66428 CDP-Infrastructure Annexes Page 1 THAILAND COUNTRY DEVELOPMENT PARTNERSHIP – INFRASTRUCTURE – Concept Paper March 2007 THAILAND COUNTRY DEVELOPMENT PARTNERSHIP: INFRASTRUCTURE (CDP-INFRA) CONCEPT PAPER MARCH 2007 CURRENCY EQUIVALENTS: Currency Unit – Thai Baht (THB) Exchange Rate (as of 30 March 2007): THB 1,000 = US$ 28.6 US$ 1.00 = THB 35.0 GOVERNMENT FISCAL YEAR: October 1 – September 30 ABBREVIATIONS AND ACRONYMS AAA Analytical and Advisory Activities ADB Asian Development Bank ASTAE Asia Sustainable and Alternative Energy Program BOB Bureau of Budget CAT Communications Authority of Thailand CDM Clean Development Mechanism CDP Country Development Partnership CDP-INFRA Country Development Partnership for Infrastructure CISC Canadian Interconnection Steering Committee COC Chamber of Commerce DEDE Department of Alternative Energy Development and Efficiency DGR Department of Groundwater Resources EAPIRF East Asia and Pacific Infrastructure Regulatory Forum EE Energy Efficiency ENCON Energy Conservation Program EPPO Energy Policy and Planning Office ESMAP Energy Sector Management Assistance Program FEC Final Energy Consumption FTA Free-Trade Area GDP Gross Domestic Product IFI International Financial Institution JBIC Japan Bank for International Cooperation KPI Key Performance Index kW Kilowatt kWh Kilowatt-Hour LAO Local Administration Organization LSP Logistics Service Provider MEA Municipal Electricity Authority MOE Ministry of Energy MOF Ministry of Finance MONRE Ministry of Natural Resources and Environment MOT Ministry of Transport MRT Mass Rail Transit MW Megawatt MWe Megawatts electric NEDA Neighboring Countries Economic Development Cooperation Agency NESDB National Economic and Social Development Board NGO Non-Governmental Organization NGV Natural Gas Vehicle NTB Non-tariff barriers NTC National Telecommunication Commission OTP Office of Transport and Traffic Policy and Planning PDA Population and Community Development Association PDMO Public Debt Management Office, Ministry of Finance PEA Provincial Electricity Authority PEC Primary Energy Consumption PPI Private Participation in Infrastructure PPIAF Public-Private Infrastructure Advisory Facility PPP Public-Private Partnership QoS Quality of Service R&D Research & Development RE Renewable Energy SOE State-Owned Enterprise SPP Small Power Producer TA Technical Assistance TAO Tambon Administration Organization TFL Thai Federation of Logistics TOR Terms of Reference TOT Telephone Organization of Thailand USF Universal Service Fund USO Universal Service Obligation UTDP Urban Transport Development Partnership VPWS Village Piped Water System VSPP Very Small Power Producer WBI World Bank Institute ACKNOWLEDGEMENTS This document was prepared by a World Bank team based on extensive discussions with the National Economic and Social Development Board of Thailand (NESDB) and other relevant agencies, and under the general guidance of Arkhom Termpittayapaisith (Deputy Secretary General, NESDB), Ian Porter (Country Director for Thailand, World Bank), and Christian Delvoie (Director, Sustainable Development Department, East Asia and Pacific Region, World Bank). The World Bank team is led by Zhi Liu and comprises Kirida Bhaopitripr, Antonie de Wilde, Mohinder Gulati, Baher El-Hifnawi, Michel Kerf, Chanin Manopiniwes, Rachadawan Pasugswad, Nat Pinnoi, Apurva Sanghi, Ashok Sarkar, Kalpana Seethepalli, Peter Smith, Manida Unkulvasapaul, Douglas Webster, Chaohua Zhang, and Samuel Zimmerman. The NESDB team is led by Chanvit Amatamatucharti (Director, Infrastructure Project Office) and comprises Poomjai Attanun, Suriyon Thunkijjanukij, Thida Pattatham, Anuwan Vongpichet, Apirada Chinprateep, Danucha Pichayanan, Manutsawee Sookaree, Nuanprae Patramai, Nitchasil Tantivejkul, Noppajit Luangchosiri, Supree Tientamnoon, and Visnu Tivatansakul. Peer reviewers include Paul Amos (Transport Adviser, World Bank), and Anil Cabraal (Lead Energy Specialist, World Bank), Jose A. Gomez-Ibanez (Professor of Public Policy and Urban Planning, Harvard University), and Shahid Yusuf (Research Manager, Development Economics Research Group, World Bank). Useful advice was received from Jitendra Bajpai (Transport Sector Director, East Asia and Pacific Region, World Bank), Somkid Buapeng (Deputy Director General, Department of Groundwater Resources, Ministry of Natural Resources and Environment), Utis Kaothien (Deputy Secretary General, NESDB), Jim Lynch (Deputy Head, Thailand Resident Mission, ADB), Kazi Martin (Lead Economist, World Bank), Taisuke Miyao (Senior Representative, JBIC Bangkok), Richard Pyvis (Director, Credit Lyonnais Securities Asia B.V.), Denis Robitaille (Operations Manager, Southeast Asia Country Department, World Bank), Maitree Srinarawat (Director General, Office of Transport and Traffic Policy and Planning, Ministry of Transport), Keshav Varma (Urban Sector Director, East Asia and Pacific Region, World Bank), Jean-Pierre Verbiest (Country Director, Thailand Resident Mission, ADB), Mechai Viravaidya (Chairman, Population & Community Development Association), Sun Vithespongse (Deputy Director General, Public Debt Management Office, Ministry of Finance), Suranan Wongvithayakamjorn (Secretary General, National Telecommunication Commission), and Junhui Wu (Energy Sector Manager, East Asia and Pacific Region, World Bank). THAILAND COUNTRY DEVELOPMENT PARTNERSHIP: INFRASTRUCTURE (CDP-INFRA) CONCEPT PAPER MARCH 2007 TABLE OF CONTENT I. Introduction ......................................................................................................................1 II. An Overview of Sector Issues .........................................................................................2 III. Approach ........................................................................................................................4 IV. Components and Actions ...............................................................................................5 V. Results Measurement and Management .........................................................................9 VI. Partnership Arrangement .............................................................................................10 VII. Budget and Resource Mobilization (Indicative) ........................................................11 VIII. Risks and Mitigation Measures .................................................................................11 ANNEX 1: Background and scope of work for Component 1: Technical support for the formulation and implementation of infrastructure strategies ................................... I ANNEX 2: Background and scope of work for Component 2: Technical support for renewable energy development and energy efficiency ............................................... VI ANNEX 3: Background and scope of work for Component 3: Urban Transport Development Partnership (UTDP) jointly supported by ADB, AFD, JBIC, and World Bank Group ......................................................................................................... XVI ANNEX 4: Background and scope of work for Component 4: Technical assistance for capacity building of the National Telecommunication Commission ....XXIV ANNEX 5: Background and scope of work for Component 5: Implementation support for pilot demonstration project for rural water supply and income generation ............................................................................................................... XXVII ANNEX 6: World Bank Press Release—National Launch of the Country Development Partnership for Infrastructure ............................................................. XXXIV CDP-Infrastructure 1 Thailand Country Development Partnership for Infrastructure (CDP-INFRA) I. Introduction This concept paper defines a Country Development Partnership for Infrastructure (CDP-INFRA) between the Government of Thailand and the World Bank Group. The CDP-INFRA will be a knowledge-based partnership for analytical works and implementation support actions in key areas of the country‘s infrastructure development agenda. The overall objective of the CDP- INFRA is to help the country improve the national competitiveness and the well-being of the population, by supporting the development and implementation of infrastructure strategy, policies, regulatory and institutional actions, and investment programs. The framework of CDP- INFRA is defined on the basis of the on-going Thailand-World Bank Group Partnership for Development (see Box 1). The CDP-INFRA will be led by the Government with support from the World Bank and other international development agencies. The National Economic and Social Development Board (NESDB) is the lead agency from the Government for the Thailand- World Bank Group Partnership for Development as well as the CDP-INFRA. Box 1: The Country Development Partnership (CDP) What is the CDP? The Country Development Partnership (CDP), launched in 2000, is a knowledge-based partnership between the World Bank and the Thai Government. The CDP is a three-year integrated framework for actions in key areas of the country‘s development agenda. Each CDP is led by the Government with support from other stakeholders, including the World Bank and other international financial institutions (IFI). The CDP also serves as a vehicle for engaging civil society, the private sector, and other partners in the policy design, implementation, and monitoring process. Depending on where support is needed, the Bank‘s engagement in a CDP can take the form of analytical and advisory activities, technical assistance, IFI coordination, and/or partnerships. In addition, as appropriate, investment projects can selectively support implementation. How does CDP work? Step One  The Government selects key priority areas for the CDP.  An outcomes-oriented action plan with a clear timeline, milestones, and accountabilities is formulated, based on strong analytic work—as laid out in a development matrix which describes the CDP objectives, output benchmarks, and capacity building inputs.  Division of labor and support from other partners is agreed—as laid out in the partnership arrangement section, which details the inputs of partners and identifies potential resources to be tapped as well as any funding gap.  Arrangements for specific analytic and advisory activities (AAA), technical assistance (TA), and capacity building support are determined. Step Two  Progress is monitored through public workshops with stakeholders annually or biannually.  Specific action plans are fine-tuned and adjusted based on the progress review meeting.  Interim implementation reports are completed and disseminated to stakeholders. Step Three  Specific CDP progress is integrated in a comprehensive progress review on the national agenda. 2 Thailand The main text of this concept paper defines the components and activities of the CDP-INFRA for the next three years. It provides the background, justification and scope of work for the proposed activities, and highlights the approach, a time-bound work program, implementation arrangements, indicative budget and means of resource mobilization, and matrices of specific objectives, inputs, outputs, and expected outcomes for each component. The background and more detailed scope of work for each of the proposed components are included in the annexes. This concept paper will be a guiding document for the implementation of the proposed activities. Additional activities that respond to the emerging needs of the country‘s infrastructure development agenda may be supported under the CDP-INFRA, depending on the availability of resources. The CDP-INFRA was officially launched on January 31, 2007 (see Annex 6 for a press release which also