Document of The World Bank FOR OFFICIAL USE ONLY FILE COPY Report No. P-2697-TH REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE PROVINCIAL WATER WORKS AUTHORITY WITH THE GUARANTEE OF THE KINGDOM OF THAILAND FOR A PROVINCIAL WATER SUPPLY PROJECT May 14, 1980 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency Unit : Baht (B) $1 = B 20.25 B - $0.05 B I million = $49,400 IEASURES AND EQUIVALENTS 1 meter (m) = 39.37 inches (in) 1 liter (1) = 0.26 US gallon or 0.22 Imperial gallons 1 cubic meter (cu m) = 35.3 cubic feet (cu ft) 1 kilometer (km) = 0.62 mile (mi) ABBREVIATIONS AND ACRONYMS PWWA - Provincial Water Works Authority MWWA - Metropolitan Water Works Authority (of Bangkok) PWSD - Provincial Water Supply Division (of the Ministry of Interior) RWSD - Rural Water Supply Division (of the Ministry of Public Hlealth) GOVERNMENT OF THAILAND AND AGENCIES FISCAL YEAR October 1 - September 30 FOR OFFICIAL USE ONLY THAILAND PROVINCIAL WATER SUPPLY PROJECT Loan and Project Summary Borrower: Provincial Water Works Authority (PWWA) Guarantor: Kingdom of Thailand Amount: $40 million equivalent Terms: 20 years, including 5 years of grace, with interest at 8.25% per annum. Project Description: The project includes improvement of about 140 water supply systems in provincial urban areas which were acquired by PWWA when it was created in early 1979. About one million people would receive improved water service and one half million people would receive service for the first time. The project will also provide advisory services to PWWA in the fields of water system operation and maintenance and in financial management, and will finance studies and designs for the preparation of additional water supply projects in provincial areas. While PWWA, as a fledgling institution, has never undertaken a project of this magnitude, risks have been minimized by organizing project management to take full advantage of experienced regional staff and by providing related technical assistance. I This document has a restricted distribution and may be used by recipients only in the performance of their official duties. its contents may not otherwise be disclosed without World Bank authorization. - ii - Cost Estimate: Local Foreign Total ------ $ million ------ Equipment 3.2 12.4 15.6 Civil works 6.5 4.3 10.8 Engineering 0.5 1.7 2.2 Subtotal 10.2 18.4 28.6 Preparation of future projects 0.8 3.2 4.0 Advisory services and training 0.2 0.8 1.0 Contingencies Physical 1.3 2.7 4.0 Price 6.8 8.3 15.1 Subtotal 8.1 11.0 19.1 Total Project Costs 19.3 33.4 52.7 Interest during construction - 6.6 6.6 Total 19.3 40.0 59.3 Financing Plan: Government 19.3 - 19.3 IBRD - 40.0 40.0 Total 19.3 40.0 59.3 Estimated Bank FY 1981 1982 1983 1984 1985 1986 Disbursements: -------------($ million) ------------- Annual 0.6 3.1 11.5 15.0 7.4 2.4 Cumulative 0.6 3.7 15.2 30.2 37.6 40.0 Rate of Return: 8% Staff Appraisal Report: No. 2831-TH, dated May 9, 1980. REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE PROVINCIAL WATER WORKS AUTHORITY WITH THE GUARANTEE OF THE KINGDOM OF THAILAND FOR A PROVINCIAL WATER SUPPLY PROJECT 1. I submit the following report and recommendation on a proposed loan to the Provincial Water Works Authority with the guarantee of the Kingdom of Thailand for the equivalent of $40 million to help finance a Provincial Water Supply Project. The loan would have a term of 20 years, including five years of grace, with interest at 8.25% per annum. PART I - THE ECONOMY /1 2. A Basic Economic Report entitled "Thailand - Toward a Strategy of Full Participation" (2059-TH) was distributed to the Executive Directors on September 18, 1978. The Report concludes that Thailand's rapid economic growth over the past 15 years has led to a significant reduction in absolute poverty, but that certain income groups have lagged behind this progress. It identifies the essential characteristics of these groups and points to the need for continued overall development as well as the initiation of specific measures to deal wiih the poverty problem, particularly in rural areas. It further discusses the constraints on the successful implementation of these policies. Country data are given in Annex I. Recent Political Developments 3. The frequent changes at the top levels of government, which have characterized recent political developments in Thailand, have mainly reflected differences in view about Thailand's external relations and about the politi- cal decision-making process within the country. The government formed in November 1977, under the prime ministership of General Kriangsak Chomanan, moved to strengthen relations with Thailand's ASEAN partners and tried to stabilize and improve relations with its Indochinese neighbors. Progress in the latter was, however, affected by Vietnam's involvement in Kampuchea and the flood of Khmer refugees into Thailand. These developments and the necessary actions related to caring for the refugees have diverted a consi- derable amount of high-level Government attention and led to significant increases in military and other expenditures. General Kriangsak formed his second administration in April 1979 but came under mounting criticism in the National Assembly for his economic policies, particularly the petroleum price increases and his handling of the refugee problem. Faced with waning /1 Parts I and II are substantially the same as those presented in the President's Report for the Mae Moh Lignite Project (P-2800-TH) dated May 1, 1980, submitted to the Executive Directors under cover of Secretary's Memorandum, R80-107. - 2 - political support and public demonstrations, General Kriangsak undertook an extensive cabinet reorganization in February 1980. However, this failed to engender the necessary political stability, and facing a no confidence vote precipitated by petroleum price and electricity tariff increases, his O.vcrtxent resigned on February 29. 4. General Prem Tinsulanonda was elected to succeed Kriangsak as Prime Minister by the National Assembly after receiving the support of nearly all major political parties. General Prem's new government, formed on March 14, included leaders from the political parties which supported him. On March 28, 1980, General Prem announced his government's policies on a number of issues including economic and social development. The statement places high and immediate priority on accelerating rural development, raising rural incomes and on measures to improve health and education. Particular emphasis is given to generating more jobs and it is expected that a rural public works program similar to the 1975/76 Tambon Program will be a major element in this strategy. The Government also intends to exert efforts to contain inflation and a more gradual adjustment of energy prices is foreseen besides developing domestic energy resources. Reforms in monetary and fiscal policy and efforts to improve the trade balance through improved export performance are also called for. As discussed below these reforms are critical to increasing resource mobilization (especially in the public sector) and reducing the current account deficit. Past Trends and Recent Changes 5. Thailand's economic performance since 1960 has been good. The average annual growth of real GDP from 1960 to 1979 was 7.9%, or about 4.8% per capita. Real agricultural growth of nearly 5% was a leading factor sustaining this expansion. The cultivated area increased by about 4% a year, water control was improved, irrigation was expanded and the cultivation of relatively new crops, including maize, cassava, kenaf, sugar and rubber, grew rapidly. Agriculture has also been a major contributor to export growth. As a share of GDP, domestic savings fluctuated between 19% and 24%, and total investment between 20% and 27%. The high level of private investment contributed to a real industrial growth of 10% per year since 1970. All this was achieved with a limited inflow of external resources and, until recently, the resource gap remained at about 5% of GDP. 6. The rate of GDP growth declined in the 1970s to 7.6% p.a from 8.1% in the 1960s. In addition to external factors (the oil price increase of 1973 and its aftermath), the major domestic factor responsible for this decline has been the increasing scarcity of land. Production has been pushed into less fertile soils causing a decline in the rate of agricultural growth to about 4.6% p.a. since 1970 compared to 5.7% in the 1960s. During 1973 and part of 1974, this deceleration was partly obscured by a domestic investment boom. This was accompanied by rapid domestic inflation, however, which led the Government to curtail sharply the public investment program in 1974 and 1975. This slowed inflation in 1975/76, but in subsequent years, it has accelerated to 7% in 1977, 8% in 1978 and 10% in 1979. The inflation in the last half of 1979 was more than 14% and the expected rates are 14% in 1980, 13% in 1981 and 12% in 1982. Substantial growth of the agricultural sector contributed to rapid expansion of 11.7% of the economy in 1978, but a combination of poor -3- agricultural output and adverse effects of external factors, primarily the oil price increase, reduced 1979 growth to an estimated 6.7%, with little improvement expected for 1980. The btfdget deficit is expected to exceed $1.0 billion in FY80 as a result of increased military expenditures, an increase in civil service pay, and increased subsidies to public enterprises as a result of the failure to raise electricity tariffs sufficiently to offset fully oil price increases. 7. Thailand's terms of trade and prospects for agricultural export are now less favorable than in the early 1970s. Thailand is facing restrictions on two of its major exports to the European Economic Community, cassava and canned pineapple, and its sugar exports are limited by the International Sugar Agreement. The balance of payments, which recorded surpluses in 1973-74, has since been running large deficits. The current account deficit reached $1.1 billion, or 5% of GDP in 1978 and is estimated to be $2.2 billion in 1979, or about 8.0% of GDP. The overall balance-ofpayments deficit for 1979 is estimated at nearly $600 million. The Government has significantly increased its foreign borrowing from traditional sources, from the Eurodollar market and from IMF to finance these deficits. Foreign exchange reserves have also been used extensively. To contain the balance-of-payments deficit, the Government, in March 1978, raised tariffs on 141 "nonessential" imports and increased excise taxes on a number of items, most notably gasoline. The prices of petroleum products were raised in January 1979, July 1979, and February 1980, for a cumulative increase of about 100% for gasoline. The current price of gasoline is the equivalent of about $1.80 per gallon (US). After a proposed power tariff increase of about 55% was rejected in November 1979, a lesser tariff increase of about 38% was finally implemented in February 1980. This is insufficient to cover the increased cost of fuel, and subsidies from the oil fund (partly funded by revenues from other petroleum products) continue. Apart from raising prices, the Government has also taken some energy conservation measures to contain the oil import bill which is expected to jump by $1.0 billion in 1980 despite almost no increase in the volume of imports. In recent years, government usury laws limiting borrowing and lending rates have become binding as inflation has exerted upward pressure on interest rates. The combination of high inflation rates and the interest ceilings has reduced real interest rates to near zero or negative levels in the past few years which has led to a sharp drop in marginal savings rates and high investment demand for funds. Until January 1980 term deposit rates were limited to 7% for maturities less than one year and 8% for more than one year. Lending rate limits were fixed at 12.5% and 15%. Liquidity constraints prevented all the demand from being satisfied and led to de facto credit allocation by the financial sector. With a view to encouraging domestic savings and curtailing the flight of capital abroad, the Government raised interest rate limits by 3 percentage points for both borrowing and lending at the beginning of 1980. The response to this change has been favorable on saving, the domestic demand for funds, and external capital flows. It is too soon to tell whether the adjustment is sufficient, but currently market lending rates are slightly below the limits. 8. The growth in incomes has not been equitably distributed throughout the country, and at present there are very significant regional differentials in incomes and access to economic and social infrastructure. The regions are very different in terms of topography, climate, soils, urbanization, etc., and - 4- present quite distinct problems for future development. The Central Region, including Bangkok, has the highest per capita income and is better served by roads, telecommunications, schools, public health and other services than the other three regions, the North, Northeast and South Within the regio-uns also there is considerable variation: farmers who have diversified into cash crops have generally enjoyed substantial growth in real incomes while the incomes of those who have been unable or unwilling to shift out of subsistence rice culture have stagnated. Recent research has shown that inappropriate cropping patterns and agricultural techniques are major factors in much of the rural poverty. This is most conspicuously the case of the rainfed rice farmers in the Northeast and North. Since there is a well functioning labor market, the low incomes of this large group have tended to depress unskilled wages throughout the economy. 9. Real concern over the plight of the poor is growing, and observable improvements in rural living standards is being seen as a major factor in promoting political stability. In the past several years the Government has initiated efforts to increase the flow of public resources to the poor rural areas, including the Tambon program of direct transfers to villages in 1976, the drought relief program in 1977, the flood relief program in 1978, and the new village development program in 1979. These programs have been designed to produce quick and tangible political as well as economic results, but consid- erably more attention and resources need to be devoted to rural development if these programs are to have lasting impact. The Government is strongly committed to rural development and raising rural incomes and is expected to launch a major public works program in the near future. While the absorptive capacity in rural areas has increased since the Tambon program of 1975-76, there is some concern about the efficacy of crash programs in view of the resource constraints facing the budget and the limitations of implementation capacity at various levels of government. Development Prospects and Constraints 10. In the coming decade, many of the positive features which helped sustain rapid economic growth over the past two decades will continue to contribute to future growth. These factors include a relatively equitable distribution of rural land, responsiveness of Thai farmers to improved technology, provision of infrastructure by the Government, and the dynamism of the private sector in both industry and agriculture. Also major gains have been made in family planning in recent years, slowing the annual rate of population growth from about 3% during the 1960s to an estimated 2.2% in 1979. The target for 1981 is 2.1%. 