sections 71-77).
The Factories Act (1992). This act prohibits a factory from draining wastewater unless it has been treated by certain methods (not simply dilution) until the quality of wastewater is up to regulated standards as prescribed in the Regulations (Clause 14).
For wastewater treatment systems, the following are required:

A conveniently accessible meter must be installed to measure electric power consumed by the wastewater treatment system and a reading must be recorded daily.
In cases where chemical or biotic substances are used, their application and source must be recorded daily (Clause 15).
DIW may withhold factory licenses on environmental grounds and issue notifications for treatment of wastewater and legal sanctions. Violators may be fined 320,000–640,000 baht ($7,111–$14,222 at 45 baht per $1) and be imprisoned.

The Public Health Act (1992). Sections 25, 26, 27, and 28 authorize local authorities to act against public nuisances, which include adding dirt or waste to water resources and water drainage systems; factories or working places without proper ventilation, water drainage, waste treatment, or control of poisonous substances; or any acts causing water, air, or noise pollution likely to adversely affect public health.
The Groundwater Act (1977). This act institutes governmental control over groundwater development and management. An official permit is required to use groundwater from designated groundwater areas. The act governs drilling and groundwater use as well as disposal of wastewater into an aquifer through a well. Violations are punishable by fine or imprisonment. The Ministry of Industry (MOI), Department of Mineral Resources, is the implementing agency.
Industrial Estate Authority of Thailand Act (1979). The act authorizes IEAT under the MOI to approve the establishment of industrial estates. IEAT approves permits for establishing factories within industrial estates and is responsible for water pollution control and treatment within the industrial estates that are outside DIW jurisdiction.

Table 3: Existing Wastewater Treatment Systems in Industrial Estates

Industrial Estate	Type of System	Capacity (m3/d)	Capital Cost (Million baht)	Year
Bangchan	Activated Sludge	4,000	135.00	1996
Ladkrabang	Activated Sludge	20,000	103.76	1979
Bangplee	Activated Sludge	3,000	64.54	1986
Bangpoo	Aerated Lagoon/Rotating Biological Contactor	22,000	13.98	1980
Northern Region	Aerated Lagoon	5,600	25.50	1986
Map Ta Put	Activated Sludge	4,000	30.94	1989
Laem Chabang	Activated Sludge	20,500	257.53	1991
Bangpakong	Aerated Lagoon	11,300	94.85	1992
Hi-Tech	Activated Sludge	16,800	143.19	1992
Bangpain	Activated Sludge	6,000	157.53	1994
Gateway City	Activated Sludge	37,229	190.00	1994
Bangpoo (Phase A)	Activated Sludge	3,600	108.30	1994
Samut Sakhon	Activated Sludge Chemical Treatment	22,000 2,000	218.08	1991
Chonburi (Bowin)	Activated Sludge	6,400	130.82	1992
Saraburi (Kang Koi)	Activated Sludge	8,000	75.00	-
Nong Khac	Activated Sludge	12,000	88.00	-
Eastern	Activated Sludge	12,000	75.00	1994
Wellgrow	Aerated Lagoon	7,200	79.76	1994
Saharattananakohn	Activated Sludge	8,000	80.00	1995
Gemopolis	Activated Sludge	2,000	20.00	1992
Songkhla (Chalung)	Activated Sludge	3,000	61.23	-
Pichit	Aerated Lagoon	9,200	31.70	-

Foreign Competition in Water Supply and Wastewater Treatment

The market for water supply and wastewater treatment is very large and offers significant opportunities for foreign companies to invest or market their goods and services. In general, European and Japanese firms have had a larger role than U.S. firms in the water supply sector. This outcome happens more because of the absence of U.S. firms in the water supply business than because of any market condition in Thailand.

In the wastewater arena, U.S. firms are very competitive, particularly in engineering services such as design and project management. Several U.S. companies are engaged in large-scale municipal or industrial estate wastewater treatment projects, generally in a consulting engineer or project management role. The largest projects that are most suitable for U.S. companies are those under BMA or PCD. The best prospects for U.S. companies have been in consulting services and design licensing. For example, Metcalf & Eddy is responsible for supervising construction of the BMA Phase II Wastewater Treatment and Collection System, and CH2M Hill Companies, Ltd. for the BMA Phase III Wastewater Treatment and Collection System. However, as privatization of projects for the environmental infrastructure continues, opportunities for equity investment and operation and management contracts will increase. The smaller, less complex municipal projects are not yet required to comply with the toughest environmental standards, and therefore can employ lower cost solutions. Consequently, U.S. companies are often priced out of this market.

U.S. suppliers face three challenges in selling water-related equipment. First is the concern for price over quality. In many cases, local contractors install inefficient wastewater treatment equipment, but that is attractive because of its lower capital cost. If the equipment is later found to be deficient, companies attempt to negotiate an agreement with the government inspector or agency. U.S. companies that find this practice unethical are at a disadvantage. This situation is subject to change if authorities place a stronger emphasis on enforcing and monitoring the standards.

A second challenge is that Thai distributors generally carry competing products from foreign and Thai manufacturers. These products are more adaptable to local skill levels and do not require significant training support. U.S. producers need to ensure provision of technical support staff in Thailand to support their market. In the water supply and wastewater treatment subsector, a well-supported but undistinguished competing product will generally out-sell a superior imported product with little available technical support.

Third, U.S. producers must recognize that Thailand’s market for wastewater treatment equipment generally has lower standards and different industrial practices than the U. S. market.

Thai suppliers believe that Japanese and Taiwanese products are more appropriate for Thailand than U.S. products, particularly in terms of costs, local management, and technical skills. American equipment is often perceived as expensive, of a high standard, and inappropriate for medium-scale use in Thailand. European manufacturers produce equipment that is better suited to medium-scale use. Due to the price sensitivity, most successful U.S. companies in Thailand produce products through a joint venture partnership with a Thai firm.

Air Pollution Control

Thailand’s rapid industrial development (sometimes at more than 20 percent growth per year), its high rate of urbanization, and the explosive growth in the automobile fleet have resulted in extreme air quality problems in Thai cities. This problem stems from industrial processes and emissions from power plant stacks, automobile emissions, and general ambient air deterioration from construction and other industrial activities. Like economic development and industrialization, air pollution has been greatest in Bangkok but is also a problem in other areas, such as Chiang Mai.

Since the air pollution control business is still in its early stages and public concerns and pressure for improvement continue to increase, the market is expected to outgrow the economic growth rate of 6–8 percent by a factor of two or more. Bangkok will account for much of this market since it has a disproportionate number of vehicles (3.5 million vehicles, about 25 percent of the nation’s total) and industry.

The World Health Organization (WHO) heightened public health concerns with a warning that Bangkok’s air pollution exceeds WHO safety standards by up to 600 percent in some areas. The election of Dr. Bhichit Rattakul, an avowed anti-air pollution campaigner, as governor of Bangkok, is a sign that this market is likely to develop more quickly. As one of his first actions in office, Dr. Bhichit ordered tough enforcement of rules on dust from trucks and construction sites. Violators may be fined 60,000 baht ($1,333 at 45 baht per $1) for each infraction and imprisoned for up to three months.

This section reviews some of the major areas of opportunity in air pollution control. Despite its importance, measures are likely to emphasize pollution prevention rather than installation of pollution control equipment. As a result, this market is much smaller than the water/wastewater sector for U.S. suppliers.
There are, however, a number of niche markets, particularly emissions monitoring and measurement, because the United States has strong suppliers in these areas.

Major Opportunity: Air Pollution Monitoring

Currently, there are a limited number of U.S. suppliers of continuous emissions systems and ambient air quality monitoring systems in Thailand. Additionally, users, sellers, and maintainers of ambient air monitoring and continuous emissions monitoring systems will require training to develop the skills needed to keep pace with air pollution control regulation in the next two to three years. IEAT has endorsed air pollution monitoring in principle and seeks to expand continuous emissions monitoring (CEM) installations in the industrial estates. IEAT monitors air pollution in areas where pollution equipment is installed to ascertain if the equipment is functioning. PCD is drafting regulations that would require large industrial facilities to install CEMs on their smokestacks.

PCD monitors ambient air pollution for planning purposes. It has established a nationwide system of ambient air quality measuring stations with the technical assistance of Radian Corp., a U.S. company. PCD is a key market for air pollution technologies and services. The Electricity Generating Authority of Thailand (EGAT) spent several million U.S. dollars to install ambient air quality monitoring networks for its power plants and plans to purchase more CEMs and ambient air quality monitoring equipment.

Major Opportunity: Air Pollution Control in Vehicles

Bangkok and Thailand’s other major cities suffer from severe street-level air pollution due to the large and rapidly growing number of vehicles and heavy traffic conditions. Bangkok is famous for traffic jams, which add to the problem. The pollutants of greatest concern are suspended particulate matter, carbon monoxide (CO), lead, and toxic air contaminants. Noise levels in heavily trafficked areas are also extremely high. Unlike other heavily polluted cities around the world, the levels of photochemical smog and other regional-scale pollutants in Bangkok are modest. A significant fraction of the urban population live and work along the major traffic arteries and thus are exposed to high levels of pollution for much of the day. The major sources of respirable particulate matter in Bangkok are smoke from two-stroke motorcycles and three-wheel taxis, heavy-duty diesel trucks and buses, and light-duty diesel trucks.

The Royal Thai Government (RTG) has adopted an action plan to address the air pollution problems caused by highway vehicle emissions. Key elements include expanded monitoring of pollution and noise levels, establishment of emissions standards for new vehicles, supplying unleaded gasoline and low-sulfur diesel fuel, stipulating reformulation of fuels to be cleaner burning, encouraging alternative fuels, and requiring smokeless oils for two-stroke vehicles. A number of measures have already been undertaken, including:

The establishment of monitoring sites at some major intersections in Bangkok. A requirement for catalytic converters on new cars after September 1, 1993. Conversion of many Bangkok taxis and “tuk tuks” (three wheelers) to liquified petroleum gas fuels. Encouraging the use of unleaded gasoline

Standards for pollutant and noise emissions from new motor vehicles are set by a government technical committee chaired by mechanical engineering professors from Chulalongkorn University’s Department of Mechanical Engineering. In late 1992, Radian Corp., funded under a World Bank project, was selected to assist PCD in planning its air quality monitoring network. Radian advised PCD to implement specific action plans in each pollution control zone, provide for the quantification of emissions (point, area, and mobile), and determine the need for and design of air quality measurement systems in each zone (see Case Study 3).

As part of this action plan, Thailand decided to allow private centers to inspect private and public vehicles, beginning in mid-1994. More than 240 companies in Bangkok expressed an interest in establishing such centers, and many have begun operations. They are potential customers for both test equipment and equipment that alleviates the problem of emissions, since the centers will both test emissions and offer services to correct problems.

There are currently 32 air pollution control firms among several hundred Thai environmental firms listed in the Green Pages of Thailand (see appendix V).