provides web links to relevant speeches and presentations made in the CDP-INFRA launching workshop). II. An Overview of Sector Issues Over the last few decades, economic infrastructure—energy, transport, water and sanitation, and telecommunications—has played an important role in supporting Thailand‘s economic growth and meeting the growing demand of the population for various infrastructure services. The achievements are significant but there are also business areas that remain underserved (see Box 2). The electricity supply, intercity highway transport, inland water transport, ocean shipping, urban water supply, and telecommunication services are generally adequate, despite the existence of minor or moderate deficiencies. Air transport can be considered world-class. However, subsectors such as urban transport in Bangkok and Chiang Mai, water supply in many rural areas, and the nationwide waste water treatment systems have long been underserved. Box 2: Key Sector Performance Indicators, 2004/5  Population with access to improved water source: 91% (rural), 95% (urban), and 93% (all)  More than 25,000 villages (12.5 million people or 20% of the population) without piped water system, and about 15,000 of these villages with inadequate water supply  Population with access to improved sanitation: 97%  Population with access to electricity: 91%  Average electricity tariff (nominal US$/kWh): 0.063 (residential), and 0.059 (industrial)  Transmission and distribution losses: 7.3%  Total energy expenditures over GDP: 15% of GDP  Share of renewable energy over total commercial energy usage: 0.5%  Total logistics costs over GDP: 16%  Percent of roads paved: 97%  Number of fatalities from road accidents (2004): 13,982  Households with a telephone mainline (2006): 23.4%  Population (over 6 years old) with a cellular phone (2006): 41.6%  Population who use internet (2005): 11.4% Source: World Bank (2006), Selected Indicators of Infrastructure Performance: How Do East Asia and Pacific Countries Compare?, East Asia and Pacific Infrastructure Department; National Statistical Office Website. CDP-Infrastructure 3 Under usual circumstances, improved quality and affordability of infrastructure services across all infrastructure subsectors is a constant requirement for responding to growing demand. But Thailand is also facing some new challenges. Since the Asian financial crisis that erupted in 1997, demand for both infrastructure services as well as infrastructure investment in Thailand had sharply declined. Today, with the economy back on track, demand is growing rapidly. For example, demand for electric power is growing at eight percent per year. Traffic growth on many national highways approaches 10 percent a year. Capacity shortages and bottlenecks are emerging in almost all subsectors, constraining economic growth. This is compounded by the increases in international oil prices. The Government is seriously concerned with the relatively high logistics costs, heavy traffic congestion in Bangkok, high energy intensity, and low level of renewable energy development. These problems directly reduce national competitiveness and weaken the foundation for long-term economic growth and sustainability. Some of the issues, such as the emerging bottlenecks, are short term in nature and can be overcome with capacity investment and various measures for improved efficiency. Others, such as relieving the high energy intensity and developing renewable energy, are long term and require persistent effort to be initiated now. Infrastructure financing remains to be a challenge. Government budget allocations will be under constant pressure from competing social services such as education and public health. Due to the policy emphasis on maintaining macroeconomic and fiscal stability, the Government will have to increasingly rely on off-budget financing for infrastructure. However, the private sector, whose participation in infrastructure financing has suffered from a number of financial and contractual problems brought on by the Asian financial crisis, may not be fully ready to re-enter the market. Local infrastructure service delivery is another challenge. Under fiscal decentralization, local governments, especially those at the Tambon level, increasingly assume responsibility for the delivery and management of local infrastructure services. However, service delivery is seriously constrained by the weak implementation capacity in most localities. These issues all require appropriate attention, through effective implementation of clearly defined medium-term development plans and investment programs, which are guided by long- term development strategy. A number of associated policy, regulatory, institutional, and financing issues should also be addressed progressively to improve the competition, efficiency and affordability of infrastructure services, and to lay a foundation for sustainable infrastructure development. Over the last two years, government agencies have been preparing strategies and programs to respond to the infrastructure challenges. The NESDB has drafted a national logistics development master plan and is in the process of formulating the ten-year implementation plan. The Energy Policy and Planning Office (EPPO) prepared an energy strategy for competitiveness, and set targets for renewable energy development. The line agencies have also prepared or are preparing investment programs to meet the rising demand for infrastructure services. The Tenth Five-Year Plan formulated by the NESDB gives strong emphasis on infrastructure, logistics and cluster development. The National Telecommunication Commission (NTC), the first independent regulatory body in the infrastructure sector, has recently become functional, and its 4 Thailand regulations are producing impacts on improved market competition, access expansion, and