11. Some less favorable domestic factors are emerging, however. As a result of very rapid population growth in the 1960s, projected labor force growth of 3% p.a. necessitates a high rate of job creation. Past growth has benefited households unevenly and created further income disparities that could threaten the social cohesion of the country. At the same time, additional fertile land, which has supported the growth of agricultural production and exports in the past, is becoming increasingly scarce. In view of these factors, continued reliance on the past pattern of development may lead to a deceleration of agricultural and overall growth in the next decade; persistently large balance-of-payments deficits; higher rates of unemployment or underemployment; and stagnating or declining real incomes of the poorer segments of the population, especially in rural areas and among unskilled workers. These internal factors are complicated by the external factors of rapid oil price increases and recession in developed countries. The oil price increase alone will add about $1 billion to the 1980 import bill, even with no increase in volume, and the current account deficit is estimated to be at least 9% of GDP. In 1980 major structural adjustments and a shift in the development pattern is necessary for social as well as economic reasons. The unfavorable external situation will require major domestic adjustments and it is unlikely that the overall growth rate will exceed about 6% in the coming years. 12. Thailand must shift its economy from a pattern of growth based on the extension of land under cultivation and on import-substituting industries to one based on increasingly intensive use of land and on industries producing for domestic and export markets under competitive conditions. At the same time it must reduce its current account deficit and increase public savings. Effective policies and programs will be necessary to ensure that economic growth is maintained and income disparities reduced, or at least not widened during this period of transition. In the past, the Government's role has focused primarily on short-term economic management and the provision of basic economic and social services. In order to achieve a relatively smooth transition, the Gc ernment will now have to undertake more coordinated long-term policieE and actions in areas of resource management and balanced regional development. 13. Agriculture will continue to be the dominant sector since it directly generates 30% of GDP, provides about 60% of total exports, and employs 75% of the labor force. However, future growth of the sector will require more intensive utilization of cultivated areas, continued diversifica- tion of crops, improved cropping patterns and farming practices, and easier access to agricultural inputs including credit. All of these imply an increased government role in the rural sector. But while growth in the agricultural sector may be expected to remain fairly rapid for some time to come, the burden of sustaining future growth will have to shift progressively to the industrial sector. Industry, construction and services will have to provide an increasing share of employment for the growing labor force. In 1979, industrial production accounted for about one-fourth of GDP and about one-third of total exports. Manufactured output, which accounted for 90% of industrial production, achieved an export growth of 24% in 1979, almost double the growth rate of total exports. While continued growth of manufactured exports is essential, the large domestic market also offers opportunities for a balanced industrial growth based on production of consumer goods, agri- cultural inputs and processing of agricultural outputs for urban consumption. Our policy dialogue will concentrate on efforts to reduce price distortions, increase availability of credit, and eliminate impediments to efficient production for domestic and foreign markets so that the dynamic private sector can realize its potential for spurring growth and creating jobs. 14. The principal objectives of the Government's Fourth Plan (1977-81) are to achieve 7% real growth, equitable distribution of income, reduction in the rate of population growth, faster generation of employment opportunities and balanced regional development. Projected public sector development expenditures amount to $12.5 billion for the Plan period, a 90% increase in real terms over the Third Plan. However, the Plan addresses sectoral issues and strategies only in broad terms, and concrete policies and programs to meet the Plan's economic and social objectives are defined only in general terms. The Government has now embarked on the preparation of the Fifth Plan (1982-86) and the agencies of the Government are undertaking a number of studies to help ensure that the Fifth Plan would provide an unambiguous basis for the allocation of resources and the formulation of development policy and program. These studies may help identify possible areas of Bank lending for structural adjustment. Financing Requirements 15. The implementation of policies needed for a satisfactory rate of economic and social progress will necessitate a steady increase in public expenditures over the next few years. This will require much greater efforts to mobilize both domestic and external resources than in the past. Government domestic revenue as a percentage of GDP (13.5% for 1975-79) is low compared to other developing countries at similar levels of developnent due to low tax rates, high exemptions and a somewhat below-average rate of compliance. With expenditures rising, the overall budgetary deficit in fiscal year 1979/80 is estimated at above $1.0 billion, or over 4% of GDP. The Government has achieved a modest improvement in resource mobilization through revision of the tax structure and improved collections but much greater efforts will be needed in the future. 16. During the coming years, the demand for external resources will increase. Despite an average real growth of exports of over 10% and increased domestic production of primary energy, the projected rise in the price of imports - led by the price of petroleum - implies that large trade and current account deficits are expected to persist through the mid-1980s. It is esti- mated that a 6% overall growth rate can be maintained and the current account deficit reduced to 4-5% of GDP by 1985 if appropriate policy is followed, including greater efforts in implementating energy saving measures, promoting agricultural growth and exports, reducing distortions and excessive protection in industry, promoting more labor-intensive exports, and postponing major capital intensive investments until the economy can afford them. This implies an average current deficit of $3 billion per year in 1980-85, which will require very large amounts of external borrowing totalling about $18 billion net over the period. 17. Official donors, particularly Japan and the development banks, have been expanding their programs to meet a part of the growing resource require- ments. The rest has been financed in the Eurodollar market and bond markets, and by the utilization of IMF resources for 1978/79 totalling about $200 mil- lion, and Thailand is considering even larger drawings under standby arrange- ments. The Government has established a Foreign Loan Policy Committee to coordinate and approve all foreign borrowing by the public sector. The Bank of Thailand is establishing procedures for recording private borrowing abroad in order to keep track of total foreign debt. Current estimates of Thailand's external borrowing requirements exceed those discussed at the last Consulta- tive Group, and the need for continued concessional aid is perhaps now more acute. In addition, external agencies, including the Bank Group, have in recent years increasingly concentrated project lending to Thailand in the agricultural and social sectors that have high social benefits, but low foreign exchange savings or earnings. To achieve the level of external resource transfer that is now required, it is necessary, in selected projects where the foreign exchange component is low, to finance some local currency expenditures. Program and structural-adjustment lending should also be con- sidered. 18. By 1985, net disbursements will more than double in current terms for both public and publicly guaranteed borrowing and private borrowing. The debt service ratio on public debt (4.6% in 1979) will exceed 10% by 1985, but should decline thereafter. Assuming a significant level of concessional assistance, the debt service ratio on total public and private civilian borrowing (currently about 15%) will rise to about 25% before declining. Given the diversification of Thai commodity exports and the rapid expansion of manufactured exports, these debt service requirements should be sustainable if rapid export growth continues and economic stability is maintained. PART II - BANK GROUP OPERATIONS IN THAILAND 19. Thailand first borrowed from the Bank Group in 1950 for a railway project and, as of March 31, 1980 had received 53 loans amounting to about $1,600 million, net of cancellations. The sectoral distribution of these loans has been as follows: $311.5 million for transportation; $316.4 million for irrigation; $498.7 million for power/energy and rural electrification (including $65.8 million for a dual purpose power and irrigation project); $153.0 million for telecommunications; $144.2 million for agricultural and rural development; $79.6 million for urban development; $52.3 million for education; and $42.5 million for industry. Thailand has also received six IDA credits: two credits totalling $54.5 million for education; one credit of $25.0 million for rural development; two credits totalling $12.5 million for irrigation improvement; and one credit of $33.1 million for a population project. In general, Bank Group-financed projects have been carried out satisfactorily and in accordance with expectations. Annex II contains a - 8 - summary statement of Bank loans, IDA credits and IFC investments as well as notes on the execution of ongoing projects as of March 31, 1980. 20. Over the past five years, the Bank has shifted its lending to Thailand from a program dominated by investments in traditional infrastruc- ture projects (accounting for over 80% of the lending through FY74) to a program which places increasing emphasis on assisting the Government's efforts to reach the poorer segments of its population more directly. Since FY75, investments in transportation, power, water supply, telecommunications and industry have accounted for only about 50% of Bank Group lending and more than half of these, in dollar terms, were for projects specifically designed to benefit the rural population. The proportion of Bank lending to the agricultural/rural development sector has trebled, accounting for about 35% of lending operations since FY75. The design of projects in this sector has also changed, from exclusively large irrigation projects to a more balanced program covering irrigation (including land development and support services to the farmer) and a variety of innovative projects to assist farmers outside the central flood plain (rubber replanting, livestock, agricultural exten- sion, and rural development). Projects in the social sectors which prior to FY75 were limited to three in education accounting for 6% of the program, have both diversified and grown. In recent years education, population and low-income housing projects have accounted for about 15% of the program. 21. The findings of the recent Basic Economic Report verify the appropriateness of the shift mentioned above, and underscore the need to move even further in designing programs which help the rural population, particularly those farmers in rainfed areas who have been largely bypassed by recent economic growth. In the agricultural sector, therefore, the Bank is redoubling its efforts to develop an approach which will help to lift the rainfed farmers out of a subsistence existence. A combination of education, agricultural research and extension, credit and improved infrastructure is foreseen. However, the major problem is the absence so far of a viable package for the poorest and most remote farmers. Expansion and improvement of irrigation systems will continue, with increased emphasis on reaching those farmers with irrigation potential in the northern, northeastern and southern regions. The program of transportation, electrification, water supply and telecommunications projects will also continue to have a rural focus. A key element of the strategy outlined in the Basic Economic Report is the creation of jobs and stimulation of increased economic activity outside of Bangkok. The bulk of the Bank Group's urban and industrial lending will, therefore, be directed to projects which enhance the attractiveness of regional cities as service centers for the agricultural economy of those regions. Selected projects in Bangkok will be aimed at strengthening agencies providing essential services to the urban population and the development of low cost, replicable programs to meet the demands of the urban sector, particularly the urban poor, without diverting scarce resources from other high-priority development needs. -9- 22. The Bank's strategy of placing an increasing share of its program into projects alleviating poverty and promoting rural development will be difficult to execute without considerable technical assistance toward project preparation. The Bank's regional mission in Bangkok will continue to play a vital role in helping to identify and prepare such project.3. Promoting overall growth also has a high priority in Thailand and is a necessary element in the poverty alleviation strategy. The resource requirements for infra- structure development, particularly for developing energy and its domestic primary sources, are large, and the Bank is concentrating its remaining funds in projects where it can have a catalytic role in effecting policy changes, mobilizing other resources, and directly facilitating growth in rural areas. The Bank is also expanding its support of the industrial sector through its economic and sector work as well as selected projects in order to help promote industrial policy which favors more labor-intensive and dispersed activities to complement Thailand's efforts in poverty alleviation. 