Major Opportunity: Gasoline Vapor Recovery Technology

Thai government agencies (PWD, PCD, and NEPO) and private sector representatives have drafted regulations for gasoline vapor recovery. Vapor recovery is an effective way to keep dangerous gases out of the atmosphere while also conserving fuel. Regulations will require that gasoline terminals, transportation trucks, and gas stations install gasoline vapor recovery devices. The Kenan Institute Asia, along with the PWD, held a technology exhibition and seminar in the summer of 1997. Eight U.S. equipment companies attended the event. Final draft regulations were completed and are expected to be passed in 1998. They will be phased in over the next five years. The estimated market potential for vapor recovery in Thailand, to be conducted in two stages, is $300 million over the next 10 years.

Market Analysis for Air Pollution Control

The overall air pollution control market is estimated at about $90 million per year by the Asia Environmental Business Journal, with growth at about 15–20 percent per year. Even faster growth should occur in particulate emission control technology, gaseous emission control equipment, and scrubbers. It is conservatively estimated that this type of equipment sales represents $2 million per year in revenues to American equipment suppliers. Primary customers are state enterprises, industrial estates, and private industries. There is a large related market in pollution control devices, such as catalytic converters for automobiles. The primary customers are major automotive firms such as Toyota, Nissan, and Honda, making this a difficult market for U.S. suppliers to enter. Chrysler Corporation has already set up a small assembly plant, and between 1998 and 1999, both Ford and General Motors will begin production at large, new manufacturing facilities, opening up new possibilities for U.S. suppliers through licensing agreements or other local joint ventures. Emission control and reduction equipment is in demand at industrial estates and individual factories. There are also opportunities for services and devices to control dust from construction sites.

Regulations and Enforcement Affecting the Air Pollution Market

Development of the air pollution equipment market has been restrained by the lack of extensive regulations to drive enforcement and the lack of sufficient staffing to enforce regulations. Thai authorities are therefore interested in equipment for continuous emissions monitoring as a way of providing automatic factory emissions checks without a need for more staff. New regulations will increase the demand for control and monitoring equipment and vehicle emission control equipment.

Municipal Solid Waste

Thailand’s rapidly expanding economy has elevated the issue of garbage collection and disposal to a high national priority. The country lacks the basic infrastructure to address municipal solid waste collection and disposal. Fee collection from household users has been very low, with the local government subsidizing operations. This has led to inefficient collection and disposal methods, sparking strong public resentment of detrimental environmental effects on surrounding neighborhoods. Additionally, landfill space is becoming more expensive and difficult to obtain due to the “not in my backyard” (NIMBY) syndrome.

Thailand is generating solid waste at a rate of 35,000 tons daily. Promotion of the recycling concept is very recent and is largely ineffective. Solid waste generation is growing at a rate of 4–5 percent a year nationwide. In Bangkok, annual growth is nearly 10 percent a year, and in other municipalities the growth is as high as 12 percent. Table 4 profiles the current situation of solid waste management in Thailand.

The Pollution Control Department has set the following targets for solid waste management in Thailand:

By the year 2002, Thailand will have one 150-liter bin for every 350 people, and one 10-cubic meter garbage truck per 5,000 people. Thus, municipalities will be able to collect 95 percent of garbage. At least 50 percent of municipalities will have proper sanitary landfills for solid waste disposal. Solid waste generation in the Bangkok Metropolitan Region will be kept to 800 grams per capita per day.
To achieve these targets, the Thai Government has allocated PCD $382 million for five years. In addition to these funds, the municipalities and BMA will have dedicated budgets for garbage disposal and landfill or incineration. PCD also plans to implement the “polluter pays” principle regarding household waste by levying additional fees beginning with this five-year period.

Case Study 3: Air Pollution: Ambient Air Quality Testing
When the Pollution Control Department (PCD) announced four pollution-control zones in Thailand and the intention to set up a National Ambient Air Quality Monitoring Program, Radian Corporation was invited to talk to several relevant government departments and encouraged to bid for the project. This project led to two bids for 32 air quality monitoring stations. Phase One, for eight stations, was completed in 1995. Radian Corporation, in conjunction with two Thai companies, Petro Instruments and Air Resources, won the bid for $2.4 million. Of this amount, Radian earned $0.3 million, another $1.3 million went to the purchase of U.S. equipment, and the rest to the Thai consultants.

The Kenan Institute Asia through the U.S.-Thailand Development Partnership program enhanced this deal with $51,000 to provide training to PCD officials. This enabled the parties to realize the full potential of the deal and, at the same time, demonstrated the commitment of Radian and the U.S. suppliers to technology transfer. PCD was thus encouraged to value U.S. goods and services and U.S. companies for serious consideration when they awarded the bid on Phase Two for the remaining 22 stations (at a cost of $7 million). Of Phase Two, at least $4.5 million was for the purchase of U.S. supplies. Radian has since won the Phase Two work. With a firm base established, Radian has been able to secure additional air pollution projects and is now looking to expand its business to other areas of Thailand’s environmental sector. The Air Quality Monitoring stations will show air quality deterioration in spots, leading to emission controls. These controls will hopefully translate into future sales of stack scrubbers for industrial emission, auto emission testing equipment, and auto emission clean-up equipment, among other equipment. Getting the Pollution Control Department to become familiar with and accept U.S. air quality monitoring equipment and supplies will give an edge to U.S. product sales in this field.

Table 4: Profile of Solid Waste Management in Thailand
Population: 60 Million
Annual Increase Rate for Solid Waste: 4–5 percent

Region	Solid Waste Estimation (tons/day)	Collection Efficiency (percent)	Disposal (percent landfill)
Bangkok Metropolitan	8,000	93	77
Municipality & Pataya	6,300	80	13
Sanitary District	4,200	15	None for landfill
Others	16,500	15	None for landfill
Total	35,000	-	-

This principle will open a market for service providers and related equipment in all municipal solid waste areas. In key cities, waste-to-energy projects based on incinerating garbage and producing electricity from landfill gas will also be considered.

At least 60–70 percent of the proposed budget will go to Thai contractors largely in the provincial municipalities where the technology requirement is too basic to attract foreign service providers. In the larger cities and tourist sites, however, foreign waste management companies will be able to compete for these projects, generally by forming consortia with Thai construction and transport companies. Each consortium will include design, service, financial, and construction components. The foreign partner will generally oversee design and financing aspects, while construction will generally fall to the Thai companies. The service provider could be a joint venture between the Thai and foreign companies.

Major Opportunity: Solid Waste Removal in Bangkok

Metropolitan Bangkok, with a population of over 8 million, generates 8,000 tons of waste daily, or 23 percent of the national total. This number is expected to increase to 12,000 tons per day within five years. All remaining municipalities produce another 6,300 tons daily (18 percent), while the remainder comes from smaller rural communities and districts.

Collection and disposal exist only in the cities and municipal areas, and even then collection is partial. Bangkok is able to collect only 7,000–7,500 tons each day, leaving hundreds of tons uncollected. The collection rate has improved considerably due to the purchase of additional garbage trucks and the extension of collection to the riverside homes. Of the amount collected, 74 percent is disposed of in sanitary landfills, 14 percent is composted, and the remainder is placed in open dumps to be dealt with at a later stage. With its increased financial resources, Bangkok has the country’s best garbage collection and disposal abilities. Smaller municipalities often dispose of waste in open dumps and therefore can collect and dispose of solid waste at a much lower cost.

In Bangkok, official garbage collectors at major collection sites sort garbage for recycling and resale. Scavengers who live on the transfer stations at Onnut, Nong Khaem, and Tha Raeng do a kind of secondary sorting. Haulage companies that transfer garbage to landfills plan to invest in more formal sorting and recycling at the transfer stations. The disposal systems currently in place are listed in table 5.
Bangkok transfer stations and dumps. The three main sites for solid waste transfer and disposal in Bangkok are Onnut, Nong Khaem, and Tha Raeng. The Onnut transfer station is an open dump. This site is literally a mountain of about 2 million tons of old garbage that receives new garbage at the rate of 2,500 tons daily. Composting facilities exist for 1,000 tons daily; the Pairoj Sompong Phanich Company deposits another 2,000 tons in its sanitary landfill in Lad Krabang. The company is operating under a five-year contract beginning in 1994. It tried to expand its operations in the neighboring Chacheongsao province but the governor denied it access, citing the company’s record of leaving garbage strewn on the roads.

The Nong Khaem station has 3 million tons of old garbage and receives 2,000 tons of solid waste daily, of which 100 tons are composted. About 1,000 tons of new garbage and 1,500 tons of old garbage are sent daily to Kampaengsaen landfill operated by the 79 Group company. A five-year haulage contract was awarded in 1995.

The Tha Raeng station sends garbage to Kampaengsaen at a rate of 2,000 tons daily. The contract was awarded in 1992. These hauling and landfilling contracts are for approximately 200 baht/ton. (See Case Study 4 for information on an additional project at Kampaengsaen.)

Table 5: Existing Solid Waste Disposal in Industrial Estates

Industrial Estate	GIZ Incinerator (No/Cap; Kg/h)	Landfill	EPZ Incinerator (No/Cap; Kg/h)	Truck Landfill (rai)	No/Cu.m.	Capital Cost (Million Baht)
Bang Chan	M	-	-	-	-	-
Bang Poo	M	-	1/250	-	1/12	13.95
Lat Krabang	1/500	-	2/250	-	1/8	1.25
Bang Plee	M	-	-	-	-	4.12
Map Ta Phut	-	9	-	-	1/4	9.26
Laem Chabang	-	30	1/10 (T/D)	-	2/12	21.32
Northern Region	-	-	1/250	-	1/1	1.25
Samusakhon	2/500	-	-	-	-	9.80
Bo win	2/500	10	2/500	-	-	20.21
Well Grow	4/750	-	-	-	-	20.00
Bangpakong	1/250,1/500	-	-	-	-	7.00
Gateway	1/5 (T/D)	-	-	-	-	20.00
Eastern	1/500	-	2/250	-	3/7.5	9.00
Bangpain	2/500	-	1/500	0	3/12	15.00
Hi-Tech	1/500, 3/500	-	1/500, 3/500	-	-	20.00
Saharatananakhon	N/A	-	-	-	-	-
Nong Kae	4/500	-	1/500	-	4/12	16.90
Kaeng Khoi	4/500	-	2/300	-	4/12	20.00
Gemopolis	-	-	-	-	N/A	-
Padaeng	N/A	-	N/A	-	N/A	-

Notes: M = Use Municipality Service; NA = Data not available.

These companies are not professional waste treatment managers, but are haulage companies that transport garbage. The landfills are at the beginning stages of professional management, but problems such as garbage leaking along routes have led to public protests and resentment.

The city administration is considering various options but has not developed a clear solution. BMA recently bid out BOO projects at Onnut, Nong Khaem, and Tha Raeng for disposal of 2,000 tons of waste daily per site using methods that meet existing disposal standards. The bid called for integrated facilities that may include incineration, recycling, composting, and landfilling. The bids were won at rates of 500–900 baht per ton and negotiations have begun. Because of the economic crisis, it is still unclear when these projects will be implemented.

