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dam-l LS: YADANA IS READY, BUT EGAT IS NOT WILLING
THE NATION: YADANA IS READY, BUT EGAT IS NOT WILLING
27 July, 1999 BY Pipob Udomittipong
EDITORIAL AND OPINION
The high cost of the controversial Yadana gas has prompted the
cash-strapped Electricity Generating Authority of Thailand to delay its
purchasing plan, writes Pipob Udomittipong.
Despite the completion of the controversial Yadana pipeline to bring
natural gas from Burma to a Thai power plant in Ratchaburi, the delivery of
the gas has again been rescheduled. The pipeline was built amidst a strong
outcry from human rights activists and environmentalists.
The main reason for the rescheduling has been delays in the installation of
the combined-cycle units at the Ratchaburi power plant of the
financially-strapped Electricity Generating Authority of Thailand (Egat).
Mitsui and General Electric, the two contractors of this mammoth 5,000
megawatt power plant, have failed to deliver the main parts of the units.
The first units were supposed to have been completed in July 1998.
Fierce protests against the privatisation of the plant have come from
Egat's union, which accused the government of selling national assets in
order to pay its huge debts. These debts, coupled with the gloomy financial
future of Egat, have reportedly prompted the two contractors to delay
installing gas turbines for the Ratchaburi plant. Since the financial crash
took place two years ago, Egat's debt servicing has ballooned, causing
concerns of debt defaults among Egat's construction contractors.
Egat cited the high cost of the Burmese gas as the main hindrance to the
delivery. Since last year, Egat has been subjected to strong criticisms
from the local media and the public for its chronic increases in the cost
of electricity. These price hikes have occurred even though Egat's exchange
losses have significantly decreased as the baht has become somewhat
stronger, and there has been a slight recovery in power consumption in 1998
and 1999 as compared to 1997, when the economic slump began.
To begin receiving the gas from Burma now means an inevitable increase in
the price of electricity. Egat has complained several times that the Yadana
gas costs substantially more than the price of gas purchased from other
local sources, and also that the gas is of lesser quality than what was
initially claimed.
The Petroleum Authority of Thailand (PTT), owner of the controversial
Yadana project, had always asserted that the gas from Burma was cheaper and
of higher quality when confronted with public protest against the project.
The Yadana gas reportedly costs US$3 per one million BTU at the point of
delivery at the Thai-Burmese border, with the price rising to $3.48 at the
Ratchaburi plant in Thailand. However, according to Egat, natural gas from
local sources costs around $2 per one million BTU at the site of power plant.
To avoid public outrage and political repercussions, Egat decided to start
receiving the gas in early 2000, when the first 700 megawatt-thermal-unit
is completed. The thermal unit, which consumes cheaper bunker oil, will
help Egat to share the cost of oil and gas, and avoid having to increase
the price of electricity at present.
PTT has been desperate to see that the Ratchaburi plant begin receiving its
Yadana gas. According to the take-or-pay purchase contract signed with the
Yadana consortium, PTT has to pay money in advance based on the agreed
delivery schedule, regardless of whether or not it actually takes the gas.
The first delivery should have taken place by Aug 1 last year. By now,
under the signed contract, PTT was supposed to pay about Bt8 billion to the
consortium, despite it not receiving any gas. It has, however, withheld
payment. PTT cited the delay of the completion of the power plant as a
force majeure (or circumstance beyond its control) upon which it can
withhold payment, though this argument was rejected by the Yadana consortium.
In the meantime, the on-going trial of Sulak Sivaraksa, a human rights
campaigner who joined the sit-in protest to block the gas pipeline's
construction, and who was arrested in March 1998, has exposed more lies by
PTT. Sulak's charge was based on the Petroleum Act, which was promulgated
by a dictatorial regime over 20 years ago. The Act authorises PTT to sue
anyone who obstructs its exploration and production efforts. Sulak's
opposition stemmed from his concern over the terrible human rights and
environmental impact associated with the pipeline's construction.
A great variety of plants and wildlife, including wild elephants and the
hog-nosed bats, have been found to inhabit the pristine forests of Burma
and Thailand along the pipeline route. A field survey last March by the
Kanchanaburi Conservation Club, a local environmental group, revealed
severe environmental destruction caused by the pipeline's construction
including deforestation, soil erosion and impact on wildlife habitats.
With respect to human right abuses, the Yadana project has involved the
widespread use of forced labour of ethnic minorities who live along the 60
km-route in Burma. These ethnic peoples have also suffered extrajudicial
killings by the Burmese military. These abuses have been investigated and
publicised by many groups including the International Labour Organisation
(ILO) and Earth Rights International, a non-governmental organisation. The
ILO recently issued a resolution barring Burma from attending ILO forums,
and condemning Burma's labour practices.
Appearing before judge Sompong Tantisuwanchkul, PTT's chief engineer for
the Yadana project denied charges that PTT had often violated the
mitigation requirements of the Environmental Impact Assessment (EIA) in
order to speed up construction and cut costs. The chief engineer also
denied charges that PTT had extensively used explosives to dig trenches,
and that it worked at night, though a great deal of evidence has been
adduced to the contrary. It was stipulated in the EIA that no work was
allowed at night because it would disturb wildlife. The EIA also said that
explosives were not to be used or only used when most necessary.
To provide stronger evidence of environmental damage associated with the
pipeline's construction, the judge has allowed a video presentation to be
made in the next hearing scheduled for September.