23. Bank loans and IDA credits, disbursed and outstanding, amounted to $459.3 million, as of December 31, 1978, representing about 26% of public external debt (disbursed and outstanding). This is not excessive in view of Thailand's modest overall public external debt (8.3% of GDP in 1978). In addition, although the level of Bank commitments is expected to increase over the next five years, the Bank Group's share is below 30% of total public external debt as Thailand has diversified its borrowing program. The Bank Group's shaLre in tot-al debt outstanding is expected to fall below 20%, and its share of total (ebt service would not exceed 10%. 24. As of March 31, 1980, IFC had made commitments totalling about $83 million in nine projects in Thailand. IFC's investments have been primarily in industry and in the development of financial institutions aimed at mobilizing domestic resources and providing financing to smaller enterprises. Prospects for increased IFC operations in Thailand have been enhanced by expanding private sector investment activity; consultations with the Government have identified several areas where IFC's assistance may be needed. These areas include very large and complex projects such as a proposed sponge iron project and a soda ash project to serve the ASEAN community; projects in the petroleum and downstream petrochemical sector; and projects in the agricultural sector. In addition, IFC expects to continue to help traditional manufacturing projects and to assist in financial institutions and money market developments. PART III - WATER SUPPLY AND SANITATION SECTOR Levels of Service 25. Although Thailand's overall health situation is relatively good, water- and sanitation-related diseases remain high on the list of common diseases. The diarrheal group is the third most common cause of death for all ages and the second most common cause of death for children under six. There are many types of diarrheal diseases which can be transmitted through impure - 10 - water, lack of water, poor personal hygiene, or improper waste disposal. Access to safe and adequate water supplies for household consumption in Tr>'I. and .azies greatly both between urban and rural areas and within individual communities. 26. Water Supply. Only about one-fourth of Thailand's total population of 47 million has access to some type of public water supply system; and two- thirds of those with such access live in urban areas (defined by Government as communities with populations of more than 5,000 people). The remainder depend on water drawn from sources of doubtful safety. Metropolitan Bangkok, with a population of about 5 million, is the best supplied, and over 70% of its residents have access to publicly supplied water. The level of service in the 330 municipalities and towns which make up the remaining urban communities is lower. Only about two-thirds of these areas have piped water supply systems and, where such systems exist, only 60% of the potential customers are served. 27. The water supply situation among Thailand's 51,000 villages is much worse both in terms of quantity and quality. According to the National Economic and Social Development Board, about 44% of the rural population has, at one time or another, been provided with water from piped systems or non- piped sources such as shallow and deep wells, metal and concrete storage tanks and ponds. From the nonpiped sources, the water obtained has often been of doubtful quality and many of the facilities have been underutilized, in part because of poor maintenance. 28. At present there are about 570 piped water supp4y systems which serve 1,200 of the larger villages and village groups; i.e., those with populations greater than 2,000 persons each. Because the systems are not fully reliable and of inadequate capacity, and because alternate water sources are available, only 30% of the village inhabitants are connected to the systems. During the rainy season many people prefer to use rain water and some water plants are shut down in the rainy months. The operations of the systems vary from good to poor dependent upon local interest, the competence of the operators and the resources made available by the community. In many instances, skilled manpower, chemicals and spare parts are in short supply. 29. Sanitation. Sewage collection and disposal is, in general, the responsibility of municipal authorities. There are only one or two waterborne sewerage systems in Thailand and these serve very small areas. Most houses which have piped water supply use septic tanks or cesspools but these do not always function properly because of the impervious soils frequently found in Thailand. Most cities and towns have some kind of storm drainage system, usually open ditches or covered rectangular concrete drains on both sides of the paved roads. In many places these drains collect wastewater as well as storm water but they are frequently obstructed by silt and garbage which compound the sanitation problem. - 11 - 30. Under a village health and sanitation project started in 1960 with United States assistance, some 1.5 million water seal latrines were installed up to 1975 serving about 9 million people or about 24% of the rural popula- tion. An ongoing UNDP-financed project in the field of environmental health will, among other things, prepare a national water supply and sanitation plan including sanitary excreta disposal particularly in smaller towns and rural areas. Water Supply Management 31. Bangkok. Bangkok's water supply is the responsibility of the Metropolitan Water Works Authority (MWWA), a state enterprise under the Ministry of Interior. MWWA plans, builds and operates a water system which supplies about 3-1/2 million persons or 70% of Bangkok's population. The remainder, mostly in outlying areas, rely upon private ground water sources. In early 1980 MWWA completed a $220 million expansion project which added 800,000 cu m per day of supply, increasing its production by 65%. Over the period 1980-84 MWWA plans to invest $360 million to expand its system by an additional 400,000 cu m per day. 32. Provincial Areas. Prior to the formation of the Provincial Water Works Authority (PWWA) in early 1979, water supply for areas other than Bangkok was administered by several agencies. Responsibilities were ill defined and fragmented, operation and maintenance performance was poor and none of the agencies had the capacity to undertake broad development programs. PWWA was created to help remedy this situation. It was formed by consolida- ting responsibility for all piped water systems previously handled by two agencies: one, the Provincial Water Supply Division (PWSD) of the Public Works Department in the Ministry of Interior, which was responsible for water supplies in urban communities other than Bangkok; and the other, the Rural Water Supply Division (RWSD) of the Ministry of Public Health which was responsible for rural water supply systems for larger rural communities, i.e., those with populations in the range of 2,000 to 5,000 persons. Of the some 760 systems now owned by PWWA, only the 190 systems inherited from the PWSD are actually operated and maintained by it. It is only on these systems that PWWA has responsibility for setting tariffs and collecting revenues. The remaining 570 systems, which were previously under the RWSD, were built in part with equity contributions from the local communities and are operated by them. For these systems PWWA provides only advice on operations and support for major maintenance; local authorities have responsibility for setting tariffs and collecting revenues. 33. There remain seven separate agencies whose operations include, among other responsibilities, the development of water supplies for rural communities through construction of nonpiped sources such as wells, ponds or tanks. These include the RWSD, the Groundwater Division of the Ministry of Industry and the Public Works, Accelerated Rural Development, Local Administration and Community Development Departments of the Ministry of Interior. These units have, over the years, provided water to over 40% of the - 12 - rural population but due to problems such as poor maintenance, many of these sources have fallen into disuse. According to a 1978 World Health Organization assessment of the water supply sector, only 10% of the rural population has access to safe water from either piped or nonpiped sources. Staffing, funding and institutional arrangements have been inadequate to meet the maintenance and operational needs. Moreover, the lack of clearly defined responsibilities among agencies for providing, operating and maintaining nonpiped rural water supplies throughout the country has hampered creation of a comprehensive plan for reaching more of the rural population. Consideration has been given to the creation of a rural water supply authority to handle nonpiped systems but no action has been taken. Agreement was reached with the Government during negotiations that it would undertake a review of the institutional and funding arrangements and of development strategies for the rural water supply subsector by January 1, 1982 (Section 3.02 of the draft Guarantee Agreement). Sector Strategy 34. Thailand has, in general terms, embraced the UN Drinking Water Decade's target to provide all communities with potable water by 1990 but it has still to develop a strategy and to determine investment levels necessary for achieving this. The World Health Organization, with financing from the Federal Republic of Germany, has proposed to assist the Government in the preparation of a plan of action for meeting Drinking Water Decade targets. PWWA, whose jurisdiction potentially covers all of Thailand's municipal and town populations, would play a key role in meeting the target. Pending development of a long-term national strategy, PWWA has a program which calls for the operation and maintenance of existing systems and the improvement and expansion of its service area through: (a) improvement and rehabilitation of 140 existing urban areas where capacity is now underutilized because of service deficiencies; (b) rehabilitation of those existing rural systems found to be functioning inadequately; (c) construction of about six new urban systems and about 20 new rural systems annually with the objective of providing all communities of 2,000 or more with piped water; and (d) expansion of capacity in selected larger towns. In the Bangkok metropolitan area, MWWA is carrying out a major expansion of its water supply system over the period 1980-84 with assistance from Japan and the Asian Development Bank. NWWA is planning a continuing series of expansion projects through the late 1980s and beyond with the objective of extending its service area and served population. The Role of the Bank 35. Bank involvement to date in the water supply and sanitation sectors of Thailand has included (i) a 1974 loan (1021-TH) of $55 million to MWWA for its expansion program in Bangkok, (ii) about $5 million in assistance to the Accelerated Rural Development Department for providing village wells as part of the 1976 Northeast Rural Development Project (Ln. 1198T-TH), and (iii) provision of water supply and improved sanitation and solid waste disposal to low income residents under the Bangkok Sites and Services and Slum Improvement Project for which a loan (1556-TH) of $8.6 million was made in 1978. - 13 - Implementation of the Bangkok Water Supply Project has been successfully completed but the related objective to strengthen MfWWA's financial position has not been fully realized, largely because of the Government's failure to allow tariffs to increase with costs. Implementation of the village well-drilling program is proceeding satisfactorily after initial procurement delays. Implementation of the water supply and sanitation components of the slum improvement project is roughly on schedule. 36. One of the major conclusions of the Bank's 1978 Basic Economic Report was that a much larger share of resources must be channelled to the provinces to stimulate and support the rural sector if Thailand is to continue growing while distributing her wealth more equitably. Consistent with this strategy, Bank support for water supply and sanitation in Thailand will increasingly focus on provincial areas through assistance to the smaller municipalities and to institutions such as PWWA which provide vital infra- structure. A major objective of this assistance and of selected projects benefiting Bangkok will be the development of programs which reach the poorer members of the communities and of appropriate pricing policies so that these programs can be self financing and thus replicable on an appropriate scale. In the water supply sector, studies to be carried out under the present project will help strengthen PWWA's financial position and are likely to result in a project to expand capacity in the larger urban centers which would be suitable for Bank support. Also, the Bank intends to pursue its dialogue with the Government on the appropriate strategies for development of the rural water supply subsector with a view towards identifying programs suitable for international financial assistance. A recently negotiated National Sites and Services Project will improve water supply and sanitation services to the urban poor both in Bangkok and provincial cities. In the sanitation sector, a regional cities project currently being prepared for possible Bank financing would, among other things, address the waste water and drainage deficiencies in five of the larger urban centers outside Bangkok. That project is expected to demonstrate solutions applicable to other towns throughout the country. For Bangkok, the Bank has had discussions with the Bangkok Metropolitan Administration regarding the problems of drainage and sanitation and a program of drainage works construction and improved solid waste collection has been developed. PART IV - THE PROJECT History 37. As a newly established institution, PWWA inherited both the existing systems and the operational problems of its predecessors. The urban systems were found to be operating on average at only 45% of design capacity and serving only 60% of the potential customers. Thus PWWA has had to embark on a program to improve existing systems while constructing new ones to keep up with growing demand. Recognizing the need for financial assistance and further strengthening of its organization and management to carry out its program, PWWA requested assistance from the Bank for a rehabilitation project prepared by its staff with the assistance of staff of the WHO/IBRD Cooperative - 14 - program. A Bank mission appraised the project in June and November 1979. Negotiations were held in Washington from April 