Major Opportunity: Solid Waste Removal in the Provinces

The problem of city waste disposal is evident in different degrees of intensity in major cities throughout Thailand but is more acute in the tourist sites of Chiang Mai, Pattaya, and Phuket.

Chiang Mai city generates 600–800 tons of waste daily and suffers from inadequate collection and acute lack of landfill space. The current landfill site is expected to reach capacity this year. Plans to incinerate garbage were delayed because the Provincial Electricity Authority proposed to burn not just garbage but 200 tons of lignite daily. Despite plans to use a fluidized bed process, locals who feared pollution from the sulphur released from burning lignite strongly opposed the project. Studies have shown that because of the high moisture content of the garbage, the project would not have been economically feasible.

The Eastern Seaboard region produces approximately 830 tons of solid waste daily, a number that is expected to increase to 979 tons a day by the year 2001. Currently, about 80 percent is collected. Sanitary landfill appears to be accepted as the most likely disposal option for this region.

In the past two years, six smaller provincial municipalities have invested in sanitary landfills, and more are expected to follow suit in the next five years. The budgets available for these landfills are generally too low to attract foreign firms, but they may offer equipment supply opportunities. Two island municipalities that lack space for landfills have opted for incineration. The island province of Phuket has installed a 250-ton incinerator, and Koh Samui has a 70-ton incinerator.

PCD, which sets regulations and monitors the effects of pollution, plans to privatize the disposal component of solid waste in the five provinces of Bangkok and surrounding suburbs (the Bangkok Metropolitan Region, or BMR, project) and on the Eastern Seaboard. While fees collected from households today are insufficient to pay for proper disposal and cleanup, PCD plans to use the 1992 National Environmental Quality Act to set regulations for collection and disposal fees and establish regional standards for monitoring and inspection. To encourage privatization of landfill management, PCD planned to finance 40 percent of the total capital costs of two landfills, for the BMR region and for the Eastern Seaboard region. Both landfills are planned on a BOO scheme, with the private sector operating the landfill for 30 years before capping and monitoring for another 10 years. The shortlist of bidders for these projects was announced in 1997. Waste Management International was the only U.S. corporation to be short-listed for both projects. However, because of the economic crisis and regulatory constraints, these projects have been delayed.

Market Analysis for Solid Waste Operations

The markets for U.S. suppliers in the solid waste subsector are in engineering design, turnkey systems, system management, and project financing. Most of the projects are with PCD, BMA, and administrations of major cities such as Pattaya, Phuket, Had Yai, and Chiang Mai (see table 6). U.S. suppliers are advised to bid jointly with strong Thai partners who are familiar with local issues and local players. Competition is from major Japanese and European companies that have government support.

Table 6: Key Solid Waste Projects in Process

Pollution Control Department	$US Millions
BMR Privatization of Solid Waste Management	300
Eastern Seaboard Privatization of Solid Waste Management	120
Bankok Metropolitan Administration
3 BOO solid waste disposal facilities to landfill, recycle, compost, and incinerate 2,000 tons per day	N/A
Nonthaburi: Solid waste BOO project of 500 tons per day	20-30
Hat Yai: Lower South Medical Waste *Incinerator with capacity of five tons per day	.8

* Amounts are based on a rate of 45 baht per US$1.

Major Opportunity: Equipment for Solid Waste Management

There is a growing market for equipment and systems for solid waste management in the next five years, as shown in table 7.

Table 7: Solid Waste Equipment and Services Market for Thailand

Equipment	Major Customer
Dump trucks, compactors, street cleaning trucks	BMA and larger provincial municipalities
Tankers for transporting used lube oil and restaurant grease	BMA
Design and systems for sorting and recycling	BMA and larger provincial municipalities
Landfill liners	Larger landfill operators
Leachate monitoring equipment, other laboratory testing equipment	Larger landfill operators
Groundwater modeling	PCD
Leachate treatment	Larger landfill operators, PCD
Hazard and risk assessment	PCD
Old dump site investigation and remediation	PCD
Incineration systems	BMA, larger provincial municipalities
Methane-to-electricity generating systems	BMA, landfill operators
Landfill system monitoring and control software	PCD

Regulations and Enforcement in the Solid Waste Sector

Laws that relate to solid waste management include collecting, transporting, and disposal.

BMA Administrative Act of 1985
Municipality Act (Ordinance) 1953
Sanitary District Act (Ordinance) 1952
Provincial Administrative Act 1955
Pattaya Administrative Act 1978
Residential Cleanliness and Tidiness Act 1992
Public Health Act 1992
Environment Promotion Act 1992
Investment Promotion Act 1977

Under these laws, local administrations have authority to collect and dispose of the solid waste in their respective territories and can give grant contracts or concessions to the private sector as needed. BMA and Pattaya City have already granted some private sector contracts.

Foreign Competition in Solid Waste Management

Foreign competition is already strong from Japanese, Australian, and European companies (the latter largely from Denmark, Norway, and Germany). U.S. companies approaching this market are advised to take a long-term outlook on market development. Larger municipal projects for design and system installation need close monitoring and contact development with the relevant government department from the pre-bidding stage.

Case Study 4: Solid Waste Management, Air Pollution Reduction, and Energy Eficiency: Kampaengsaen (Energy- Landfill Gas to Electricity)
The Energy and Environmental Engineering Center (EEEC) of Kasetsart University and the 79 Group are establishing a pilot electricity-generating plant sourced by landfill gas at the Kampaengsaen landfill. Since landfill gas-to-electricity technology is not currently being applied in Thailand, the participants are using this as a demonstration project. The system will tap an unused source of energy, improve the environmental conditions in Kampaengsaen, and reduce the emission of methane (a greenhouse gas) from the landfill into the atmosphere. As the first landfill gas-generating electricity plant in Thailand, it will also pave the way for the development of such facilities at other landfills throughout Thailand.
The 79 Group, which owns the landfill, and nearby Kasetsart University, which needs additional electricity supplies, agreed to cooperate on the venture. The project has attracted funding from the Thai Royal Family through the Chai Pattana Foundation, Thailand’s National Energy Policy Office ($1.04 million), and the Kenan Institute Asia through the U.S.-Thailand Development Partnership program. After a successful demonstration phase, it is expected that the private sector will invest in a full-scale facility at the 3-ton per day Kampaengsaen landfill, Thailand’s largest.
The project is proceeding in the following phases: (1) prefeasibility study; (2) a business development mission to the United States; (3) preliminary field testing; (4) field testing and design stage for the gas collection system and a 650 kW electricity facility; (5) building and start-up phase of the gas collection system and 650 kW facility (ongoing); (6) operating the 650 kW facility; and (7) expansion of the 650 kW facility into a full-scale 2–5 MW facility.
Kasetsart University brings considerable environmental and engineering capability to the partnership. The University, however, had no personnel directly experienced with the design and operation of a landfill gas-to-electricity project and therefore required U.S. technical assistance. A U.S. engineering consultant was identified and brought to work on the field testing and design stage of the project that was partially funded by the U.S.-Thailand Development Partnership. Partnership personnel also assisted on a financial feasibility projection, identified U.S. equipment suppliers (including the supply of US$500,000 worth of electricity generating equipment), and provided training.
The facility should be operational in 1998.

Hazardous and Industrial Waste

Thailand faces severe problems in hazardous waste treatment. The country is generating large waste stockpiles but has no facility to handle them (see table 8). Two major problems hinder hazardous waste treatment: the local population’s strong opposition to siting a treatment facility near their homes, and a severe shortage of trained personnel and technical expertise.

Current hazardous waste generation is estimated at 1.7 million tons a year, growing at a rate of 13 percent. The bulk of this waste is generated by small-scale industries. These are often released into waterways or city dumps, with no treatment. Medium- and large-sized factories generally employ some form of pretreatment, but it is inefficient and does not completely treat the waste. Industrial estates also provide waste treatment facilities, but not for hazardous waste.

In the agro-industries, the extensive use of chemical fertilizers and pesticides has severely polluted soils and surrounding waterways. Mining wastes have also caused pollution of water resources, soil contamination, and air pollution in the quarrying grounds. The most severe hazardous waste management resulted in the poisoning of more than 1,200 people in Nakhon Si Thammarat from toxic tin slag waste accumulated over 15 years, which leached arsenic into the groundwater.

Hazardous industrial waste from larger factories is often stored on site, and over time these deposits have begun leaching toxins into the ground. High-volume waste producers include steel mills, plastic manufacturers from the petrochemical complex, and electronic and chemical plants. Industrial estates now have allocated 3,000 rai (1,200 acres) of land each for hazardous waste storage.

Risk of industrial spills and fires is also high, as Thailand lacks emergency response units to handle such crises.

On the coast, waste from marine activities, submarine gas pipelines, oil refining, and petrochemical plants generates pollution.

The hazardous waste component of municipal waste is estimated at 13,000 tons a year, infectious waste 76,000 tons per year, and photochemical waste 16,000 tons a year, all of which are disposed of as regular municipal waste. Table 8 shows the quantities of hazardous waste by type and year; table 9 shows volumes for 1995.

Table 8: Hazardous Waste Quantities by Waste Type and Year (Tons/Year)

Waste Type	1986	1991	1996	2001
Oils	106,372	188,254	332,779	589,503
Liquid Organic Residues	187	311	522	876
Organic Sludges & Solids	3,737	6,674	11,951	21,533
Inorganic Sludges & Solids	11,655	19,163	31,858	53,696
Heavy Metal Sludges & Solids	302,316	536,322	946,565	1,658,192
Solvents	19,783	36,163	58,532	124,306
Acid Wastes	18,505	31,432	53,793	46,105
Alkaline Wastes	5,769	9,839	16,846	29,109
Off Spec Products	12	25	52	107
PCB	*	*	*	*
Aqueous Organic Residues	116	242	499	1,037
Photo Wastes	8,820	16,348	30,398	57,809
Muncipal Wastes	7,231	11,787	19,090	31,093
Infectious Wastes	45,674	76,078	123,219	200,699
Total	530,177	932,638	1,626,104	2,813,975

* Assumes no PCB materials imported into Thailand after 1975.

Table 9: Hazardous Waste Volumes for 1995

Type of Waste	Tons per Year
Industrial Waste	1,100,000
Commercial and Services	126,150
Medical Waste	122,400
Marine and Shipping	121,950
Household	18,900
Agriculture	10,800

Major Opportunity: Central Treatment

The Industrial Works Department (IWD) plans to set up hazardous waste treatment plants in four Thailand locations. The first and largest treatment center, in Rayong, is under construction. Waste Management, Inc., has obtained a 25-year service contract to operate this unit from GENCO, a public-private joint venture company that has the BOO contract. Despite careful selection of the site for treatment and a secure landfill, this project faced severe public protests that have caused a delay of at least two years (see Case Study 5). In 1997, feasibility studies for two hazardous waste treatment sites were conducted. One is planned east of Bangkok (near Kabinburi) and the other in the northern province of Lampoon. These projects will most likely be BOO schemes.