21 to April 25, 1980; Mr. Nikorn Praisaengpetch, Charge d'Affaires, a.i., of the Royal Thai Embassy, led the Government delegation, assisted by Dr. Vithya Pienvichitr, Governor of PWWA and Mr. Pravit Klongwathanakith of the Ministry of Finance. Objectives and Description 38. The primary objective of this project is to help PWWA develop into a strong institution by supporting its efforts to rapidly improve 140 existing urban water systems (selected after a survey revealed them to be in urgent need of rehabilitation) and to prepare major expansion projects for about ten cities. Concurrent with this, the proposed loan would support PWWA's efforts to strengthen its organization and management, through the financing of specialists services, training and equipment. Details are provided in a Staff Appraisal Report (No. 2831-TH dated May 9, 1980) which is being distributed separately to the Executive Directors. Supplementary project data are given in Annex III. 39. The water supply improvement component, termed the Immediate Improve- ment Program, would consist of rehabilitating and expanding facilities, providing equipment such as pumps, motors, production and customer meters, and chemical feeders; expanding distribution pipe networks and service connec- tions; providing mobile equipment for construction, maintenance and operations; and improving operations and maintenance procedures and training personnel. The program would be carried out over a four and one-half year period beginning in late 1980. For about 100 systems thE rehabilitation work is straightforward; it would involve the repair and replacement of faulty facilities and equipment and a modest expansion of distribution capacity. For the remaining 40 systems some water source exploration would be required; on these systems modest overall capacity expansions would accompany the rehabili- tation work. PWWA has done the planning for 68 systems. Engineering consultants, assisted by PWWA staff, would review the planning already done by PWWA, plan the additional systems, and prepare final designs and contract documents for all systems covered by the project. PWWA would, with the help of consultants, evaluate the planning of each system to ensure that the proposed solution is least-cost and effective, and PWWA would send to the Bank for its comments the proposals and evaluations for systems which are estimated to cost more than $100,000 (Section 3.07 of the draft Loan Agreement). 40. The advisory services and training component would aid in the planning, design and supervision of works, the establishment of management and accounting systems, the improvement of operations and maintenance procedures and the training of staff in these fields. The component to prepare future projects is for studies and designs for the rehabilitation and expansion of water supply systems where facilities are deficient and/or the population has outstripped existing capacity. In an effort to capture economies of scale, the studies would employ uniform investigation and planning procedures and, to the extent feasible, standardized designs. Design and supervision of the Immediate Improvement Program would require about 250 man-months of local and - 15 - foreign consulting services. An additional 17 man-months of consulting support would be needed for operation, maintenance and training advisory services, while engineering services for the preparation of future projects would require about 550 man-months of services. Consulting services in accounting and management fields would involve a total of about 45 man-months of local and foreign expertise. During negotiations PWWA agreed that it would employ engineering, accounting and management consultants whose qualifications and terms of employment are acceptable to the Bank (Sections 3.02 and 4.04 of the draft Loan Agreement). The employment of engineering consultants is a condition of loan effectiveness. The Borrower 41. PWWA would be the borrower and the Government agency responsible for project execution. It was created by the Provincial Water Works Authority Act of 1979, reports to the Ministry of Interior, and is responsible for planning, building and maintaining, all piped water supplies outside the greater Bangkok metropolitan area. The Authority operates 190 piped urban systems and advises local authorities in the operation of 570 piped rural water systems under its jurisdiction; it is in the process of reviewing the status of the rural systems and eventually plans to bring the operations of the larger ones directly under its control. PWWA also provides advice, when requested, to 44 locally-owned water systems operated by concessions. 42. Organization and Management. PWWA is governed by a Board consisting of a chairman and 10 other members, most of whom are officials from other Government agencies and ministries and all of whom are appointed by the Cabinet for a three-year term. The chief executive of PWWA, designated as Governor, has the responsibility for day-to-day operations in accordance with the policies and regulations prescribed by the Board. He is assisted by three Deputy Governors for Technical Affairs, for Operations and Services and for Administration. The management of PWWA is striving for decentralized operational control. Fifteen regional offices have been established, each under a Regional Manager who is responsible for all operational aspects including maintenance, accounting, billing and collection of revenue, and for reporting to the headquarters at Bankgok. 43. Staff. The first permanent Governor of PWWA was appointed in October 1979. A sanitary engineer and formerly Rector of Khon Kaen Univer- sity, the Governor comes to PWWA with excellent credentials and has quickly begun addressing the problems of the new organization. The three Deputy Governors are also qualified and experienced in their respective fields and are supported by a team of capable staff, several of whom have academic qualifications from foreign universities. PWWA is in the process of integrating its staff - 4,800 of whom came from PWSD and 500 from RWSD - and placing them into appropriate positions and grades. It has improved staff benefits and compensation, having given an initial salary increase of 20% to all employees. - 16 - 44. Training. The development of PWWA staff capabilities is a key feature of the project. Technical staff would receive on-the-job training from the engineering consultants working on plananig, aesign and construction. The consultants for operations and maintenance, in addition to directly training key staff, would review and recommend improvements to existing PWWA operations and maintenance training programs. Finally the consultants employed to help PWWA set up management and accounting systems would train PWWA staff in the use of those systems. 45. Project Management. PWWA has created and staffed a Project Office which is responsible for administering the project and coordinating the project activities of the various PWWA departments and regional offices, other Government agencies and consultants. PWWA Project office and Regional office staff would assist the consultants in planning and in the preparation of designs and contract documents. The work would be largely done by the consultants using standardized design criteria and documents. 46. Financial Position. The inadequacies in the accounts of the water systems of PWWA's predecessors make it necessary to establish and implement sound accounting systems as a part of the project in order to develop an accurate picture of PWWA's financial position. On the basis of available information, however, it is estimated that the water supply systems taken over by PWWA have required Government subsidies of approximately $2 million annually for operations over the past three years. The total Government contribution to the program of PWWA predecessor agencies, including capital works, has averaged about $12 million annually and is expected to reach about $20 million in the current fiscal year. The need for Government contributions of this magnitude arises primarily from the historical inadequacies of water rates as well as the inefficient use and underutilization of installed capacity. 47. Under the project, a data collection system would be set up to inform management on a local and regional basis of such important factors as population, population served, water produced and sold, numbers of connec- tions, water consumed by classes of customers and per capita and household income. This information, together with timely financial statements would provide management with a sound basis for improving and extending the water supply systems and resolving such issues as feasible water rate levels and structures and cost recovery. A program of water rate increases would be put into effect to eliminate cash operating deficits of the urban systems by FY85 and, on the basis of data to be developed and operating experience during this period, consideration would be given to additional increases for subsequent years to eliminate entirely Government subsidy to PWWA for both urban and rural systems (paras. 55-58). 48. Accounts and Audit. Records of the local water supply systems of PWWA have been maintained on a cash basis and are incomplete. PWWA staff is in the process of establishing an accounting system (for which accounting and management consultants would provide assistance and training) and is gathering information to prepare the opening balance sheet and other initial financial - 17 - statements. Agreement was reached at negotiations that PWWA would furnish to the Bank its audited opening balance sheet and other financial statements for its initial fiscal periods through September 30, 1980, and the auditor's reports thereon, by September 30, 1981, and would furnish the audited financial statements and auditor's report for each subsequent fiscal year within nine months after the end of each fiscal year (Section 5.03 of the draft Loan Agreement). Cost Estimates 49. The total cost of the project is estimated at $52.7 million; the foreign exchange cost is $33.4 million, or 63% of the total cost. Costs for the Immediate Improvement Program were estimated by PWWA staff on the basis of recent contracts and force account work. They are based upon plans prepared for the improvement of 68 systems, extrapolated to all 140 systems. Costs for the preparation of future projects and for advisory services and training have been estimated by PWWA with the assistance of Bank staff and a consultant. Consulting costs reflect current local and international price levels for similar services. Ilan-month costs are estimated to average $3,500 for local and $9,800 for foreign professional services inclusive of salaries, overheads, fees, travel, and subsistence. An allowance of 12% has been applied to all costs for physical contingencies. Price contingencies applied to the March 1980 base prices including physical contingencies are: for local expendi- tures, 1980, 14%; 1981, 13%; 1982-3, 12%; 1984, 10%; and 1985, 9%; for foreign expenditures, 1980, 10.5%; 1981, 9%; 1982, 8%; 1983-5, 7%. The estimates include duties and taxes on imported goods amounting to about $2.5 million equivalent. Financing 50. The proposed Bank loan of $40 million would cover; (i) the estimated foreign exchange costs of the project ($33.4 million) or about 67% of total project costs net of taxes and duties, and (ii) $6.6 million for interest and other charges on the loan payable during the construction period. Finan- cing of interest during construction is proposed because PWWA, as a new institution, will face severe financial deficits requiring substantial government subsidies until such time as operating revenues can be increased through the introduction of a sound tariff structure and through the expansion of operations in its service area. The local costs of the project, estimated at $19.3 million equivalent, will be met by the Government as equity contributions to PWWA. Procurement 51. The nature and size of the civil works contracts - well drilling, pipe laying, equipment installation and treatment plant improvements in widely scattered locations and of relatively low monetary value (i.e., averaging less than $500,000 equivalent with none exceeding $1.0 million equivalent) - are such that, in view of Thailand's well developed construction industry, foreign - 18 - firms would not be interested. Therefore, civil works contracts (estimated to have a total value of $14 million equivalent) would be awarded following competitive bidding in accordance with local procedures satisfactory to the Bank. Contracts would be advertised in Thai and English in the local press, specimen documents would be in English and final documents would be in Thai and English. Foreign firms would be eligible to bid, and bid evaluation procedures would follow the Bank's Guidelines for Procurement. PWWA forces would install some equipment, but this is a relatively minor activity expected to cost less than 5% of the estimated civil works expenditures. 52. Where feasible, equipment and vehicles would be grouped in contracts of at least $100,000 (with a total value of about $18 million equivalent) and would be awarded after international competitive bidding in accordance with the Bank's guidelines. A 15% preference margin, or the prevailing customs duty if lower, would be extended to local manufacturers in the evaluation of bids. Equipment and vehicle contracts below $100,000 would be awarded under competitive bidding procedures of the Government which are acceptable to the Bank. For reasons of urgency or compatibility, selected items costing less that $20,000 each and in aggregate up to $300,000 may be purchased directly from suppliers after prudent shopping. Contracts for civil works estimated to cost $500,000 or more, and for equipment estimated to cost $100,000 or more, would be submitted to the Bank for review before bidding and before award; other contracts would be submitted after award. Disbursement 53. For equipment contracts, disbursements would be made against 100% of the foreign exchange cost of imported equipment, 100% of the ex-factory cost of locally manufactured equipment and 65% of expenditures for equipment pro- cured locally. Disbursements for civil works would be at 25% of total expen- ditures. For consultant services and training, disbursements would equal 100% of expenditures. Disbursement for all items would be made against standard Bank documentation except expenditures for civil works by force account would be disbursed against statements of expenditure with the supporting documenta- tion retained by PWWA and held available for inspection by Bank supervision missions. The project will be completed by July 31, 1985. Disbursements from the loan are expected to be completed by April 30, 1986. Monitoring of Performance 54. Performance indicators would serve as a basis for evaluating progress towards the objectives of the project, and these would be reported to the Bank on a periodic basis during project execution. Bank missions at about six-month intervals would review the progress of the project. Upon completion of the project, PWWA would prepare a completion report within six months of the closing date of the loan. - 19 - Water Rates and Cost Recovery 55. The water rate charged for urban water supplies operated by PWWA is a uniform B 2 per cu m except for government consumers, which is about B 1.4 per cu m. The principle of graduated water rates based on quantity use and ability to pay has not been adopted in fixing rates, and rate levels have not been raised to keep pace with increased expenses. Sizable water rate increases will be required to enable PWWA to meet operating expenses and debt service on the proposed Bank loan. 56. The present water rates for urban systems would be continued in FY81, the first year of the project, while PWWA is completing its assessment of the operations of the water supply systems, initiating accounting and information systems and devising a structure for the prospective increases in water rates. Commencing not later than October 1981, the water rates of the urban systems would be increased gradually so that by FY85 and thereafter their revenues each fiscal year would be at least sufficient to cover cash operating expenses (i.e., excluding depreciation) of the urban systems and of PWWA's headquarters and regional offices, and debt service. This would entail annual increases in the average urban water rates so that the following percentage of its operating expenses and debt service requirements are met: FY82, 70%; FY83, 80%; FY84, 90%; and FY85, 100%. Thereafter, urban water rates would be further increased to maintain the recovery of PWWA's cash operating expenses and its debt service. The structure of urban water rates (including the rate for government consumers) for the initial rate increase would be studied by PWWA and a policy for rate structure would be formulated by mid-1981. During negotiations Government and PWWA agreed to this program of setting tariffs and PWWA agreed that it would complete a rate study, formulate policies on rate structure and present them to the Bank not later than June 30, 1981 (Sections 5.04 and 5.05 of the draft Loan Agreement and Section 2.03 of the draft Guarantee Agreement). 57. An analysis of ability to pay under a model tariff structure indi- cates that the projected water rate increases are just within the ability of the consumers to pay and that a higher level of water rates is not justified at this time. However, when a sounder basis has been established for deter- mining the expense levels of the water systems, including the impact of depreciation charges, and when the effects of the rate increases in the early years have been observed, this situation should be reviewed. Accordingly, agreement was reached at negotiations, that by September 30, 1985, PWWA would complete a reassessment of the factors affecting urban water rate levels, recommend the extent to which any additional cost recovery should be provided in the rates, and implement such recommendations as PWWA, the Government and the Bank shall agree (Section 5.06 of the draft Loan Agreement and Section 2.03 of the draft Guarantee Agreement). - 20 - 58. Less information is available on PWWA's rural water supply systems than on its urban systems. The rural systems, although owned by PWWA, are operated and maintained on behalf of PWWA by the 1_1 authorities urider PWWA's supervision and guidance. They retain the revenues from these systems and provide funds for their operation and maintenance, which, in some instances, are supplemented by PWWA and the Government. Because of inadequa- cies in accounting methods, water supply costs cannot be distinguished from those of other municipal functions. Until a reliable record of operating results is obtained, an appropriate basis for cost recovery on these water supply systems cannot be determined. With the objective of eliminating, if feasible, operating deficits of the rural systems and reducing or eliminating the subsidies provided by PWWA and the Government, agreement was reached at negotiations that, not later than September 30, 1983, PWWA would (a) complete a study of rural water rate levels and structures and recommend a policy and action plan and (b) advise the local authorities operating such systems on the implementation of a policy (Section 5.07 of the draft Loan Agreement). Meanwhile, it will be necessary for PWWA, mainly by means of Government contributions, to continue to provide funds to support the rural systems. The Government has agreed that it will provide PWWA with the necessary funds to operate and maintain the systems to the extent these cannot be covered by self-generated funds (Section 2.02 of the draft Guarantee Agreement). PWWA agreed not to incur any debt, except with Bank concurrence, until its net revenues rise to a level at least 1.5 times its debt service obligations (Section 5.09 of the draft Loan Agreement). Benefits 59. The Immediate Improvement Program of the project covers about 140 existing water supply systems which currently operate below capacity. The project will improve service to about one million persons and provide new service to an additional half million people. The average per capita cost for new customers served by the program is about $40 which is only 40% of the usual per capita cost of new water systems in Thailand. The high productivity of this investment derives from the improvement, at modest cost, in the utilization of existing plants. But perhaps the most important element of the project is its contribution to building PWWA's institutional capacity and improving its financial posture. By strengthening PWWA's operations and maintenance programs, the project will increase PWWA's capacity to provide potable water to the populace. Internal Rate of Return 60. In calculating the internal rate of return of the Immediate Improve- ment Program, benefits have been taken as the incremental revenues earned as a consequence of the Program taking into account the gradual increase in tariffs as agreed with PWWA and the Government; costs include the capital costs relating to the Program and the incremental operating expenses necessary to bring systems improved under the Program to full utilization. On this basis, the internal rate of return for the Program, representing about 80% of total project costs, is 8%. In line with the Government's 21 - policy of putting all revenue-generating state enterprises on a sound financial footing, it will be necessary for PWWA to increase tariffs further to cover not only operating costs but depreciation as well. If tariffs are increased gradually to reach this level by 1989, the rate of return increases to 11%. These internal financial rates of return should be considered only as inadequate proxies of expected economic benefits, however, since intan- gible benefits, such as improvements in health and the quality of life, are not fully reflected in the prices charged for water service. Adverse Effects 61. The additional supply of water under the project will create additional wastewater. To the extent that drainage systems in the project cities are themselves in need of rehabilitation, the project could exacerbate flooding and related problems. Although PWWA has no responsibility for this subsector its engineers have and would continue to advise local officials on technical matters related to it until such time as drainage and sanitation problems can be addressed directly with concerned agencies (para. 36). Income Distribution 62. In Thailand about 14% of the households living in towns have incomes below the poverty line. In general the existing public water supply systems benefit proportionally more middle income households than lower income households but the improvements proposed under the project are designed to broaden the numbers and increase the proportion of poor persons served. The project would provide new service for about 300,000 poor people. It is expected that, under a model tariff level and structure to be adopted, a minimum wage earning family could afford to take a water connection and a basic quantity of 80 liters per person per day. In order to encourage the use of safe public water supply PWWA has agreed that (a) it would prepare, in consultation with the appropriate public agencies and the Bank, a public education program on the advantages of using safe water supplies, and (b) residential consumers would be given the option of paying for their water service connections in monthly installments (Sections 3.06 and 5.08 of the draft Loan Agreement). Risk 63. The project inherently entails some risk, being the first of its kind to be undertaken by PWWA, a new institution which will undoubtedly encounter organizational difficulties during the initial years of its operations. The management's ability to create a productive and harmonious working environment for its staff will be complicated by their having transferred from separate government ministries and by their geographical dispersion. The technical assistance in engineering and management to be provided has been designed to minimize this risk by assisting PWWA in the establishment of sound operating procedures and maintenance standards and appropriate training programs. Putting PWWA on a sound financial footing will also be difficult; in the face of inflation, operating costs are expected to - 22 - climb steadily while public pressures will seek to keep tariffs down. Nonetheless, the agreements reached on a plan for implementing water rate increases are a major step toward achieving financial viability. In all, the risks associated with the project are considered reasonable in view of the priority attached to supplying provincial areas with potable water and the need to establish PWWA as an institution capable of performing this important task. PART V - LEGAL INSTRUMENTS AND AUTHORITY 64. The draft Loan Agreement between the Bank and the Provincial Water Works Authority, the draft Guarantee Agreement between the Kingdom of Thailand and the Bank, and the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement are being distributed separately. In addition to the features of the Loan and Guarantee Agreements which are referred to in the text and listed in Section III of Annex III, an additional condition of effectiveness of the proposed loan is that PWWA employ consul- tants to carry out the design and construction supervision of works for the Immediate Improvement Program (Section 7.01 of the draft Loan Agreement). 65. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 66. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments May 14, 1980 Washington, D.C. - 23 - ANNEX I T17Al - SOCw. MCA TOt5 DATA SUET Page 1 of 5 rtA wn UICeGt CIO5S (A=JUTD A.!Ars LAND AUV (ST4CSII 7Q. . _- - ISOST UCtllT tS35) TOMI 51,. S^Z SME M IISTIGICU 2ICOLTIURA 179.6 IOST NICT GOIAPRIC DNGOOR INCOME 1960 lb 1970 h *SSTXILTE A 2010O L GROUP /d G3DU1 a g? PEr CAPITA up08 100.0 210.0 490.0 528.9 461.5 1097.7 Ot6Ct CONSUTIOU PER CAPIlT (ULOGUIS Of COAL SQOIYALUT) 64.0 247.0 308.0 371.1 262.1 730.7 rOPULATON AN VITAL STATISTICS POPULATION. KID-TM (MILLIONS) 26.4 35.7 43.3 CUM POPULATION (TEUCW 0P TOTAL) 12.0 13.0 14.0 - 27.4 24.6 49.0 POPULATION P50JET3OM POPMLATIO 7J tEAH. 2000 (lILLOS) 69.0 STATIONIT POPULATION (IMLIONS) 105.0 TUR STATIOEUA 7lOIUATIC 1S KACUD 2095 POPLATION D1351T PU SQ. la. 51.0 69.0 64.0 154.8 45.3 44.6 PU SQ. 1(. AGRICULtURAL LAND 204.0 251.0 244.0 566.7 149.0 140.7 POPUATIoN AGE 5s1E=1 (PUCST ) 0-14 n15. 44.7 46.2 45.0 41.3 45.2 41.3 15-64 YU. 52.6 50.8 52.0 54.9 51.9 55.3 65 YR. AIND B1OVE 2.7 3.0 3.0 3.3 2.8 3.5 POPULATION GOWSI IATE (PERCET) TOTAL 2.8 3.0 2.8 2.4 2.7 2.4 URNA 5.1 3.6 3.5 4.3 4.3 4.5 CRIU5 8ILTE RATE (PU2 TQUSAiD) 46.0 42.0 32.0 30.2 39-4 31.1 CRUDE DEATH RATA (PER T3OUS4l) 17.0 12.0 8.0 8.3 11.7 9.2 (MSS REPRODUCTION LAT .- 3.2 2.2 2.1 2.7 2.2 PAMILY PLASNRIG ACCEPTORS. AUIIUAL (TTOUSANDS) .. 203. O 527.0 OSERS (P!ECENT 0 MIARRIED U) .. 27.4 32.3 34.1 13.2 34.7 OOD AND NUSltT10N MUDX Of FOOD PROD5CrI0 O PUR CAPITA (1969-71-100) 68.0 100.0 110.0 106.2 99.6 104.4 PM CAPITA SUPPLY OF CALORIES (PUCENI O0 4ZQUI3ZNKITS) 96.0 103.0 107.0 104. 1 94.7 105.0 PROTEINS (GRANS PER DT) 43.5 52.2 50.0 57.4 54.3 64.4 OtP WICE ANIMAL AND PULSE 8.4 .. 14.6 16.9 17.4 23.5 CEILW (AGUS t-4) NOLTALITI tA 15.0 9.0 6.0 4.8 11.4 8.6 liALTII LIFIE EECTANCYT AT 311S (AlS) 51.0 57.0 61.0 61.1 54.7 60.2 INYANT MORTALITY IRATE (PE IIOUSAND) .. 86.01L 68.0 46.6 68.1 46.7 ACCESS TO SAIP WATEt (PURCIRT OIP POPULATION) TOTAL .- 17.0 22.0 21.9 34.4 60.8 URBAN .. .. 49.0 46.2 57.9 75.7 RURAL .. .. 12.0 12.8 21.2 40.0 ACCESS TO ZETA DISPOSAL (Pl!tCEI OP POPULATION) TOtAL .- 17.0 40.0 28.4 40.8 46.0 UOAN .. 65.0 58.0 65.0 71.3 46.0 RURAL .. 8.0 36.0 14.7 27.7 22.5 POPULATION PER PEYSICLUA 7800.0 8420.0 8370.0 3790.5 6799.4 2262.4 POPULATION PEE NURSING PERSON 4900.0 3340.0 1510.0 1107.4 1522.1 1195.4 POPULATION PER HOSPITAL RED TOTAL 1340.01f 890.0 00m.0 613.3 726.5 453.4 1L28A *- 280.0 240.0 203.6 272.7 253.1 RURAL .. 1380.0 1290.0 1110.3 1404.4 2732.4 ADMISSIONS PER NOSPITAL 3eD .. 31.0 33.0 23.9 27.5 22.1 SOUSING AVERAGE SIZE OP SOUSEMOLD TOTAL 5.5/f 5.8 5.5 5.2 5.4 5.3 UR3AN 5.3Zf 5.9 5.5 .. 5.1 5.2 RURAL 5.6Lf 5.8 5.5 .. 5.5 5.4 AVERAGE hMIER OF PESONS PU POOK TOTAL .. .. 2.4 .. .. 1.0 UlRBAN .. 2. 2.2 .. .. 1.6 RURAL .. .. 2.4 .. .. 2. 5 ACCESS TO ELECTRICITY (PERCENT OP DWELLINGS) TOTAL .. .. 24.6 .. 8.1 50.0 URBAN .. 63.0L * 45.1 1.7 RURAL .. 13.0 *- *- 9.9 17.3 -24 - ANNEX I THAILAND - SOCIAL INDICATORS DATA SHEET Page 2 of 5 THAflAJED REPERZNCE GROUPS (ADJUSTED A¢RAGES - MOST RZCENT ESTIMATE - SAME SAME NEXT HIGHER MOST RECENT CZOCRAPHIC INCOME INCOtE 1960 /b 1970 lb ESTIMATE /b REGION /c GROUP /d GROUP /I EDUCATION DUSTWD ENROLLMFNT RATIOS PRIMARY: TOMAL 83.0 81.0 83.0 91.Y 82.7 102.5 MALZ 88.0 85.0 86.0 98.7 87.3 106.6 FEILZ 79.0 77.0 79.0 97.4 75.8 97.1 SECONDARY: IUTAL 12.0 18.0 26.0 42.2 21.4 33.5 MALZ 15.0 21.0 29.0 46.7 33.0 38.4 FEMALE 9.0 15.0 22.0 40.9 15.5 30.7 VOCATIONAL EROL. (1 OF SECONDARY) 19.0 24.0 13.0 12.5 9.8 11.5 PUPIL-TEACGER RATIO PRXIMARY 36.0 35.0 30.0 32.5 34.1 35.8 SECONDARY 20.0 16.0 21.0 25.8 23.4 22.9 ADULT LITERACI RATE (PERCENT) 68.0 79.0 82.0 84.1 54.0 64.0 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 2.0 5.0 6.4 6.1 9.3 13.5 RADIO RECEIVERS PER TOOUSAID POPULATION 6.0 78.0 131.0 84.4 76.9 122.7 TV RECEIVERS PER THOSAJD POPULATION 2.3 7.0 17.0 22.4 13.5 38.3 NEWSPAPER ("DAILY CZNERAL INTEREST") CIRCULATION Pn TIOUSAND POPULATION 11.0 24.0 .. 24.2 18.3 40.0 CINEMA ANNUAL ATTENDANCZ PER CAPITA .. .. 