Major Opportunity: On-Site Treatment in Industrial Estates

Thailand has 19 industrial estates operating under IEAT and another 26 operating independently. Nine more industrial estates are planned for implementation by the year 2001. Setting up an industrial estate generally requires on-site industrial effluent and solid waste treatment facilities. There is a continuing market for these systems.

In addition, IEAT has regular needs for the following:

Security and safety equipment
Fire fighting equipment
Emergency preparedness software
Pollution monitoring equipment for air and groundwater

IEAT provides a monthly half-day environmental training course for factory managers that enables service providers to present their technology, relay information to factory owners, and display products.

Industrial wastewater treatment facilities for smaller factories operating outside Pathum Thani, Samut Prakan, Nakhon Pathom, and Samut Sakhon are in various stages of development. (See Part 2, Water Supply and Wastewater Treatment.)

Major Opportunity: Medical Waste Management

Hazardous and infectious medical waste remains a major problem in Thailand because of the lack of collection, treatment, and disposal facilities. The Thai Government has opted for small incinerators to deal with hospital waste in the provinces, with 444 medical incinerators scheduled to be built by 1995. These incinerators tend to have inefficient combustion chambers and are environmental hazards in themselves. Many of the larger private hospitals outside the government program have strong financial capabilities and plan to purchase sterilization/incineration systems to deal with infectious medical waste.

Bangkok’s central collection and treatment system for medical waste is incapable of providing appropriate service to all hospitals and clinics. BMA currently collects tons of medical waste a day in 15 air-conditioned trucks operating only in Bangkok. The waste is transported for incineration at two 10-ton incinerators at Onnut. BMA needs to triple the capacity and is evaluating alternatives. The Japanese Government has provided a 25 kg/hour mobile incineration facility for use at major government hospitals in Bangkok. BMA is considering privatizing collection and operation and management of the old facilities and fully privatizing any new facilities.

Market Analysis for the Hazardous Waste Sector

Strong market opportunities for U.S. companies include supplying hazardous waste collection, transportation, treatment, and landfill/incineration technologies. On-site remediation of toxic waste contamination will become necessary in many industrial estates in the near future. On-site treatment of infectious medical waste also has strong market potential. Developing clean technologies for industries is another area with strong market potential.

As the Thai Ministry of Industry and PCD focus more on industrial waste, Thai companies are employing waste minimization and clean technology concepts. Thus, while competition for industrial waste treatment opportunities is quite strong, U.S. companies will have solid opportunities in promoting clean technologies.

To address existing waste, PCD will require:

Feasibility studies on establishing disposal facilities for community hazardous waste;
Establishing disposal facilities for community hazardous waste
Establishing mechanisms for collection and disposal of hazardous waste
Developing database networks for monitoring
Developing incentive systems for private sector monitoring

Heavily polluting industries such as textiles, electroplating, tanning, chemical plants, and food processing industries are under pressure to improve their production processes by minimizing waste or adopting clean technology. These industries will be reviewing methods to improve production processes and simultaneously produce less waste. The trend is toward treatment by individual factories as well as central treatment plants run by the Ministry of Industry for small-scale producers or by IEAT in the industrial estates.

The Ministry of Industry, through the Industrial Safety Technology Center, is launching a plan for upgrading environmental safety and preparedness among factories. The Center has a budget for hiring consultants to help them develop Awareness in Preparedness for Emergency at Local Level (APEL) according to the requirements of the United Nations Environment Program. The Center will also purchase relevant safety and preparedness-related software and conduct factory operator training in Map Taphut and Samut Prakan. Recent projects include:

Drafting petrochemical plant standards for safety issues: These include studying Thailand’s current situation, laws, and regulations; comparing standards in the United States, Japan, and European Union; and making recommendations on how to set up new safety standards and how to handle existing plants.
Providing production plant safety manuals for: plants manufacturing acids and alkaline and storage of explosives and combustibles. All projects were required to have a Thai component of 50 percent or more. (See Case Study 6.)

PCD encourages larger private hospitals and provincial hospitals to treat their own infectious waste and to invest in mobile treatment units and central treatment plants.

The first regional medical waste project to be implemented serves Hat Yai and the neighboring districts.

The Lower South Medical Waste Incinerator project has a capacity of five tons per day. After successful implementation, PCD plans to develop additional regional sites throughout the country. Another expected growth area is recovery and recycling of lubricating oil, expected to fall under the jurisdiction of BMA.

Regulations and Enforcement in the Hazardous Waste Sector

Current legislation lacks adequate provisions for ensuring compliance and implementation. Regulations covering control of industrial waste do not adequately define hazardous waste or distinguish it from other wastes. This ambiguity hinders the movements of the regulatory agencies.

More importantly, Thailand’s industries are generating more and more hazardous waste, and there is no collection and disposal service they can subscribe to. A small treatment plant at Bangkhuntian near Bangkok can handle waste from a few chemical plants but is already over capacity.

Under the Hazardous Substances Act of 1992, hazardous waste is defined as waste containing the following:
Explosive substances, flammable substances, oxidizing agents and peroxides, toxic substances causing diseases, radioactive substances, mutation-causing substances, corrosive substances, irritating substances, and other substances or chemicals that may cause injury to persons, animals, plants, properties, or the environment.

Under the Notification of the Ministry of Industry, hazardous wastes are defined as:

Wastes or unwanted products that fall into the following categories: ignitable substances, corrosive substances, reactive substances, explosive substances, toxic substances, and substances having leachate toxicity.
Twenty types of expired and unusable solvents
Sixteen types of waste or unwanted materials from specific industries such as electroplating, battery, pesticide, and chemical industry
Forty-five types of chemical wastes defined in the Basle Convention on the Control Transboundary Movements of Hazardous Waste and their disposal

All hazardous waste management, i.e., detoxification, landfill disposal, etc., must comply with Notification of the Ministry of Industry No. 25 (1988).

Foreign Competition in Hazardous Waste

The industrial wastewater market is largely controlled by local companies. Foreign competition is active in specialty areas such as the use of bacteria and chemical treatment, groundwater modeling, recovery of chemicals and heavy metals, and other high-value services. Foreign dominance in these areas is likely to decrease as Thai companies become capable in these technologies.

The market for turnkey systems (design, financing, and management) tends to favor consortia of companies from different countries, each supplying different areas of expertise but working closely with a strong Thai company.

In equipment sales, the market is varied and depends on the technological expertise of the supplier and strong support services. Chemicals used in this sector are mostly imported from Japan, Korea, and Taiwan.

Environmental Services

The environmental services field is wide open to leading-edge technology providers, particularly European and American suppliers. Facility construction and installation projects are more likely to be won by Japanese and Korean companies, which are more competitive in large-scale construction projects in Thailand and can obtain economies of scale in system construction. This section focuses on broad service areas; specific services in the areas of water, air, and solid and hazardous waste are addressed in previous sections of Part Two.

Case Study 5: Rayong Hazardous Waste Treatment Center (GENCO)
The cabinet approved the Rayong Hazardous Waste Treatment Center in 1994 as a joint venture between GCN Holding Co., Ltd. and the Ministry of Industry (holding 25 percent ). The planned investment of $100 million was to be for a model hazardous waste treatment plant, with a combination of waste analysis treatment, fuel-blending landfill, and incineration. Waste Management International obtained a subcontract to install and manage the landfill for 25 years. The project was planned to have hazardous waste treatment capability for 1,000 tons a year.
The project grew out of a feasibility study funded by the U.S. Agency for International Development for such a facility to be situated in the fast-growing Eastern Seaboard industrial area. The feasibility study led to discussions of a joint project involving the Ministry of Industry, the finance company GCN Holdings Co., Ltd., and Waste Management International. During those discussions, the question of site safety was an important factor.
Eventually, the project was approved with Waste Management in the role of designer, builder, and operator. To assist in addressing site safety issues, the U.S.-Thailand Development Partnership supported extensive site safety testing that was carried out by a U.S. engineering firm engaged by Waste Management. The testing showed that the site is geologically stable with a thick layer of granite underlying it. Despite extensive government involvement, considerable care in choosing a treatment and landfill site with a natural rock–based impermeability, and exhaustive site testing, the local people feared the landfill in Pluakdaeng would contaminate the nearby Nong Pla Lai water reservoir located below the landfill. This fear led to strong local resistance and demonstrations that blocked a major bridge linking Bangkok and the Eastern Seaboard. Following two days of protest and continued road blockage, causing substantial economic losses for business in the region, the Ministry of Industry agreed to review the whole process. The result of the review was a change in the design and relocation of the facility to the Map Ta Phut industrial estate in Rayong. A small landfill area was included, but the company is still searching for a much larger site for the longer-term needs of the facility.
This experience offers a clear example of “not in my backyard” syndrome. At the time of site selection and testing, local village leaders were taken to Hong Kong and Indonesia to show what facilities for hazardous waste look like and the safety issues involved. Yet, when the protest erupted, the government hesitated to come out strongly to justify its actions and was subsequently forced to accede to public pressure as protests escalated.
Construction of the facility in the new location was completed and operations began in 1997. Phase II, chemical and physical treatment, and Phase III, incineration, are currently in the bidding process. Although the project appears to be back on track, other potential entrants wonder whether GENCO will ultimately succeed or if the project will encounter more costly delays and changes. Much will depend on the Ministry of Industry’s willingness and ability to enforce its regulations.

Major Opportunity: Environmental Impact Assessment

The Ministry of Science, Technology, and Environment (MOSTE) and the National Environmental Board (NEB) determine the types of projects that require an environment impact assessment (EIA). EIAs are required for most major projects, as shown in table 10.

The Office of Environmental Policy and Planning (OEPP) grants licenses over specific periods to companies permitted to making EIAs and keeps a record of the quality of their activities. About 50 companies in Thailand have been licensed to conduct EIAs.

Major Opportunity: Pollution Prevention and ISO 14000

Thailand has adopted pollution prevention, clean technology, and promotion of the use of ISO 14000 as methods to deal with future pollution sources. The government is aware that it lacks the ability to closely monitor the manufacturing sector’s activities and prefers voluntary compliance as a method of keeping the environment clean.

Thailand expected to have the capability to certify companies for ISO (International Standardization Organi-zation) 14000 by 1997 and has now targeted 200 companies for certification. The Thailand Industrial Standards Institute (TISI) of the Ministry of Industry is the country’s official ISO representative. TISI set up a committee representing environmental organizations. The committee, chaired by the president of the Thailand Environmental Institute (TEI), will support and advise the organization on ISO 14000 activities. Training programs are under way to educate suppliers of various required services such as environmental audits, environmental management systems, product life cycle, assessment, etc. TISI and TEI are training their staff to certify companies for ISO 14000.

Two pilot programs, one involving 10 companies supervised by TISI and the other involving 10 supervised by the TEI, are under way to demonstrate ISO 14000 capabilities. By early 1998, more than 10 of the facilities in the two programs had been certified. In total, more than 20 facilities have been certified throughout Thailand.