1.7 3.6 2.5 3.7 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 12757.0 16163.0 18514.0 FEMALE (PERCENT) 48.3 47.3 46.9 36.7 29.2 25.0 AGRICULTURE (PERCENT) 83.7 79.9 77.0 54.6 62.7 43.5 INDUSTRY (PERCENT) 4.4 6.0 8.0 16.3 11.9 21.5 PARTICIPATION RATE (PERCENTr) TOTAL 51.3 46.6 45.6 40.7 37.1 33.5 IIALE 52.7 49.3 4.6 49.9 48.8 48.0 FEMALE 49.8 43.9 42.6 31.0 20.4 16.8 ECONOMIC DEPENDENCY RATIO 1.0 1.1 1.1 1.1 1.4 1.4 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HICHEST 5 PERCENT OF HOUSEHOLDS 21.8/h 23.8/i 14.O/L 14.9 15.2 20.8 HIGHEST 20 PERCENT OF HOUSEHOLDS 50.97h 49.J77 42. 27 46.8 48.2 52.1 LOWEST 20 PERCENT OF HOUSEHOLDS 6.2/b 6.1/i 7.6/ 6.2 6.3 3.9 LOWEST 40 PERCENT OF HOUSEHOLDS 14.97/ 15.971 19.1/1 16.8 16.3 12.6 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME IEVEL (USS PER CAPITA) URBAN .. .. 126.0 193.1 241.3 270.0 RURAL .. .. 94.0 128.7 136.6 183.3 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 115.0 136.8 179.7 282.5 RURAL .. .. 108.0 96.8 103.7 248.9 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 15.0 32.0 24.8 20.5 RURAL .. .. 34.0 52.5 37.5 35.3 .Not available Not applicable. NOTES /a The adjusted group averages for each indicator are population-weighted geometric means, excluding the extreme values of the indicator and the most populated country in each group. Coverage of countries amoong the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimte, between 1974 and 1977. /c East Asia & Pacific; /d Lover Middle Income (5281-550 per capita 1976); /e Intermediate Middle Income (S551-1135 per capita, 1976); /f 1962; tg Percent of population in Bangkok metropolitan area; /h 1962-63; /i 1968; /L Preliminary data for 1975/76, due to lack of data on national basis, the methodology for aggregating the available regional data overstates incomes of lo. income groups and understates inco-e of higher income groups. Thus, this data is not suitable for any analytical coaparisons; /k Government: /I 1964-1965. ,ost Racent Estimate of GNP per capita is for 1978. Augut, 1979 - 25 - ANNEX I DEIIIISOF SOCIAL nIIICATORS Pa2e 3 of 5 N.otes: hlthoogh the data ar draw fro souce genrally judged the scat authoritative snd reliable, it should alo be noted that they may -t ,ie interns tionh ily comarblebcueftetato tandadiced definitions and onave-pta usd by differen.t -otrie- in collectIng the data. The dan r,t oehees usflto ecie reso m ti,Ind icate trends, and ch -oeiecrtain aJc, duifereo-c hetoee coutries The udoctri roop scesgetfor ech -od-ctor ar popu.atin-....ghted geometric men, ectiu,cth,ob rorn ausi tl. oia, the tot ypohntel coutryin nd roo.lirto lach of data, group hoer,es of all Ind,icators for Capital lurpiot Oil EsPores7 , iodo." IC ucos so.t,, ad boorto, hispo..sI, cuoto,' Ioonr litrihut-o aod Poverty for other coutry groups ho yppulatiu.-oeghtted ge... tr I oac - .o-o-t oolcii ftoo coto- oto- -nd the mst ppolatd contry.Sinc tIe voraeh fcutie m the indictors deedd0 oimllt i asad ist. co Sicuinndi cucosr In relatisg aeg,of -m adicatne to nte.Teeae.e r _ati usfla aprsmtona oPf 'enpetcd to '. a h aua a indicator an a iea h onr and reference groups. tAut AREn (thousadfsq_1.ha. jAccess noEsret hIspD al perea!t5yoj:l - s a rana r' Thn-tcasufe flac 1puin ad fle nd inland waters. Stue fPeoI tt, ra, aocrl eudh enrta dips..s ASI,ic,lt-rl - Mbta recent satite of agiutrlae -ad htisor-ily per-ntge o6,f thes eeeticroslati-ha dcoeta dtapoal may isld or Per -etlY fur crps, P* ptora, maket and kitIhee garuen..o to the colletio and dis.nsa, ith or citbout t-etmht, of h-ssmmn t lie falI_c and -ate-ate- by atee-bh..ae yste.n or the us of pit prince an non1a SIP FiR CAPITA (US$) - GNP pee capita estimates at curet maket pi , Ppltn e hsca auaicdoddh ubro rciigpyiin calculated hy nae nerion method as Wlurd BanA Atlas (i976-78 basis); qulfe rmamdclsho t uni-e-ity 1e-e. 1017,an1978 data. Posniatios per Dri Perann - Ppulatice di,,ided by number of practicing mu,, ENERGY CCihSMTIONs PER0 CAPITA - Ann-I consuption of ourna-srrad female graduate nuse,pr.tvt..re, .r asitac ure "coa an nlnte, petroicum, natura hs and hydr-, unclea adg-Poutinpr HnpitalI ed - totm1, urbanadrua, Popultion oonSl,uri, therma eotuIty) In hilogrmo f coa equivalet per vpaytta I;*, and neat) divided by the ir re.potive somber of hospital teds vial it 1970 and 197 data, publIcI and private geerltand apeciliced hosipital -ao echbili.tai ono-t-r. Rosponale _r Mmbglishme_t permaetly staffed by at least on pdhsicia. POPOI,kTION AND VfTTAL STATISTIC S Etatbli.hmeata providing prior ipaly custndial car ar tot inluded Pura1 Tonal1 Ppol tinn. . d-ec7lio(- iof July 1; iu60, 197(1, ad hoapitalIs,h-nve, Sanlude health and edi-1ni. ceters not permnetly ntaffed 1977 data. by aphysIcIan (hot by a med-1i ... asistant, nus, midi fe, etc.) whiob offer Urban Porultio seRsa of tota-I atic of urban no tonal pupulatish; in-patient -cidation and provide a limited range of mdclf istie.. ditfferntdefinitionsof urhan a-rc may affect -oparbitity cf data Admiamisas Per Hmanitl ld - Thin number of admhaiona tor dinchanges from aeIng conris 1*,970, ad i975 data. hospitalo dirided by the number of beds. ppulaltion in year 2(00 - Curret popolantc erojections ann basd on OU03SIN 195ttlppition byag an eead their meetala. n etlity Aceag hiE of househod (peson pe inuaciold) - total, uran ndrna rae .Prjevs- paramter for motl.ity rae opieof three A ho-behod -ssiet of a groP oi diviual bh hv iin uresad be_l annumi5 life -pyrt-ny at hirth II cresig sith coutry's theIir main meal. Abhoader orlndger may or may sot he -inlded -c the P"r capita ce ice,an ea iecpestany tabolinig at house hold for stntitiial PurPoses. 77. years. The aantr fo etlity rate also hare three Ieveis Averag homier of nermos car roo - toaa, urban, and rura - Avegrag combs a_-nun decline is fertility no-oding toI i-cm ieve and pant of perons Per room In al rban, and rura occpied --retio,nnl delihings, fami ly uning Peeforan- inch coutry is then assigned cse of these reper,tiely. D-1e1i-gnlude non-permanet structure sad -pir- tarts nineI cob inations of sartiltoy and fertility treds for proje-tio Acoama te al-etricite servat of dee.1iome - otmi,l urban, ass rual-Co purpose. . etonluelig ith eleosrlity inliig quarters ma per-etag 0 itntinsry opulaion IA a tatiotn-y populatio ther Is no gr-thb total, -rbar, adura delnsrpctively. alto the birth rats Iequal to tbc death rate, ad also the age s ,trcuercit cosat ThIs ischevd only after fertility rates DLEICTlION deliteeto the repinnmn lec fuit net rpoutnraeeks Adjusted Eaolet ia each g-cration of n-n rria- itself e_otty. The stationar pup.- Primary%shool! - total, male and female-ross tonal, male and lunat -ur11- lnnoc,Ioeaan..oti*mutd .. the banio of the, pro,e-ted sharateriati- meat of all ages at the primary her-l1 p_retagem of repecive primary of the populatio_ it the year 2000, an doh rate of declin of fertil ity schol-gepopLatio-s; normaly incldes ohildeen aged i-ti pear tot rate to replasemeot leosi. a~~~~~~~~djustn.dfor differet 1iengthn of primar edu-tio- or, o-uetrio I'll Pear sttinrypolato isehobr - The yea h.. stationary population unvra dvtu noletmyece 2 eos ic orPupil stor has here reachd. ar- ono bove the official school age. Poziultoshnat ir-od-u -obs - total, male and female - C.mistrd ao a.. n eoii Per 00. km. - Mid-y-a population yes sqarhlomt- (10 h-tare) of ed-ction requires aseat fou year of approved primay o...uti o- octal neca prooldee general vocational, or tea~~~~~~~~her training i-atruttt. forpp.1 Per sq. ha giutrlland - Computed abo- foe agricultural land usualily of 12 to 17 pear of age; orep.ndenre core -ae -.oraly only. -1clded. 5P-Ply70oa, Str-otu.jpnrip. t( - Cholo. (0-14 year), corhng-ged- voaional enrollmet (scroent of secondary - Oooatioa ins -titto' i`ltude ~15rw'tteed (br pears and ore) an percetages of mid-year tebi-al, induatial, oother prngem shieb oprte undtpend-tlyOrh population; 19*0, 1910 ad 1977 data, departments o sodaI itttos.. Populat ion ur-th Rate (p--otn) - total -uua eroth ease of total mid- Ppil-tearher catlo - pri-ayc an :sodvs-Ttl idnserlsdi year.P poulti.n. for1950-hO, 1*1-7, an - 971-77. primary and secodary level div,ided by nubers of teaher -v Otin -ro- Popultiontot ae cret rban - inn1s g b eaten of urhan spending -icola pupolationo fur 190Ad *-7,ad 1970-75. Adul literaY rate (percet) - Loterte adults (atle to read and oroto] Crude rti cane (Per tousand) - .nnual live births prr thousand of mid- apercetge ofI total adult popultioo aged it pear and over year po_pplts iph, 1970, ad1977 dta. Crude teath Rate (per thousand)1 Annua dr-tho per th--uadooaiu-y-a C05550PgFPo2g popelatis; 1*, 1975 sod 1977 data Pasheger Cur (per thouad ppsslatior) - Passe nger vaso -iemtrncs dros Reprodution Rate - Aorra nobe- of daoghtrrnem oill bea seating less than eight per-n; ncludesamuaca hease ad military Is her normal reprodu-ti- p-id If she coei _rn _raht ag- "eIles speriiv frtitto rtes;usnaly fie-per nueng- ending ic 1960, Radi eriven(ertosndcplainI All types of reciver, oe radio q70, and 1975. broadr-ta to genral public per oboomad of ptuit.io.. e-cbdno .i-honue faiy Planing _ Arptor.~ A-mnal(tho,xdaud) - Anni-1 sunh- of -eerr noutries and iyershin regitra tis of radl, st mn0 acetr f birth-control derives under -,aPce ... na..tiona Ifsmly vffert; data for recet years s -pru be -upar..blr sic -.. vtries plantuog pengr- bhlished ticr nss Family Planning U..e P""oe" of marrid oel-Percen.tage of maried Tt Rece1ivers1 (see thosaa poplation) - TV reciver foe b-od-a to ener1 50mm f chid-beaing ae (15it psrt) h.buo birth-rotu d- hc uli e th-me-ppsltiun; estae unlicense1d TV reciver o...t~ to all maried .oan- in sam age grop. and In year ekes registration of TV eta wa in effect. ilesynerCivsltin (eethousand psjahath ) - bsh-n ohs ur-ege iolt. Funt ANDi IPRITICE Ind- of F.7-11Fd-ti~~~~~~~~~:1pe, o dpiy gnera1t9tr7stninPape, dfndm period-Ica potli-atio- One fPo rduction per Capta(l_ j71_0( Inden of per -pita devted peim-rily to recor.ding genra news hisonIdr-d to Os "daily" annualprodutiuc o all oud c dtti-n Produ-tin e-Ildes aced ad if is aep-rar at leat fou timmaserk. feed a ono alna yea mom .. uCodit- IIacoe primac goods Cin-. Annua Attead-v Per Capita per Ia--Eed on the sumn- o,f tickets (r_g. ugrasinstead of suigar) thinh ar edible and contain nuti_ot aci dring the year, solding admin.i.- to droo-in si-m and -Li i e..off, and tea ar- cldd.Aggregate production of eah coutry units. in asd on nattost aveag producr price neights. Pee caitinsplofvo s (neroet of reurmno(-Cnm,tnd from lAm FORCE rhep equivalent o,f net foo sPpliesaaiai in coutryP perempita Total abr Porc (th.umads) EI- h ui-lly atio pe-ng, inclosing arced p5 hay. Acnilnblv iuppiie comris d-ntnic production,' impots les forcem ad uneplypd hat -o1lding h-uei-r, snudenim, ca. DIfi,sit--Oo coota, and changes In st-kh. let -uppli-a ro-ldd animal feed, seeds, in -ar... ro-trien ar tot -up-rble. _onitoe usd In ford procssng, and 1ss- In disnltbtion. teqaire- eal man -Feal lahor forc as peroetag of total labor forc. -etn weertissted by PRO bass on phyoiologJ-1 sesfrnma g4jjss )-Labor forc In faring, fo restry, hunting and actoo yn health rousode-in, onvi 'scrtal t-mpratna1ri _ bdy ghts, fishing anpercetage of total labor force agt:ad urndistributin -of populst-o, and nl1c-iog 10 p Idrt o Industry (p-ret) - Labor for-ve onmiing, -ont-ti-o, manfacturingac ustet houshold Iec-1. e-t-icttp, ea, I.teangsanp manag of t,tal laboc forc. Per oaito supply ofPr-teis (gram peIr dap) - Pr-nie cotent o'f pe PariiainRt,pren totlml,adfmle-Priiaino _msta ne supply of food per day., et supply of fend is oris-d a atlitityrae are ptmyund amttl1ml,ad eaelbor`fnree asIer abov. Requi-ests f. o al coutrIes. establIshedrby UiDA provide Pus a rntgen f total, male and female poplation of all ages -epeti-eip; minimu alsanr, of ht gram of utat prtein Per dap and 20 gesm of 1*0, 1970, and 195data. Thre ar lIOn .parnc-paisob rates reflecting anIml an pule prtot of:hthin10 grno should Is animal protein. age-se marutrn7 ofhypoultion, and long time tred. A fee estimates These standardo are losrhantos f 75 gPs oP tsta1 protein and aefro a.iniml oroa 07 grai- oanmlprotein an an -teg fur the arId, proposed by PAt lesg-in ~Pemmdn Rtio - Ratio of pepulation under 10 and bt and -r to in the Third World rood iur-y. the tabs fcein age group of 15-6l yea.. dervedfrm aimls ndpolnInI gram pee day. 0305 POTPDlOmic Cid(gm1-b) MortalIty Rtpr titusad) -Annualdeaths per thouad-essaeo rvt soe hn nca n id eeod byrisa Is age group I-_Leara to chituqe- in this w age nep; for mes desel- 5 presmt, risbest .Rpecet, poet 20 percet, an pooret hI percet oping coutrIes data drei-d fro tf tables, of hnassablda. RHIATH POtVERsY TAPirS GOPO "'11f hoot-y at Pirt -yers - Averge nuber of year of life intimated Abalute Preerty Isom ee Pt e moa ubna ua reann t brh ,17,ad1977. data Absouatr poverty isr-m -ire Is that ba.lve hl ehivh a mina1 Irfant Sa-rility Rats (per thoucnd]" Annual deat.hs of infants under onntrothnally adequats diet Plum em-etial non-f-vd rui ete is ant pea of age yes thousand lIve hirtho. affordable. hcresa toOafs Wate (percentof popultion - total, urban, and rura - Eitimand RelatireP-sts Inoelvl(R e mpta) -ubnmlss leher of people (ittl, urban- n ua ihraoa cest Rsrarrlaive perty incom leelisa-thr of messge pee capita safe sates suppl(icue treated surf. mesiner or ntreand hut persna incom of tise coutry. Urban1- eoi.I derted fro the coa .e.el .._otambnntrd cae hao atht fr.. p-tot- borehole,, spring., nith adjustment for higher cot of living is urban areas. and saitr wells as Percentages of their respective populations in 1t;tme P,nuanssPelu Alalt oet ao ee yretl-ehna a ra rea a public fotais cr standyct loaa eethnrrl-Pret _s _panId. (uban ad roal bsae"''i7ti3id. "" eesfrom a h-n map be conidered as being sithit r-senble acsof thatI- hos . I rura ane-saoabe Ies ud imply that the ho..e-ife or amber. of -tehoshold do not have t spend fEncsis and S-i.i Data t,icis dap-op-tni-ste part of the day in fetblng the family's sates see ds conomIc Analysis and P-jectioms Depsrtaa Augiat 1979 D~~ ~~~ F - 2~~~~ _ _ 0. 7 _W_77w_SW~~~~ | . 3 I 2. >i on_ __t _- ___* .. ^ "- ~~~ - ^. .a ^ 3 ~ ???~ 0F SoS-- o7oI0 3 oo _-e_ o - 0000 ee~_ _00-_w .s ___*___ COrot|@| 8 F?.