Additional Market Opportunities

Opportunities exist for companies that can provide the following services:

Corporate environmental strategy
Environmental impact assessment
Environmental management systems
Environmental auditing
Energy efficiency consulting (DSM and ECPA)

Case Study 6: Conversion of Hazardous Steel Slag toEnvironmentally Friendly Road Fillers
Thailand’s rapid industrialization has encouraged a major expansion in steel production. This expansion, however, has resulted in significant pollution problems caused by the slag left from the production process. At present, Thailand’s steel producers dispose of slag mainly in landfills, which causes air and soil pollution. When landfills are not feasible, as is the case in certain parts of Thailand, slag is disposed of in water, creating more serious pollution problems. Samutprakarn province has recently ordered steel mills not to dispose of slag and other hazardous industrial waste outside of factory premises until a solution to the problem has been found.
To address this problem, the Edward C. Levy Company of Dearborn, Michigan and NTS Steel Group Public Co., Ltd. of Bangkok, Thailand, worked out a joint-venture agreement to recycle and reprocess steel slag at Chonburi Industrial Estate on Thailand’s Eastern Seaboard. The joint-venture company, under the name Chonburi Steel Mill Services Ltd. (CSMS), will invest $23.2 million in the operation.
CSMS will recycle and reprocess slag and steel mill wastes into slag aggregates, processed scrap steel, and ferrous pucks—commercial products that are environmentally safe and employ environmentally sound production processes. Asphalt pavement produced from slag aggregates will partially replace limestone aggregates as a road construction material, reducing Thailand’s reliance on quarrying, an additional major cause of air pollution. Ferrous pucks, produced from flue dust, will reduce imports of ferrous scrap by an estimated 200,000 metric tons per year.
Some of the jobs in the new facility will require significant skills, including lifting, transporting, and tipping molten slag. These skills can be gained only by sustained practice. The U.S.-Thailand Development Partnership approved financial assistance of $45,500 to train the Thai work force in the Levy technology, providing 46 percent of total training costs in partnership with Levy and Chonburi Steel Mill Services, which will invest the remaining 54 percent. The Partnership also assisted the joint venture in the early stages of the process, including the negotiations with the Board of Investment to seek investment privileges. The development of the other facilities has been delayed because of the economic crisis. Levy was one of the first companies to win special tax privileges for environmental activities under new Thai regulations.
CSMS is the first of four planned Levy recycling joint ventures in Thailand with different large Thai steel groups in other geographic areas. Levy generally prefers to establish operations on site for its larger customers, to reduce transport cost.

Foreign Competition in Environmental Services

Competition exists from Europe, mostly Swiss and British companies certified to provide ISO 14000-related services. Danish and German companies are marketing strongly in pollution prevention and clean technologies. Swedish and Norwegian companies compete against the United States for air pollution and energy-related pollution control services. Of the 10 companies registered to conduct ISO 14000 consulting, only one is from the United States; the others are all European companies that have generally set up separate companies for ISO 14000 consulting. In addition, a number of top Thai consulting companies attempting to enter this market are interested in partnering with U.S. companies.

Clean Energy

The tremendous industrial expansion in the 1980s and 1990s has propelled Thailand’s energy demand to annual growth rates exceeding 10 percent. Because of the economic slowdown, in 1996, the growth of peak demand for electricity was 8.5 percent, well below the expected 11.5 percent growth. Nonetheless, the increase in peak demand is expected to continue at an annual rate of at least 7 percent. Moreover,
the absolute amount of electricity demanded will increase substantially during each of the next three national five-year plans, as table 11 indicates.

Thailand’s peak energy demand reached 13,600 MW in May 1996, and installed capacity was 16,142 MW for a reserve margin of 2,497 MW (8.8 percent). Over the next 14 years, Thailand plans to increase its power generating capacity to over 40,000 MW, thereby tripling the nation’s electricity-generating capacity during the Eighth (1997–2001), Ninth (2002–2006), and Tenth (2007–2011) National Plans. To provide sufficient power during the Eighth National Plan alone, EGAT plans to spend approximately $10 billion on new generating capacity (see table 12).

As the economic slowdown continues, EGAT is deferring construction of some power plants and electricity purchases from the private sector. The second phase of the Independent Power Producers (IPP) program is slightly delayed, and the Small Power Producers (SPP) program will focus on “small” biomass and renewable projects. Nevertheless, since Thailand’s economy is expected to grow at approximately 6 percent annually over the next 10 years, EGAT expects all major power projects to move forward.

To ensure a reliable and steady supply of power, Thailand is moving cautiously in its efforts to privatize the electric utilities; implement IPP and SPP projects; purchase electricity from neighbors, especially Laos; secure long-term natural gas contracts for electricity producers; and develop human resources. An overriding concern is meeting the demands in an environmentally sustainable method. To achieve this objective, Thailand’s government and state energy organizations are promoting clean fuels, renewable energy, demand side management, energy efficient techniques, and pollution control measures.

U.S. companies are well positioned to share in the opportunities stemming from this tremendous growth. Through state-sponsored privatization projects, U.S. project developers, consultants, and equipment suppliers are well suited to compete with the Europeans and Japanese.

Table 10: Projects Requiring Environmental Impact Assessments

Dam or reservoirs	Storage volume above 100 million cubic meters
Irrigation	Irrigated area above 80,000 rai (12,800 hectares)
Commercial airport	All
Hotel, or resort facilities adjacent to rivers, coastal areas, lakes, beaches, or close to national parks/historical parks	80 rooms and above
Mining, as defined by the Mineral Act	All
Industrial Estate as defined by the IEAT Act, or similar projects	All
Commercial port	Capacity of vessels above 500 gross tons
Thermal power plant	Capacity 10 MW and above
*Industries*
Petrochemical	For oil refineries and/or natural gas separation units that use more than 100 tons of raw material per day
Oil refinery	All
Natural gas separation/processing	All
Chlor-aklaline industry using sodium chloride as raw material	Capacity of 100 tons or above
Iron and steel	Capacity of 100 tons a day or more
Cement industry	All
Smelting other than iron and steel	Capacity of 50 tons per day or more
Pulp industry	Capacity of 50 tons per day or more
All types of projects located in designated watershed areas	All
Coastal reclamation	All
Buildings in areas adjacent to rivers, coastal areas, lakes, or beaches or in or near national or historical parks	Having height of more than 23 meters or total floor space of more than 1,000 sq. meters
Residential/commercial land	500 plots or more, or land above 100 rai (16 hectares)
Hospitals, located in a. adjacent to rivers, coastal areas, lakes, beaches b. in areas other than (a)	a. with 30 or more inpatient beds b. with 60 or more inpatient beds
Producers of pesticide or active ingredient	All
Chemical fertilizer factory	All
Highway or roadways passing through— Wildlife sanctuaries National parks Class 2 watershed areas Mangrove in the national reserve forests Coastal areas 50 meters from maximum sea level	All including road expansion

Table 11: Overview: Growth in Demand for Energy

National Plan	Period	Demand Growth (MW)	Percent Annual Growth
7th Plan	1992–1996	4,639	10.40
8th Plan	1997–2001	6,248	8.00
9th Plan	2002–2006	8,520	7.50
10th Plan	2007–2011	11,303	7.00

Additionally, Thailand has begun implementing DSM and energy efficient projects (total available funds over $400 million at 25 baht per $1), which are rapidly improving the opportunities to sell energy efficient equipment and engineering and consulting services. The Thai private sector is also striving to become more efficient in its manufacturing processes and services. U.S. companies with high-tech solutions, financial resources, new technologies, and staying power are best positioned to reap the benefits of these opportunities.

Thailand as a Regional Energy Leader

Thailand has emerged as a leader in the energy sector for the Greater Mekong Subregion (GMS), which includes Thailand, Myanmar, Laos, Vietnam, Kampuchea, and Southern China. With the experience and capital accumulated from the economic growth of the past quarter century, Thailand is positioned as a regional leader. It is conducting joint energy projects in Laos, Myanmar, Cambodia, Malaysia, Vietnam, and Southern China. EGAT has agreed to purchase 1,500 MW from Laos by 2002 and plans to increase that amount to 3,000 MW, with five additional power plants that will go on line between 2005 and 2007. Four projects that have already agreed on pricing are slated to meet the 1,500 MW requirement: Nam Theun-Hinboun (210 MW), Nam Theun II (681 MW), Houay Ho (143 MW), and Hongsa lignite (600 MW). All projects are hydroelectric except for the Hongsa lignite plant.

The Laos projects have been delayed by procedural and price differences between the Laos and Thais. Furthermore, a 681 MW hydropower project, Nam Thuen II, has been delayed on environmental grounds, and the World Bank has not yet provided a loan guarantee. The Asian Development Bank is withholding funds on the 60 MW Nam Leuk hydro project until developers complete a satisfactory environmental impact assessment statement. Of the 1,500 MW, only 300 MW (Nam Thuen Hin Bun and Huay Ho projects) had commenced by mid-1996; the others remain uncertain.

The Thailand-Malaysia Inter-connection Project, which has a boost power exchange of up to 300 MW, was completed in 1997. EGAT is negotiating with Teknologi Perlis, the IPP authorized by the Malaysian Government to sell electricity to Thailand on the purchase of 300 MW by EGAT. Another possible source of electricity is 6,000 MW from Myanmar under the Lower Salawin project.

In addition to firms involved in energy projects in Laos, Thai companies such as Saha Union, Co-generation Company (Coco), and Amata Power participate in other regional power projects. To enter the Chinese market, Union Energy, Saha Union’s energy company, has begun 5 of 10 planned cogeneration projects in the eastern provinces of Jiangsu and Zhejinag, as well as Yunnan in the South. The country is now focusing on larger, long-term projects. Coco is targeting countries, including Indonesia, Malaysia, the Philippines, and Vietnam, where its parent company, Banpu, already has experience and knowledge. Amata Power has targeted Vietnam and is developing an industrial estate with a power plant that could expand to 214 MW in 2003. Foreign companies, such as Siemens AG of Germany and Power Fin SA of Belgium, have leveraged their relations with the Thai companies in an effort to enter neighboring countries.

Fuel Supply

Indigenous energy resources used for power generation include lignite, natural gas, and hydro resources. Due to their negative environmental impacts, lignite and hydro resources will not be used significantly in Thailand’s future power production projects. By the year 2006, EGAT plans to decrease the portion of installed capacity in lignite-fired thermal plants to 13 percent (from 21.8 percent in 1993) and hydroelectric to 3.8 percent (from 5.8 percent). Several older fuel oil-supplied plants will be retired and their portion of installed capacity will decrease from 23.7 percent to not more than 6 percent. To compensate, Thailand will be increasing its use of cleaner fuels and imported coal from zero in 1993 to as much as 44 percent in 2006. Imported energy use will increase from zero to 7 percent. Natural gas and liquified natural gas will continue to supply more than 40 percent of the fuel for power production.