°? |; 00... w 0 °0 -__ Wo_ $ _e ::* sw_o~_| ~~- 0^~°? f _~ ~rW *~~~~~ 00 :±:, ;|-0 *Ss ONr __ _o R~~~ . a. ;-_ 000 0 _'Q 000 t - -t - ~~~~~~~.440.4 - 3 ANNCX I - 27 - .rge 5 of 5 8ALANClt 09 PAYtITO. FX78RKA1 0AUS _SNYC!. nr.T AND CR0DOTWRThI83S (Carreet US$ dIllo.1 Artel tProIr"ted 1973 1974 1975 1976 1977 19781i 1979 1980 1985 1990 ose ofWrolanc of Pa-e-ta 7 port: ( Nnrliog NFS) 2,084.7 3.025.4 2,796.5 3,490.6 4,029.3 4,930.7 6,300.0 7,660.0 12,R35.0 24,967.7 Iepoet (Inrioding NFS) 2,256.3 3,353.2 3,487.3 3,911.9 5.097.a 5,919.2 8,140.0 9,460.0 13,904.5 24,650.4 6aoource b-l-nce -173.6 -327.8 -609.9 -421.3 -1,064.4 -989.2 -1.840.0 1,800.0 -1,069.5 317.3 Net f-tor -rfrte 1000., -20.8 -0.7 5.4 -41.6 -72.5 -154.5 -210.0 -300.0 -925.0 -1,412.5 Ne0 lot,reet roynents 7.0 36.0 69.0 26.1 -4.0 -69.4 -100.0 -210.0 -766.9 -1.170.7 Of tltith no pbllc 0 & LT 1o.n. -25.1 -28.1 -364. -44.3 -64.5 -101.8 -133.1 -174.5 -487.1 -802.0 Dlr-1t 1n--tnt i0-noo -28.0 -37.0 -64.0 -66.1 -68.5 -72.8 -75.5 -80.0 -192.5 -290.0 Workers -eItt-enCeS (0.1) 0.0 0.0 4.0 0.0 0.0 0.0 22.9 24.5 34.4 48.2 Curr-nt tr..nfere (net) 145.5 241.0 80.1 22.8 39.3 40.4 60.0 s0.0 100.0 110.0 Belaore on. --re-t -crot -48.9 -87.5 -605.3 -440.0 -1.097.6 -1.103.4 -1.990.0 -2,020.0 -1,894.5 -985.1 P.Ove-t dIrect llvest.,nt 67.0 135.6 85.5 79.1 106.1 50.0 60.0 75.0 276.3 487.0 Crants * graro-lOhe flont 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Pobli, M 6 ILT I.ne Ilebursene, 69.0 95.9 149.2 241.7 362.6 739.5 900.0 1,010.8 1,960.4 2,697.6 A fmr-tleallo -28.9 -32.3 -38.7 -43.4 -87.8 -90.7 -164.1 -722.1 -620.1 -1,092.7 let dl.b-r-r-ent. 39.2 63.5 110.5 198.3 274.8 648.8 735.9 78S.7 1,340.3 1,604.9 Other SI LT 10cr, Mlahorseerta 178.9 326.2 399.6 279.7 311.8 501.3 900.0 1,150.0 1,393.0 462.2 Aa,ortlatlon -223.1 -197.2 -235.1 -245.9 -264.2 -467.2 -520.0 -600.0 -650.6 -1,167.8 Ne t dlhb.r...n.t. -44.2 129.3 64.5 33.8 47.6 34.1 380.0 550.0 542.4 -705.6 se of 08SF resource. 0.0 0.0 0.0 77.1 1.8 181.4 200.0 200.0 -30.0 0.0 Short-tern capitol rrennnctlons 42.0 55.5 127.5 130.2 256.2 84.0 120.0 250.0 180.1 252.6 CaIrt -l orontottlons 8_1 57.8 96.3 77.2 -11.4 136.2 -371.9 0.0 0.0 0.0 0.0 Cha-8. In --ternee (- - Iacreaaal -113.0 -392.7 140.1 -73.0 275.0 476.9 494.1 176.3 414.8 -654.5 Jet foreign exchange reselbs 1k (osd of perfod) 1,306.0 1,599.0 1,406.0 1,444.0 1,135.8 659.9 166.0 10.0 2,634.5 5,320.9 Grant end Loan Cnon,ltmonte OfOtrial grants 0.0 0.0 0.0 0.0 0.0 0.0 Totel public t 4 LT loan- 87.1 636.5 223.4 372.3 633.0 1,220.0 IL5R 15.0 142.0 95.0 158.0 137.8 256.0 7DA 25.0 7.0 0.0 0.0 0.0 33.1 Other aolttltereal 6.4 77.2 62.7 92.1 47.0 194.7 naroneos ntx24.0 200.5 47.7 32.2 106.4 312.0 0If sttch reotr.lly pllsond -I.oo.e. ' 0.0 0.0 0. 0 ° 0.0 0.0 Joppller. 0.0 0.0 0.0 0.0 0.0 0.0 fl..n nll institotloos 16.7 9.7 18.0 100.0 341.9 423.7 Othor M0 4 LT loan. (Nthere v1lablo) 178.9 415.9 392.5 360.2 348.9 531.8 Cr rt aee nt of total -o.mitcant. (X) 44.600 31.400 16.700 11.500 10.200 14.869 Average nterest (X) 0.044 0.057 0.076 0.081 0.080 0.072 A-er-ga et-rty (yetar) 29.100 23.800 23.500 18.500 14.000 12.832 Hledl t- and Tooz-Tern Debt (DIsbursed ocIy) Total debt o 4tttandlog (OD end f period) 903.9 1,160.7 1,345.6 1,606.8 1,931.9 2,691.0 Irr.eludog t,dtsb.rsed 1,182.4 1,730.0 2,009.5 2,404.0 3,145.9 4,594.3 Puhblc dtebt nerone -34.9 -60.4 -73.2 -87.7 -152.3 -202.9 Intere-t -25.1 -28.1 -34.5 -44.3 -64.0 -100.7 Other n & LT debt nernOct -255.8 -266.8 -314.5 -245.9 -338.3 -590.8 total debt -ervfre -310.7 -327.2 -387.7 -333.6 -490.6 -796.7 .ebt Jordan (:) Debt er,ree ratio 14.9 10.8 13.9 9.6 12.2 16.1 Db -t Invt te rotlo Ld 16.2 12.0 16.2 11.5 13.9 17.6 Debt Leentr/GOP 2.9 2.0 2.7 2.0 2.7 3.6 pabl O dehb seroic_/G..ornso_ t savnna 4.3 2.5 3.5 3.7 4.4 6.3 Ter. (2) Inte.a.t or total DOD/total ditbors.eet. 53.7 5.3 5.6 5.4 5.7 5.6 Tot.l debt -e-vuca/Gonarnsict rwntt 12.4 11.8 11.9 10.7 12.0 19.6 Derendanny Fntotns nor M ILT Delbt (S) GC.. dtshtr.ecenta/Isportr (1-ctdl. N8S) 11.0 12.6 12.9 13.3 10.9 21.0 llet trarstoIepnrtn (Inrlndtno N0FS) -2.8 2.8 1.8 4.8 2.0 10.2 81st teas. Oor/6rOts dhararsearnta -23.3 22.5 13.6 36.5 18.4 48.7 ue_- (X ) 18R0 ddIa retnt/ot total d1lh...eaent. 14.8 8.0 9.1 8.3 12.0 9.3 lank Grnup dl,borents/trre- totol di.b.rse.et.t 14.8 8.3 9.7 9.3 13.6 9.9 18R0 bOD/to.tl 030 26.2 28.8 20.0 1.6 17.9 20.2 8 nk CGtP DD06t/otl WDO 24.2 20.9 20.4 19.2 18.9 21.3 0160 d'nt seI vIleltatol drbt ner,lne 8.0 8.5 8.3 1O.9 9.8 7.8 Sk Grt..., debt .rvlo/t-ral t- 8.0 8.5 8.3 18.9 9.8 7.8 Knesl Debt (Dl-b.rted only) Oltat-ndi.n 12(31178 (C-nr st A8 onillott) Anoent 2 IERD 434.8 24.5 la-b Group 459.3 25.8 Other anltllet-ral 257.5 14.5 Governennon 549.2 30.9 Of ,hirk -entrslly pla.n.d econol-es /c 0.0 0.0 n-ppult rh 9.0 0.3 61 t..nclal Iratitntion. 502.1 28.2 londe 0.0 0.0 Total pnhllc M & LT debt 1,777.1 100.0 Other M & LT debt 913.9 51.4 Tnttl pnbllc debt (inludlog adoehur.-d) 3,680.4 207.1 Total M * LT debt (Inclodllg ..dt,b-rsrd) 4,594.3 258.5 /- Pnaleloeinsy. eb NRt onelgn .se.te: US$ eqnlnalert of Ld.e 31. October, 1979 Ic ln-ledee CttA cntsie., Peoples R..pabO1 of Chit... o-th ros, Sosbh Viet ta* ld -Inladoag set ditect iv-st-ett -nosne. - 28- ANNEX II Page 1 of 12 THE STATUS OF BANK GROUP OPERATIONS IN THAILAND /a A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of March 31, 1980) Loan or Amount ($ million) Credit Less Cancellations Number Year Borrower Purpose Bank IDA Undisbursed Twenty-four loans and one credit fully disbursed 388.90 5.50 - 822 1972 Kingdom of Thailand Education 15.40 - 2.78 864 1972 Telephone Organization of Thailand Telecom 37.00 - 0.77 870 1972 Kingdom of Thailand Highways 28.60 - - 369 1973 Kingdom of Thailand Education - 19.50 2.59 461 1974 Kingdom of Thailand Irrigation - 7.00 0.95 977 1974 Electricity Generating Authority of Thailand Power 75.00 - 8.34 992 1974 Industrial Finance Corporation Thailand Industry 11.70 - 0.20 1021 1974 Metropolitan Water Works Authority Water 55.00 - 0.11 1149 1975 Kingdom of Thailand Irrigation 95.00 - 67.58 1198 1976 Kingdom of Thailand Rural Dev. 21.00(TW) - 8.84 1199 1976 Kingdom of Thailand Livestock 5.00(TW) - 3.05 1243 1976 Kingdom of Thailand Rubber 50.00 - 31.58 1253 1976 Telephone Organization of Thailand Telecom 26.00 - 4.29 1271 1976 Kingdom of Thailand Education 31.00 - 20.25 1327 1976 Industrial Finance Corporation of Thailand Industry 25.00 - 7.42 1393 1977 Kingdom of Thailand Agriculture 28.00 - 20.75 1468 1977 Kingdom of Thailand Irrigation 55.00 - 37.67 1485 1977 Electricity Generating Authority of Thailand Power 50.00 - 26.04 1492 1977 Industrial Estates Authority of Thailand Industry 4.80 - 3.12 767 1978 Kingdom of Thailand Population - 33.10/b 33.01 1519 1978 Kingdom of Thailand Transport. 110.00 - 64.32 1527 1978 Provincial Electricity Authority Rural Elect. 25.00 - 22.61 1556 1978 Kingdom of Thailand Housing 8.60 - 7.64 S-10 1978 Natural Gas Organization of Thailand Natural Gas 4.90 - 0.21 1620 1978 Telephone Organization of Thailand Telecom 90.00 - 90.00 1630 1978 Kingdom of Thailand Irrigation 17.50 - 17.18 1638 1979 Kingdom of Thailand Urban 16.00 - 14.00 1662 1979 State Railway of Thailand Railways 16.70 - 16.70 1690 1979 Electricity Generating Authority of Thailand Power 80.00 - 80.00 - 29 - ANNEX II Page 2 of 12 Loan or Amount ($ million) Credit Less Cancellations Number Year Borrower Purpose Bank IDA Undisbursed 913 1979 Kingdom of Thailand Education - 35.00 35.0 929 1979 Kingdom of Thailand Agriculture - 25.00 25.0 1752 1979 Kingdom of Thailand Ag. Extension 40.00 - 40.0 1773 1980 Petroleum Authority of Natural Gas Thailand Pipeline 107.00/d 107.0 1787 1980 Kingdom of Thailand Irrigation 80.00 80.0 Total 1,598.10 125.10 879.0 of which has been repaid 214.70 0.09 Total now outstanding 1,383.40 125.01 Amount sold /c 68.62 of which has been repaid 43.21 25.41 Total now held by Bank and IDA 1,357.99 125.01 Total undisbirsed 782.45 96.55 /a This summary includes Bank Group loans/credits signed as of March 31, 1980 /b Of which $3.1 million is Norway grant participation. /c Of which $43.3 million sold to the Bank of Thailand. /d Includes refinancing of Loan S-10-TH ($4.9 million). - 30 - ANNEX II Page 3 of 12 B. STATEMENT OF IFC INVESTMENTS (As of March 31, 1980) Amounts ($ million) Year Company Type-of Business Loan Equity Total 1959 Concrete Products and Cement and Construction Aggregate Co., Ltd. Materials 0.30 - 0.30 1964/ Industrial Development - 0.38 0.38 1970 Finance Corporation Finance Company of Thailand (IFCT) 1969/ Siam Cement Group Cement and 1975/ Construction 1978/1979 Materials 28.33 4.24 32.57 1977 Mutual Fund Company Money and Capital Limited Market - 0.29 0.29 1977 United Sugar Terminal Food and Food Limited Processing 2.50 0.20 2.70 1978 Siam Commercial Bank Small and Medium Scale Industries 2.00 - 2.00 1979 Bangkok Glass Industry Company, Limited Glass Containers 4.85 0.25 5.10 1979 Siam City Cement Cement and Construc- Company, Limited tion Materials 36.00 4.00 40.00 1979 Thai Orient Leasing Co. Ltd. Capital Market - 0.15 0.15 Total gross commitments 73.98 9.51 83.49 Less cancellations, terminations, repayments and sales 48.86 2.56 51.42 Net held by the Corporation 25.12 6.95 32.07 Total undisbursed 34.00 - 34.00 - 31 - ANNEX II Page 4 of 12 C. STATUS OF PROJECTS IN EXECUTION /1 (As of March 31, 1980) Loan No. 822 Second Education Project (Kasetsart University); $15.4 Million Loan of May 24, 1972; Effective Date: August 22, 1972; Original Closing Date: June 30, 1978; Current Closing Date: July 31, 1980 Although the technical assistance and educational aspects of the project are largely on schedule, civil works are about three years behind schedule with consequent delays in furniture and equipment procure- ment. The delays in civil works result from delays in contracting archi- tectural consultants, completing tender documents, and awarding contracts. These delays also reflected ineffective management which has begun to improve after the recent formation of a commission of senior officials to coordinate project implementation. Consequently, civil works are expected to be completed by June 1980 and equipment procurement, by September 1980. The specialist services program under the project is nearly completed. Out of 26 experts, 21 have completed their assignment and the remainder have been recruited. Recommendations of experts for improvement of teaching, research and extension activities are considered worthwhile and have been implemented by the university staff. All the fellowships have been awarded; nearly all recipients have completed their training. Total project cost will exceed appraisal estimates by about 35%. Credit No. 369 Third Education Proiect; $19.5 Million Credit of April 11, 1973; Effective Date: August 8, 1973; Original Closing Date: June 30, 1978; Current Closing Date: September 30, 1980 All project components are virtually completed except the Teacher Training Colleges (TTC) component which is about three years behind schedule. Good progress is generally being made in the pedagogical development of project components except at Songkla University where the attraction of teaching at Bangkok universities is resulting in high staff turnover. /1 These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any prob- lems which are being encountered, and the action being taken to remedy them. They should be read in this sense, and with the understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project implementation. - 32 - ANNEX II Page 5 of 12 Loan No. 1271 Fourth Education Project; $31 Million Loan of September 13, 1976; Effective Date: February 9, 1977; Closing Date: June 30, 1982 Progress in project implementation follows approximately the appraisal estimate. There have been no significant delays in civil works or procurement of furniture and equipment. Nearly all fellowships have been awarded. Staff training programs are on schedule but need to be improved, as does supervision by the Ministry of Education of its nonformal education programs. Credit No. 913 Fifth Education Project; $35 Million Credit of June 28, 1979; Effective Date: October 12, 1979; Closing Date: June 30, 1985 Good progress is being made in project implementation: (i) the Central Procurement Unit has been established; (ii) sites for all first phase institutions have been acquired, and construction is expected to be completed by mid-1981; (iii) Phase I sketch plans and lists for most furniture and equipment have been prepared; and (iv) technical assistance consultants have been identified and partly contracted. Loan No. 864 First Telecommunications Project; $37 Million Loan of December 5. 1972: Effective Date: March 1. 1973; Original Closing Date: December 31, 1977; Current Closing Date: June 30, 1980 The project is lagging a few months behind the revised time schedule established in 1975 due to delays in procurement. The Bank loan is fully committed and as of March 31, 1980, $0.8 million remains to be disbursed. Nearly all of the local telephone network expansion has been completed. Loan No. 1253 Second Telecommunications Proiect; $26 Million Loan of June 11, 1976; Effective Date: August 25. 1976; Closing Date: December 31, 1980 The project is progressing satisfactorily. Procurement action on all Bank-financed items is complete. The Bank loan is fully committed and $21.7 (83%) had been disbursed as of March 31, 1980. Local telephone network expansion is a few months behind schedule. The project is now expected to be completed by the end of December 1980, 11 months behind schedule, and to be fully disbursed by September 1981. - 33 - ANNEX II Page 6 of 12 Loan No. 1620 Third Telecommunications Project; $90 Million Loan of October 4, 1978; Effective Date: January 3, 1979; Closing Date: September 30, 1983 Due to a delay in the borrower's decision on standardization of switching equipment and cables, action on procurement has been delayed by about 9-12 months. Waiting lists have been introduced in all telephone areas and procedures for giving new connections revised. Progress on implementation of other project components is satisfactory. Loan No. 1519 Sixth Highway (Provincial Roads) Project: $110 Million Loan of March 23, 1978; Effective Date: June 22, 1978; Closing Date: December 31, 1982 Progress is generally satisfactory. Procurement of maintenance equipment is under way, and most contracts have been awarded. Construction of project roads is well under way, with most contracts on schedule. Loan No. 1662 Fif h Railway Project; $16.7 Million Loan of April 23, 1979; .Effective Date: August 22, 1979; Closing Date: June 30, 1982 Progress on project implementation is satisfactory. Credit No. 461 Northeast Irrigation Improvement Project: $7 Million Credit of February 19, 1974; Effective Date: October 7, 1974; Original Closing Date: June 30, 1979; Current Closing Date: June 30, 1980 The project will be completed two years behind schedule as a result of initial delays in appointing consultants and in procuring earthmoving equipment. Work on rehabilitation of main canal systems has been completed and the pace of construction of tertiary canals has improved considerably. The current estimate of project cost is $30.3 million, compared with $12.5 million at appraisal. This increase is due to inflation being higher than foreseen at appraisal, the decision to provide new tertiary canals over an area of 34,700 ha rather than the 21,500 ha assumed at appraisal, and the adoption of higher standards for tertiary development than envisioned at appraisal. The higher costs are compensated by increases in projected commodity prices and the economic rate of return is now estimated at 24% compared to 22% at appraisal. Progress on the rainfed rice component has been affected by management difficulty in integrating the work of several different disciplinary groups. - 34 - ANNEX II Page 7 of 12 Loan No. 1630 Second Northeast Thailand Irrigation Improvement Project: $17.5 Million of December 4, 1978; Effective Date: May 9, 1979; Closing Date: September 30. 