Natural gas comes primarily from the Gulf of Thailand. However, natural gas reserves are limited and are insufficient for future generation. In the 21st century, Thailand will depend more on external sources of energy. Imported fuels will include piped gas, liquefied natural gas (LNG), coal, and orimulsion. Although Thailand will decrease its dependence on heavy oil, it will still have to be imported as a back-up fuel for the dual-fired thermal power plants. In addition, Thailand and Myanmar are developing a pipeline to transport natural gas to be used in power plants in Western Thailand.

Private power producers are relying on natural gas and can curtail costs with the prospects of increased domestic supplies and additional deliveries from the Malaysian-Thailand joint area gas fields in the South China Sea, both of which are less costly than importing LNG. Additional local gas supplies are expected to increase as UNOCAL develops vast gas fields in the Gulf of Thailand.

Government Agencies in the Energy Sector

Following are the main Thai government and state organizations comprising the energy sector:
National Energy Policy Council (NEPC). NEPC is a cabinet-level committee chaired by the Prime Minister. It has overall responsibility for Thailand’s energy policy. NEPC is responsible for overseeing Thailand’s utilities: EGAT (generation), Metropolitan Electricity Authority (distribution in Bangkok), and Provincial Electricity Authority (distribution elsewhere). The National Energy Policy Office (NEPO) is the secretariat to the NEPC. NEPO sets national energy policies and reports directly to the Prime Minister’s office. NEPO is also responsible for drafting regulations and coordinating policy for the energy conservation program. NEPO plays an important role on the Fund Committee of the Energy Conservation Act Fund. It also aids development of renewable fuel projects.
Electricity Generating Authority of Thailand (EGAT). EGAT is responsible for power generation and transmission. This state enterprise reports to the Office of the Prime Minister. On the energy efficiency side, EGAT is the primary agency responsible for implementing Thailand’s highly acclaimed DSM program.
Metropolitan Electricity Authority (MEA)/Provincial Electricity Authority (PEA). MEA and PEA are responsible for distributing electricity supplied by EGAT. MEA distributes electricity to Metropolitan Bangkok, and PEA is responsible for all the provinces outside Bangkok. MEA and PEA are state enterprises that report to the Ministry of Interior.
Department of Energy Development and Promotion (DEDP). DEDP, under MOSTE, is the main executing agency for the Energy Conservation Promotion Act (ECPA), particularly for compulsory implementation of energy efficiency in large buildings and factories. DEDP manages implementation of the act, including training components, and distribution of the Energy Conservation Fund. DEDP is also involved with research and promotion of energy-efficient products and renewable energy.
Other Organizations. Other state and government organizations involved in energy include the Petroleum Authority of Thailand (natural gas supply) and Thailand Industrial Standards Institute (testing and certification).

Table 12: Thailand’s Growth in Demand (Revised Load Forecasts) of Electricity

Year	Demand (MW)	Increase (MW)
1996	13,312	779
1997	14,377	1,065
1998	15,527	1,150
1999	16,769	1,242
2000	18,111	1,342
2002	21,027	2,916
2004	24,299	3,272
2006	28,080	3,781
2008	32,149	4,069

Sources: National Energy Policy Committee, Thailand Forecast Subcommittee, and Industry; April 1996.

Regulation in the Energy Sector

Demand Side Management (DSM) Program. In December 1991, Thailand became the first Asian nation to formally incorporate a comprehensive DSM program. EGAT, in cooperation from the MEA and PEA, is responsible for implementing the $189 million plan. EGAT established a DSM office to plan, design, and implement the program. The DSM office reports to EGAT’s Deputy Governor of Policy and Planning and the DSM Subcommittee of the NEPC.
The five-year plan (1992-1997) had an initial budget of $189 million. The World Bank’s Global Environment Facility (GEF) contributed $15.5 million in grant funds ($6 million from the Australian Government) and Japan’s Overseas Economic Cooperation Fund (OECF) has concessional funding of up to $25 million to support the GEF project.
EGAT DSM attempts to supply the most cost-effective energy generation. Additional environmental and natural resource benefits are substantial although not as easy to quantify.
DSM considers methods of changing customers’ patterns of electricity use to decrease system load curves and control peak use problems. Thailand’s DSM focuses on three components: (1) energy efficiency, (2) load shifting, and (3) load control. Energy efficiency is the use of efficient end-use equipment such as motors or lights and the installation of efficient processes or systems, such as manufacturing processes or air-conditioning systems. Load shifting refers to moving part or all of the process or service to an off-peak time. Load control is the voluntary or mandatory control of specific end-use loads based on an identified system need to curtail loads. Electricity tariffs have been based on time-of- day (TOD) rates that have peak, partial peak, and off-peak electricity charges, which apply to large energy users. A two-rate (peak and off-peak) system is under consideration.
Initial estimates of the DSM program showed a cumulative energy savings of 1,427 gigawatt/hours (GWh), peak capacity reduction of 238 MW, and greenhouse gas emissions reductions of 1.16 million tons of carbon dioxide per year by the end of 1997 (DSM Plan, EGAT). However, the energy efficiency programs have reduced demand more than originally anticipated. At the initial stage of the DSM program in 1993, a 280 MW goal was set for the five-year plan. However, in 1996, it was estimated that at least 311 MW, or 1,826 GWh of electricity demand, had been reduced as a result of the DSM program; by 1998, there is the potential to reach 600 MW, according to EGAT’s DSM office. Thailand’s DSM program is lauded as the best in Asia by the World Bank and ranks in the top 8 of the 110 worldwide programs (Global Environmental Fund).
EGAT’s efforts have largely focused on encouraging appliance makers to produce more energy efficient products and urging the public to use them. The DSM office offers various incentives to manufacturers that produce more efficient domestic appliances.
The first activity the DSM promoted was an energy efficient fluorescent tube program, selected because of its potentially significant impact and ease of implementation. In September 1993, EGAT signed a voluntary agreement with five major lighting manufacturers in Thailand to produce 36 W and 18 W fluorescent tubes in place of the 40 W and 20 W fluorescent tubes. By mid-1995, all manufacturers had made the transition. It is estimated that by the end of 1997, a savings of 104 MW of peak power demand was realized.
The refrigerator labeling program has also begun, and the early results show it is expected to save 27 peak MW over a five-year period. This program began in September 1994 with voluntary cooperation from the five major refrigerator manufacturers and an extensive advertising campaign by EGAT. The results are encouraging; the popular program has sparked stiff competition among manufacturers to produce highly efficient refrigerators.
An energy efficient air-conditioner program that closely mimics the successful refrigerator project is slated for implementation. The program is targeted to save 23 MW over a five-year period, with a US$20 million fund to help the public finance the purchase of energy efficient air-conditioners through interest-free loans.
EGAT is also promoting a “Green Buildings Program,” which is available to all major power consumers. The building owners can receive subsidized loans funded by Japan’s OECF. EGAT recently has promoted the concept of thermal energy storage (TES) and is demonstrating the technology at its headquarters. In the private sector, institutions and industry are assessing the possibility of retrofitting their buildings with TES systems.
EGAT plans to implement a program of high-efficiency factory motors, which are 2–10 percent more efficient than standard motors. The potential savings are highly significant since over a third of Thailand’s electricity is used in factory motors. The DSM program is expected to stimulate the import and, eventually, local production for the domestic and foreign markets. Preliminary estimates of the efficient motors program show savings at 70 MW and 375 GWh over four years. The market for energy efficient motors is estimated at $39 million in 1998 by the International Institute for Energy Conservation. The DSM office will work with manufacturers on an efficiency labeling scheme.
TISI is responsible for setting energy consuming standards. To be certified under EGAT’s refrigerator and air-conditioning programs, equipment must be tested and rated by TISI.
EGAT, in cooperation with DEDP, TISI, and NEPO, expects to implement a pilot program that introduces a modified Energy Services Company (ESCO) concept to the private sector. Four companies will be allowed to participate in four separate projects to provide energy efficient equipment and services. The Energy Conservation Fund will finance the project. The customer will repay the DSM office, and the monies can be used in future projects. The DSM office will select, monitor, and evaluate the project with assistance from outside consultants; the project will be funded by the GEF. Unlike in the United States, this pilot project’s ESCOs will receive fees for services rendered not based on performance contracts, which tend to be difficult to enforce. This is a two-year program that may pave the way for strictly private sector ESCO business.
Energy Conservation Promotion Act (ECPA). ECPA was approved by the government in 1991. DEDP is responsible for implementing the ECPA. ECPA requires all owners of businesses and buildings that consume over 1 MW annually to implement energy efficiency measures. These measures include designating and training an energy conservation manager, performing audits, submitting an energy conservation plan to DEDP (within two years), and utilizing the appropriate technologies (within five years).
The Energy Conservation Promotion Fund was established in 1992. Its purpose is to finance energy efficiency, renewable energy, and cogeneration projects, as well as to support efforts in education, training, promotion, and assistance. The fund is supported by taxes on petroleum and natural gas products and by surcharges on electricity bills. The Thai Government made an initial allocation to the fund of $60 million, and annual allocations have been approximately $60–80 million. As of mid-1995, the accumulated total was estimated to be over $300 million (at the rate of 25 baht per $1). It was estimated that 2,500 factories, 950 large commercial buildings, and 415 government buildings must be brought into compliance with the legislation. The regulations on large facilities became effective in 1996. By 1999, the government plans to require all owners of facilities housing over 1 MW of power to adhere to the energy efficiency standards.
To implement the energy efficiency programs in factories and buildings, DEDP has registered over 40 companies or consortia to provide energy audits and detailed designs. Many of the companies involved are from the United States. For most Thai/foreign partnerships, the foreign consultants plan to provide technical input and training, while Thai companies will conduct audits and prepare the documentation and designs. Currently, DEDP is not accepting applicants for registration as energy consultants, but additional applications may be accepted in the future.
The total market for energy efficiency products was estimated at almost $600 million in 1995, with imports accounting for $310 million (Department of Commerce) (at the rate of 25 baht per $1). Energy efficient products can be divided into three sectors: industrial (60 percent), commercial (30 percent), and residential (10 percent). The Japanese manufacturers control approximately one-third of the market share, followed by the United States (25 percent) and Germany (15 percent), with smaller shares held by Taiwan, Singapore, Hong Kong, Australia, and the United Kingdom.
Price is the primary limitation on greater sales. Energy efficiency products in Thailand are generally 20–100 percent above traditional products. Some customers are willing to buy high-end products because of their superior quality, reliability, and energy saving characteristics.
It is important to note that although the import tariffs for energy efficient products are set at 30 to 35 percent, ECPA import duties for such products can be negotiated to as low as 5 percent. However, it is often difficult to prove that the products are energy efficient unless there is strong support from a Thai government agency.

Privatization of the Energy Sector

Over the next five years, the energy sector will be restructured by privatizing the electric utilities (EGAT, PEA, MEA), with up to 50 percent of the shares being offered to domestic and foreign investors. Private sector participation will increase through the sell-off of utility business units and implementation of the IPP and SPP projects.

Private participation in the energy sector began in 1993 when EGAT established EGCO, a subsidiary generating company. EGCO is the sole holding firm in Rayong Electricity Generating Co., with an initial capacity of 600 MW. EGCO was partially privatized in 1994 as EGAT reduced its share holding to 48 percent. In June 1996, the sale of the 774 MW gas-fired Khanom Power plant (Nakorn Si Thammarat), one of EGAT’s prized power plants, marked another significant advance in the privatization of the generating authority. The plant was sold to EGCO for $700 million.

EGAT will be divided into six business units: transmission, generation, maintenance, engineering, construction, and mining. Once this occurs, realistic transfer pricing costs will be charged among the units. In 1998, the units will become corporations established as fully owned subsidiaries, and will be listed on the Stock Exchange of Thailand by 1999. EGAT may sell more than 50 percent of the shares to private investors but will retain a controlling stake. Eventually, EGAT will be converted into a high-voltage transmission and central dispatch firm. A group of advisers, including Lehman Brothers, Kleinworth Benson, Finance One, and Andersen Consulting, is helping develop the reorganization plan.

In 1998, EGAT will set up three publicly listed subsidiaries, Bangpakong, Ratchaburi, and Mae Moh, to assume the assets and operations of at least nine additional power stations. The three groups will have combined assets of $8 billion and 15,000 MW generating capacity when they go public on the New York and London exchanges. Hydroelectric facilities will not be privatized since water resources are considered national assets vital for sectors other than power generation. Plants targeted for privatization and inclusion in the three groups include:

Mae Moh, Lampang, lignite, 2,625 MW
Bang Pakong, Chachoengsao, gas, 2,300 MW
Ratchaburi, gas, 4,600 MW (under construction)
North Bangkok, Nonthaburi, oil, 237 MW
South Bangkok, Samut Prakarn, combined cycle, 623 MW
Nong Chok, Bangkok, gas, 492 MW
Sai Noi, gas turbine, 244 MW
Wang Noi, Ayutthaya, combined cycle, 2600 MW
Nam Phong, Khon Kaen, combined cycle, 355 MW

PEA hopes to begin privatization efforts in 1999. These efforts have been delayed by the change in governments, because PEA still needs approval from the parliament. PEA will be divided into four regional power distribution companies (northern, central, northeastern, and southern). MEA will continue overseeing the Bangkok area and may be divided into two companies. The privatized distribution companies would then be allowed to purchase directly from any generating company or IPP, and later, large industrial and commercial customers would be allowed to buy directly from all generators.

Major Opportunity: Independent Power Producer Program

The IPP program enables private companies to participate in large power projects in Thailand. Selected companies will set up BOO facilities and sell electricity to EGAT. Requirements and details of the program are as follows:

Purchase Power Agreement will be for a period of 20–25 years.
Initial capacity cannot exceed 1400 MW.
Facility should fill base load or intermediate load plant requirements.
The fuel must be environmentally clean, acceptable to the public, stable in pricing structure, secure in supply, and supportive of the government’s policy on fuel diversification (i.e., nonconventional energy except hydro and nuclear; natural gas, including LNG; coal; and orimulsion).
Power prices should not exceed EGAT’s avoided cost.
Investors must have proven technological capability and experience that match the required specifications.
Plant locations should be in the Eastern corridor (Rayong, Chochoengsao, Chonburi) or Western corridor (Ratchaburi, Prachuab Khiri Khan).

The power plants will all be eligible to receive the same Board of Investment privileges and incentives, except that in Zone 1 only gas can be used. The evaluation criterion is 60 percent on price factors and 40 percent on nonprice factors. The Evaluation Subcommittee, composed of the Governor of EGAT and representatives of NEPO, NESDB, and the Fiscal Policy Office, Ministry of Finance, evaluates IPP proposals. The Board of Directors of EGAT makes the final approval.

Note that due to the devaluation, EGAT has adjusted the payment formula in order to compensate the IPPs that have large foreign components.

The IPP bids occur in two stages of two phases each. In Phase 1, Stage 1, two consortiums have been chosen and negotiations were completed in late 1997. Stage 1, Phase 1 winners are:

Thai Oil: UNOCAL, Westinghouse consortium, natural gas, 700 MW, Eastern Corridor, Rayong
TriEnergy: Texaco, Banpu Coal and Black and Veatch, natural gas, 600 MW, Western Corridor, Ratchaburi

Due to increases in energy demand estimates for the next 15 years, the planned IPP purchases have been increased from the original limit of 4,200 MW under Phases 1 and 2 to approximately 5,600 MW. The purchases will primarily be sourced from Phase 2 bidders. The original plan required Phase 2 winners to establish power plants to supply 2,800 MW to the national grid beginning in 2001–02. However, in November 1996, the IPP selection committee announced that four consortia would supply approximately 4,174 MW. All four bidders proposed prices close to or lower than EGAT’s estimated costs for future power plants. The average electricity tariffs submitted by the four bidders was 1.38 Baht/kW hour. Stage 1, Phase 2 winners are:

Union Energy, Tomen Corp., and Imatran Voima Oy of Finland, imported Australian coal, 1,400 MW at Hin Krut in Prachuab Khiri Khan (2001)
Gulf Electric: Siam City Cement, Lanna Lignite, Mission Energy, imported coal from Indonesia, 700 MW, Prachuap Khiri Khan (2002)
BLCP: Ban Pu, Loxley, CRA (Australia), PowerGen (UK), imported coal from Australia, 1400 MW, Rayong (2001)
BWII: Hemaraj Land and Development, Intergen, and Bechtel, natural gas from PTT, 673 MW, Chonburi Industrial Estate, Bo Win (2003)

Stage 2 will include the supply of 4,000 MW to the national grid starting between 2004 and 2007. EGAT admitted that the teams of reference for Stage 1 were inadequately defined and will be more specific in Stage 2. In particular, EGAT plans to specify the types of IPP fuels and locations instead of allowing the bidders to make such decisions.

Major Opportunity: Small Power Producers Program

NEPC policy states that electricity generation from renewable energy, waste or residue fuel, and cogeneration be increased to raise the efficiency of primary and by-product energy sources and to help reduce the public sector burden regarding investment in electricity generation and distribution. To implement the concept, the SPP program was introduced in 1992 and is supported by EGAT, PEA, and MEA. EGAT is the main implementing body. The total capacity supplied by any SPP to the national grid is up to 90 MW at any one connection point. However, SPPs wishing to supply more than 60 MW must receive special approval from EGAT. The tariff for the purchase of power from SPPs is fixed to the price of fuel; in early 1997 before the devaluation, the price was approximately $.04 per kW/h. There is also a supplier capacity payment that increases the average total payment to approximately $.053 cents per kW/h.

Interest generated by the IPP program has attracted investors and project owners to the Thai power market, but many companies find the SPP program opportunities more varied and attractive. SPP projects are often viewed as a less risky strategy because they are less capital-intensive than IPPs. Establishing an SPP is also a more viable strategy to enter the Thai power industry than winning an IPP bid, primarily because there are more opportunities.

In the first stage of bidding, EGAT approved 50 small power producers out of more than 80 applications to supply 1,720 MW to the national grid. The majority of the first stage, 78 percent (1,353 MW), are larger cogeneration projects that use natural gas, lignite, and imported gas for fuel. These types of purchases are made on a firm, long-term basis. As of late 1996, EGAT signed contracts with 26 SPPs (10 firm and 16 non-firm contracts) to purchase 843 MW of power; 17 of those are already transmitting 336 MW to the national grid.

The cogeneration market was late to develop due to the lack of understanding of the technology and the lack of favorable terms to sell to the grid. The biggest complaint about the SPP program is that the rates offered by EGAT are not attractive enough to encourage sales to the grid. However, in the past year, there has been a rash of cogeneration SPP projects initiated in conjunction with industry, particularly on the Eastern Seaboard. Examples of SPP projects at various stages of development include:

Amata Power plans to increase capacity of its Bang Pakong plant from 170 MW to 340 MW and set up a 170 MW, cogeneration project in the Amata City-Rayong industrial estate. The new plant, expected to begin operation in 1998, would be fueled by natural gas supplied by PTT and would sell 60 MW to EGAT under the SPP program.
Rojana Industrial Park will establish a 120 MW power plant in its Ayutthaya industrial estate; 30 MW will be supplied to the industrial estate and 90 MW to EGAT. Construction was to start in 1997 and operations in 1999.

In Map Ta Phut, Black & Veatch is building a 300 MW plant for the Cogeneration Company (Coco). The plant should be completed by the end of 1999. Both plants will sell to industrial end-users and EGAT.
The Industrial Power Company plans to build a 134 MW cogeneration plant at the Eastern Industrial Estate in Rayong. Phase 1, 67 MW, should be operating by late 1998, and 55 MW from the first phase will be sold to EGAT. ABB has won the turnkey project, and PTT will supply natural gas.
IEAT received 33 bids from 19 consortia to build and operate power plants in the 13 IEAT estates. Six consortia are bidding for the Laem Chabang estate, five are bidding for the Songkhla Industrial Estate and Bangpoo Industrial Estate, three for Map Ta Phut and Lad Krabang Industrial Estates, and two for Nong Khae Industrial Estate, the Northern Industrial Estate, and the Well Grow Industrial Estate. There was one bidder each for the Bang Pa-in, Ratchaburi, Samut Sakhon, Hitech, and Eastern Seaboard Industrial Estates. The proposed plants are required to range between 100 to 150 MW and sell to industrial users in the estates. It is not clear if these plants will be able to sell to EGAT under the SPP project.

EGAT and NEPO received and approved proposals for approximately 4,000 MW. The economic crisis, however, has decreased the demand and companies are therefore not able to obtain loans. It is expected that about 2,000 MW of the proposed sources will become operational. The economic downturn and decreased electricity demand have discouraged EGAT from quickly developing new sources of power. After receiving a number of large cogeneration projects in 1995 and 1996, EGAT was on target to reach the prescribed limit of power to be purchased from SPPs and since November 1996 has accepted only biomass and renewable projects. NEPO also is considering supporting demonstration projects for new biomass technologies. Whether this policy changes will depend heavily on changes in electricity demand. It is accepting proposals only for alternative sources of fuel, such as biomass. These projects are smaller than 50 MW, and proposal reviews will continue on a rolling basis.

Major Opportunity: Renewable and Alternative Fuels

EGAT is looking to make purchases from SPPs that use nonconventional fuels such as biomass, paddy husk, or firewood grown specifically for fuel. Natural gas, oil, or coal can be used to supplement the biomass fuels, but only up to 25 percent of caloric value derived per year. These purchases may be on a firm or nonfirm basis. The minimum length of firm purchase is five years, while nonfirm purchases cannot exceed five years. Firms with low tariffs, designated areas, and using alternative fuels are preferred.