1985 The consultant's contract was signed in Mlarch 1979. Work by contract is delayed but "force account" work began in early 1980. Procurement of vehicles and equipment is delayed due to difficulties in reconciling the language used in existing bidding documents with recently introduced government regulations on procurement. Loan No. 1149 Phitsanulok Irrigation Project; $95 Million Loan of July 25, 1975; Effective Date: October 31. 1975; Closing Date: June 30, 1983 Major civil works are behind schedule, but project completion is still expected by mid-1984. Construction work on the diversion dam is progressing well and RID expects to award a third canal contract in time to commence construction during the next dry season. About 4,500 ha of on-farm development was completed in 1979. Thus, total area provided with on-farm development is now 9,000 ha or 10% of the project area. All studies financed under the project are proceeding satisfactorily. Loan No. 1468 Second Chao Phya Irrigation Improvement Project; $55 Million Loan of September 23, 1977; Effective Date: December 23, 1977; Closing Date: June 30, 1983 Equipment procurement is progressing satisfactorily. Rehabilitation and on-farm development works on about 15,500 ha were completed in the 1979 construction season bringing the total area developed to 22,000 ha, which is in accordance with the appraisal estimate. Loan No. 1787 Eleventh Irrigation Project; $80 Million Loan of February 17, 1980; Effective Date: April 2, 1980; Closing Date: June 30, 1986 This loan became effective on April 2, 1980. Loan No. 1198T Northeast Thailand Rural Development Project; $21 Million Loan of February 27, 1976; Effective Date: June 29, 1976; Closing Date: June 30, 1981 After a delay of one year in appointing consultants, satisfactory progress is being made on the engineering of village roads. The first con- tract for construction of 114 km has been completed and work has begun on two contracts for a total of some 250 km. Procurement problems have delayed the water supply components, but most of the drilling equipment has now been delivered, drilling crews have been recruited and are being trained. The rural electrification component has been completed, and progress on agricultural extension and land settlements is satisfactory. After a slow start-up, the Upland Crop Improvement Component is progressing satisfactorily. - 35 - ANNEX II Page 8 of 12 The program management, with the assistance of a recently appointed program advisor, has undertaken a critical review of past work and is gradually intro- ducing an innovative program of research to help solve the problems of upland- crop farmers in the Northeast. Credit No. 929 Northern Agricultural Development Project; $25 Million Credit of June 28, 1979; Effective Date: October 12, 1979: Closing Date: December 31, 1985 Preparation for the first year of project implementation have been satisfactory, particularly in view of the fact that the implementing agencies have no prior experience with Bank-supported projects. Loan No. 1199T Livestock Development Project; $5.0 Million Loan of February 27, 1976; Effective Date: May 25, 1976; Closing Date: June 30, 1981 Project implementation is proceeding satisfactorily but disburse- ments remain about eighteen months behind appraisal estimates. The seed production and pasture development programs are prograssing well and the loaned-bull and artificial insemination program, hitherto hindered by the delay in importation of cattle, are improving. Loan No. 1243 Rubber Replanting Project; $50 Million Loan of September 13, 1976: Effective Date: January 14, 1977; Closing date: June .30, 1981 The project is one year behind schedule due to procurement diffi- culties and initial delay in loan signing as well as in agreeing on the formula of fertilizers to be procured through ICB. Implementation is improving, however. Staff constraints have delayed completion of the socio-economic survey of rubber smallholders. Loan No. 1393 National Agricultural Extension Project: $28 Million Loan of May 17, 1977; Effective Date: September 1, 1977; Closing Date: December 31, 1982 Supervisory staff have been appointed in all 33 project provinces, and remaining vacancies are expected to be filled by end-1980. The quality of training, particularly that for subject matter specialists, can be further improved. Efforts to rectify shortcomings in the quality of leadership and technical support are being made in the weaker provinces. Excellent extension results have already been achieved, in particular through the extensive use of small pumps for dry-season cropping by small farmer groups, and in improve- ments in home gardens. The civil works program is about two years behind schedule because of high inflation and, until recently, - 36 - ANNEX II Page 9 of 12 the low unit cost ceilings for civil works set by the Budget Bureau. It is expected that contracts for all remaining civil works will be awarded before October 1980. Procurement of vehicles, equipment and materials is on schedule. Disbursements are lagging through the delays in the civil works program. Consultants continue to provide excellent assistance. Loan No. 1752 Second National Agricultural Extension Project; $40 Million Loan of September 18, 1979; Effective Date: December 18, 1979 Closing Date: December 31, 1985 This loan became effective on December 18, 1979, and implementation progress to date is satisfactory. Loan No. 977 Srinagarind (Ban Chao Nen) Hydroelectric Project; $75 Million Loan of April 15, 1974; Effective Date: June 14, 1974; Closing Date: December 31, 1980 Civil works under the project are nearly completed. The installatioa of the turbine generating units is expected to be completed on schedule. Project c.sts are likely to be about 30% higher than appraisal estimates, due mainlj to additional grouting work required beneath the main embankment. The progress on resettlement has been satisfactory, and all of the families affected have now been resettled. Loan No. 1485 Pattani Hydroelectric Project; $50 Million Loan of September 23. 1977; Effective Date: December 20, 1977; Closing Date: December 31, 1982 The construction of the main civil works is proceeding satis- factorily. Implementation is about one month behind schedule. The initial delay was caused by slow mobilization of the contractor and poorer-than- expected rock conditions at the downstream ends of the diversion tunnels. Orders for all major equipment (financed by the Kuwait Fund) have been placed. Construction for the resettlement component is progressing according to schedule. Disbursements are generally in line with appraisal estimates. Loan No. 1527 The Accelerated Rural Electrification Project; $25 Million Loan of March 9, 1978; Effective Date: June 7, 1978; Closing Date: June 30, 1983. After an initiating delay in procurement, progress on project implementation is satisfactory. - 37 - ANNEX II Page 10 of 12 Loan No. S-10 Natural Gas Development Engineering Project, $4.9 Million Loan of July 28, 1978; Effective Date: September 25, 1978; Closing Date: June 30. 1980. All the project preparation activities and preliminary engineering have been completed. In July 1979, the Borrower, the National Gas Organiza- tion of Thailand, was taken over by the Petroleum Authority of Thailand who is the Borrower for a loan of $107 million for the Second Gas Pipeline project. Loan No. 1690 Bang Pakong Thermal Power Project; $80 Million Loan of August 9, 1979; Closing Date: June 30, 1984 This loan is not yet effective. Loan No. 1773 Second Natural Gas Pipeline Project; $107 Million Loan of February 15, 1980; Closing Date: December 31, 1983 This loan is not yet effective. Loan No. 1021 Bangkok Water Supply Project; $55 Million Loan of June 28, 1974; Effective Date: December 2, 1974; Original Closing Date: June 30, 1979; Current Closing Date: June 30, 1980 Physical work on the project is proceeding satisfactorily. The quality of construction and the performance of consultants on supervision of construction of the IBRD portion of the project is good. Because of the initial delays in contract awards, the project is expected to be completed by the end of 1980. Due to inadequate tariffs, which were last revised in May 1972, MWWA's financial performance continues to be poor. Although MWWA's proposals for raising the water tariffs in line with increased operating costs were approved by Cabinet, parliamentary opposition has put these tariff increases in abeyance. Loan No. 1556 Bangkok Sites and Services Project; $8.6 Million Loan of June 15, 1978; Effective Date: September 22, 1978; Closing Date: December 31, 1981 Progress is generally good with only minor delays in implement- ation. Current cost estimates for civil works are below appraisal esti- mates. - 38 - ANNEX II Page 11 of 12 Loan No. 1638 Bangkok Traffic Management Project; $16 Million Loan of January 25. 1979: Effective Date: April 25, 1979; Closing Date: September 30, 1982 After an encouraging start, the project's overall progress has slowed. The most pressing concern is to strengthen the role of OCMRT in guiding project implementation. The policy package featuring area road pricing has made little progress in gaining acceptance. Recently, a healthy dialogue on the role of various agencies took place that may help to push the implementation of the project. Tangible project progress to date has been largely limited to the installation of a computer-controlled traffic signal scheme which has been a technical success. Loan No. 1492 The Minburi (Lat Krabang) Industrial Estate Project; $4.75 Million Loan of December 5, 1977; Effective Date: March 24, 1978; Closing Date: December 31, 1981 On-site infrastructure has been progressing. Bunding, drainage, and three of the four deep wells have been completed. Substantial progress is being achieved in road construction, sewerage, and water distribution. Land sales have been very encouraging with nearly all of available plots either firmly committed or being negotiated, and are well ahead of appraisal estimates. These sales have been achieved at an average sales price of B 300,000 per rai, as compared to projected sales price of B 250,000 per rai in the appraisal. In order to accommodate substantial demand for the Export Processing Zone, IEAT has enlarged this area to 30 ha. The estate's full development is expected by mid-1980. Loan No. 992 Second Industrial Finance Corporation of Thailand (IFCT) Project; $12.0 Million Loan of June 4. 1974; Effective Date: September 4. 1974: Original Closing Date: September 30, 1978; Current Closing Date: December 31, 1980 Since June 1974 when the loan was made, IFCT's financial condition continued to be good. The loan is fully committed and nearly disbursed. Loan No. 1327 Third IFCT Project; $25 Million Loan of December 8, 1976; Effective Date: March 14, 1977; Closing Date: December 31, 1980 The loan commitment rate was initially slower than expected because of sharply depressed investment climate in 1976. This has much improved. The IFCT's capital structure and liquidity position have improved, however, with successful share capital increases. Satisfactory progress has been made on the institution-building aspects of the project. - 39 - ANNEX II Page 12 of 12 Credit No. 767 Population Project; $33.1 Million Credit of February 27, 1978; Effective Date: June 30, 1978; Closing Date: December 31, 1981 Due to initial staffing problems, key project activities were held up initially and major elements of the project are about six months behind schedule. The Ministry of Public Health is, however, taking appropriate action to strengthen project management, improve coordination and remove impediments to implementation. - 40 - ANNEX III Page I THAILAND PROVINCIAL WATER SUPPLY PROJECT Supplementary Project Data Sheet Section I: Timetable of Key Events (a) Time taken by country to prepare the project: One year. (b) Agency which prepared the project: Provincial Water Works Authority. (c) First presentation to the Bank: February 1979. First mission to consider the project: June 1979. (d) Appraisal missions: June and November 1979. (e) Completion of negotiations: April 25, 1980. (f) Planned date of effectiveness: November 1, 1980. Section II: Special Bank Implementation Actions None. Section III: Special Conditions (a) The Government has agreed that it will: (i) undertake a review of the institutional and funding arrangement to enhance the development of the rural water supply subsector (para. 33); (ii) ensure that the increases in water rates of PWWA will be put into effect (paras. 56 and 57); and (iii) provide PWWA with sufficient funds to operate existing systems and carry out its development program to the extent self-generated funds are insufficient (para. 58). (b) PWWA has agreed that it will: (i) review the design of each system to ensure that it is cost- effective and send to the Bank for comment proposals for those systems estimated to cost more than $100,000 (para. 39); - 41 - ANNEX III Page 2 (ii) employ engineering, accounting and management consultants whose qualifications and terms of employment are acceptable to the Bank (para. 40); (iii) furnish its audited opening balance sheet and other financial statements for its initial fiscal periods through September 30, 1980, and the auditor's reports thereon, by September 30, 1981, and furnish the audited financial statements and auditor's report for each subsequent fiscal year within nine months after the end of each year (para. 48); (iv) gradually increase its urban water rates beginning in fiscal year 1982 so that, by 1985, sufficient revenues would be generated to cover cash operating expenditures and debt service and carry out a study of urban water rates and formulate policies on a rate structure for presentation to the Bank by June 30,1981 (para. 56); (v) reassess, by September 30, 1985, the factors affecting the level of urban water rate levels, recommend as to the extent additional cost recovery should be provided, and implement such recommendations as PWWA, the Government and the Bank agree (para. 57); (vi) complete a study of rural water rate levels, structures and cost recovery, and recommend a policy no later than September 30, 1983 (para. 58); and (vii) not incur any debt, except with Bank concurrence, until its net revenues rise to a level at least 1.5 times its debt service obligations (para. 58); (viii) encourage the use of safe public water by undertaking a program of educating the public in the advantages of using safe water supplies and giving residential consumers the option of paying for their water service connections in monthly installments (para. 62). 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