In addition to the opportunities initiated through the SPP program, NEPO and DEDP are promoting the use of alternative and renewable fuels. Before implementing the SPP program, Thailand had not strongly promoted renewable fuels—perhaps because of the high electrification rates and low electricity tariffs. Now, through the Energy Conservation Fund, projects are supported primarily for demonstration purposes. Projects will supply energy to end-users situated near their facilities, with the remaining amounts sent to the grid under the SPP program. Technologies such as biomass to energy, landfill gas to energy, wastewater gas to energy, and animal waste gas to energy are being developed. The main biomass energy sources are wood fuel, baggasse (sugar cane waste), rice husks, and wood waste. For biomass cogeneration projects, the sugar cane industry accounts for the largest portion. Because of dispersed rice processing operations and higher prices for alternative uses, such as building materials, rice husk to energy projects have not been developed on a large scale in Thailand.

EGAT and NEPO are researching and developing alternative energy sources such as solar, battery, and wind. Solar water heaters are the most common application, and photovoltaics are used in small pilot projects and communications stations. Demonstration projects being developed in Thailand are not expected to supply a major amount of power, because of their high price. EGAT is also pursuing battery and wind pilot projects, but opportunities are limited with the present technology.

The IPP and SPP programs, as well as EGAT, will have to adhere to emission requirements under the Factory Act. The Environmental Division at EGAT and the Office of Environmental Policy and Planning are working to ensure that pollution control measures are implemented. The PCD helps to monitor and enforce the regulations. Stronger regulatory enforcement offers opportunities for imported high-tech solutions.

Major Opportunity: Energy Efficiency

There are two primary motivations for using energy efficient products, processes, and services: (1) as a response to government incentives and (2) as a response to market forces.

The Thai Government has realized that producing an ever-increasing power supply without the proper controls is expensive and environmentally degrading. Furthermore, since the growth of power supply has remained unhindered, there are many opportunities to employ energy efficient techniques. Thailand’s energy efficiency market is being fueled by two major policy developments: (1) the Demand Side Management program (1991) and (2) the Energy Conservation Promotion Act (1992).

EGAT (DSM) and DEDP (ECPA) are the governing agencies for energy efficiency. Other agencies include NEPO, which has a strong a degree of input on how the ECP Fund is allocated. There are significant opportunities to work with state agencies PEA and MEA to help develop their transmission and distribution systems, as well as in the equipment supply and training arenas.

The rapidly evolving, young energy efficiency industry has caused EGAT and DEDP to tread cautiously in choosing technologies and providers. To demonstrate their commitment and capabilities to EGAT and DEDP, foreign private companies have tried various techniques, such as participating in small projects (e.g., training initiatives and small-scale consulting projects aimed at developing implementation plans for these policies) and creating demonstration projects, often at a loss.

As the more progressive Thai companies strive to meet international competition and international standards, including ISO 9000 and 14000, they are increasingly responsive to new ideas and procedures that cost less and improve or maintain quality standards. The market for energy efficient services and equipment for the private sector is considered large but not easily defined. Promotion and direct marketing are crucial for foreign companies introducing their technologies to the Thai private sector, as well as to educating local participants of the technology’s quality and applicability. Seminars and demonstration projects are also methods used to enter the market.

Often, up-front capital cost is the major impediment to implementing new technologies. While this requires serious commitment by the private companies, the government programs can be vital in covering some of the risk.

Major Opportunity: Human Resource Development

Organizations involved in the energy sector are undergoing a tremendous learning process that involves understanding numerous types of equipment, systems, and approaches. To compound the difficulties, the core government agencies are understaffed and lack the expertise of the private sector.

Case Study 7: Energy Efficiency: Asian Institute of Technology Chilled Water Storage System
Companies are increasingly interested in implementing energy efficient technologies because of the momentum that the government programs (Demand Side Management program and Energy Conservation Promotion Act) are creating and the realization that new technologies can save companies money. Thermal energy storage (TES) is one technology that aims to decrease the peak demand of electricity and reduce the number of power plants that will have to be built.
TES systems accumulate cooling energy by using power generated during the off-peak hours (9.30 PM–8 AM), when there is no demand surcharge, to make ice or chilled water. The system then discharges the stored cooling energy the following day for air-conditioning or process cooling.
Realizing the opportunity offered by TES in Thailand, Saangsan Consultants (Thai) and Dorgan Associates (U.S.) held a conference on the technology. From this conference two projects were generated: one with a spinning factory and the other at the Asian Institute of Technology (AIT).
In 1995, AIT paid about $840,000 for its electricity bills, or an average of $70,000 per month. Out of this amount, about 25 percent is used for the air-conditioning system. Based on the energy audits and analyses, the chilled water storage system or cool thermal energy storage (TES) should save about 42 percent of the energy cost for the air-conditioning system. The capital investment for the system is about $328,000, with a payback period of 3.7 years. A second U.S. firm, CBI Walker, will supply the tanks for the system.
Besides energy saving, AIT will receive other benefits such as (1) avoiding purchase of an additional chillier, about 550 tons of refrigerant (TR), for future cooling load growth; (2) more efficient operation of chillers, as they will operate at night at a lower cooling water temperature; (3) education: AIT’s students, who study energy technology, can learn by observing system operation; and (4) use of the chilled water storage tank for fire protection water and as an emergency fire water reservoir.
This will be the first chilled water storage system in Thailand using a proven U.S.. technology, i.e., a thermally stratified water storage tank. If this demonstration is successful there will be significant opportunities with industrial and institutional end-users. This project is partly funded by the Kenan Institute Asia’s U.S.-Thailand Development Partnership program and substantial cost sharing from Saangsan Consultants Ltd., Dorgan Associates, Inc., and CBI Walker.
As the energy sector continues on the path to privatization, an increasing amount of training will be needed. For the IPPs, training will be required for approximately 100 managers, more than 600 engineers, and operations and maintenance staff. For SPPs, particularly in the areas of energy efficiency and energy management in buildings and facilities, training is needed for an estimated 4,000 managers, engineers, and technicians in the next five years.
One institution, the Power Management Institute (PMI), has been established specifically to meet the entire region’s growing demand for energy management skills. PMI is a partnership among Chulalongkorn University; the Thai electric utilities EGAT, MEA, and PEA; and two U.S. energy organizations. PMI operates through a large network of affiliate institutions, both Thai and foreign. Foreign partners, initially U.S.-based, are assisting in the establishment of the institute, participating in training activities, supplying and transferring technology, investing in the institute, and, in the future, may collaborate on research.

Market Analysis for Energy Sector

(Note that the following figures were calculated at a rate of 25 baht per $1.)

For the Eighth National Plan period (1997–2002), the investment expenditures in Thailand’s energy sector are projected at $18.4 billion, with $12 billion from EGAT, $4.4 billion from the IPPs, $1 billion from MEA, and $2 billion from PEA. Alone, EGAT’s total capital expenditure between 1992 and 2001 will be $32 billion.

Through 2011, plans were to increase generation capacity by 30,929 MW to a total of 43,918 MW. Of this, 8,100 MW will come from IPPs and at least 3,000 MW from SPPs. In addition to development and consulting opportunities for U.S. energy companies, there are significant opportunities to supply equipment and services to the IPPs as well as to EGAT.

The market for imported power generation products in 1994 was valued at $186 million. Japan led the way with $57 million in sales, followed by France ($23.2 million), the United Kingdom ($19.2 million), and the United States ($13.9 million). The most promising business opportunities include equipment for steam generating plants, turbine generator plants, and transmission and distribution.

The SPP market holds a greater variety of possibilities for U.S. companies with experience in developing cogeneration and renewable fuels projects. Thailand’s potential for cogeneration is 2,800 MW. Customers with the greatest potential to develop gas cogeneration plants are industrial parks and the textiles, chemicals, and cement industries. Within the equipment subsector, the market for biomass fired boilers and cogeneration systems, nearly all imports, is estimated to reach $240 million annually by 1998 (International Institute for Energy Conservation—IIEC)

The search for alternative and renewable energy resources is a relatively new initiative, and Thailand’s renewable resources are underused. Opportunities exist for technology and projects making use of biomass, biogas, solar energy, wind, and battery. The most attractive industries for developing biomass projects are sugar, rice, saw mills, palm oil, and pulp and paper. However, wind and battery technology limits the scale of the opportunities in these sectors. Support from the Energy Conservation Fund the DSM programs are possible for pilot projects.

Cleaner fuels such as natural gas, clean coal, and the renewable and alternative fuels require high-tech solutions and equipment not readily available in Thailand. U.S. service and equipment providers are highly capable to compete in this market as it develops.

Large-scale opportunities also exist for energy conservation products, equipment, and technology. By 1998, Thailand’s total market for energy efficient technologies and services will be $719 million (IIEC). The greatest energy-saving opportunities are in the lighting and cooling systems. For U.S. investment, energy efficient motors, variable speed drives, air-heat exchangers, electronic ballasts, lighting controls, solar photovoltaic modules, solar water heaters, and building energy management systems provide bright prospects (Department of Commerce). The $189 million DSM program, the $300 million ECF, and the search for international competitiveness by private companies will stimulate sales.

The Energy Conservation Promotion Act will require all large commercial buildings to reduce energy usage. Building owners can apply for assistance from the Energy Conservation Fund (ECF) and the DSM program. New buildings will also be required to meet standards before they are used. Approximately 4,000 facilities will fall under this program by 2000. Subsidies from the ECF will assist in implementing this program.

Consulting services in energy efficiency technologies are in high demand. The market has already seen the proliferation of involvement from foreign companies, however, and U.S. companies must respond quickly. Local companies are also adding this capacity to their roster of competitive services.

Thailand has emerged as a leader in the Greater Mekong Subregion energy sector and can successfully be used as a regional base for both the power and energy efficiency sectors. For the export of energy efficiency products, Thailand makes an attractive base and can receive attractive incentives from the Board of Investment.

Foreign Competition in the Energy Sector

In the energy sector, the foreign competition—European (Germany, Britain, Sweden) and Japanese—is very strong. Most successful companies have long-standing relationships in Thailand. Nonetheless, U.S. companies are quite competitive. The IPP and SPP programs are providing good opportunities for new-to-market companies. The renewable energies and clean fuel markets are not as established, but U.S. technologies are considered high quality. Companies from Korea, Taiwan, Singapore, and Hong Kong have not traditionally been direct competitors with U.S. companies; however, as these companies continue to expand their technological expertise, they will become an increasingly competitive threat.

In energy efficiency, the Europeans and Japanese are the strongest competitors, having had manufacturing bases in Thailand for several years and now increasing their product offering to include energy efficient products. Additionally, the Japanese and European governments also support programs that help companies from their respective countries to enter the energy efficiency market. For some of the largest growth areas, such as household refrigerators, five Japanese companies dominate the market, so U.S. entry into this market would be both difficult and expensive. However, a sector such as the motor industry has many more players, and opportunities are greater for companies with highly efficient products. In other sectors, such as lighting controls, the United States already controls the high end of the market.

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