cost reduction. More work lies ahead for the Government. There is a need for broad strategic directions for more sustainable infrastructure development. There is an urgent need for the Government to investigate the renewable energy development options and for actions to jump-start the development at scale. There is also a need for better policy environment for the private sector participation in the provision and management of infrastructure services. At the implementation level, there are needs for capacity building for the newly established regulatory agencies, for improved clarity in infrastructure financing policy, and for improvement of the infrastructure prioritization and delivery process so that good projects are implemented in a timely and efficient manner. III. Approach The CDP-INFRA follows the partnership approach set out by the Thailand-World Bank Group Partnership for Development, which was approved by the Bank‘s Board in December 2002 and has since been the umbrella program for the Bank‘s activities in Thailand. The approach is based on an recognition that the relationship between Thailand and the Bank has progressed from primarily a borrower-lender relationship to one of a true development partnership. While financial support remains an important part of this partnership, the Bank‘s role has evolved more towards facilitating knowledge sharing and providing policy advice on medium-term structural issues. Building on this evolving approach, the Thailand-World Bank Group partnership focuses on diagnostic and monitoring work and implementation support for select critical issues in Thailand‘s overall national development agenda. So far, a few thematic or sectoral CDPs have been or are being supported under the Thailand-World Bank Group partnership. These include CDPs for Governance, Financial and Corporate Sector, Social Protection, Poverty, Environment, Education, and Health. For the concept development of the CDP-INFRA, a series of preparatory discussions have been carried out between the World Bank and the NESDB and other government agencies. Other international financial institutions including ADB, AFD, and JBIC have also been consulted. From this preliminary work, five focus areas were identified. Accordingly, five components are defined as follows: 1. Technical support to the formulation and implementation of infrastructure and logistics development strategies; 2. Technical support to renewable energy development and energy efficiency; 3. Technical support to urban transport development in the Bangkok metropolitan area, under the Urban Transport Development Partnership (UTDP) jointly supported by ADB, AFD, JBIC, and World Bank Group; 4. Technical support to the capacity building program of the National Telecommunication Commission (NTC); 5. Implementation support to a pilot demonstration project for rural water supply and income generation. CDP-Infrastructure 5 All five components are considered to be highly relevant to the national development agenda. These are also business areas where the Bank possesses international experience, knowledge and expertise. The components and actions are summarized in the next section. Their expected outputs and outcomes are explained in the development partnership matrices. The details of each component are provided in annexes one through five. IV. Components and Actions Component 1: Technical support for the formulation and implementation of infrastructure strategies The objective of this component is to provide an analytical underpinning and support to the Government‘s ongoing effort to develop and implement sustainable infrastructure and logistics strategies. The component will include analytical and advisory activities (AAA), to help the Government better define its long-term infrastructure strategic directions, prioritize the medium- term development programs, and enhance the legal, institutional, and managerial frameworks to support sustainable infrastructure development. The need for new strategic thinking arises from a high level of consensus within the country that Thailand should develop a more resilient and sustainable economy that is able to deal with shocks. Facing high oil prices, the Government‘s long term concern is how to achieve a better energy mix, better energy efficiency, and less oil-dependent transport modal splits. The Government has done a great deal of thinking on these subjects in recent years, and has come up with strategic ideas to address the concerns. The key challenge is how to articulate them in a more coherent manner and put them into operation. The scope of work for this component is envisaged to cover the following activities: (i) a critical assessment of Thailand‘s infrastructure development and performance in each sub-sector; (ii) analysis of the key drivers influencing Thailand‘s socio-economic future and their implication to the future infrastructure and logistics needs; (iii) analysis of the linkages between public and private investment and between infrastructure and investment climate; (iv) policies to promote sustainability and efficiency of infrastructure services; (v) infrastructure financing including fiscal space, private sector financing, and public private partnership modalities; (vi) legal and regulatory framework; (vii) planning and policy making process; (viii) environmental and social issues and citizen participation; (ix) subsidy and pricing policies; and (x) local infrastructure service delivery, including sub-national financing of infrastructure. The main deliveries will include two major analytical studies, supplemented by just-in-time advisory and capacity building activities (including training and seminars), where appropriate: 1. Thailand infrastructure sector study. This is expected to be a comprehensive sector study that builds on current knowledge, focuses on the improvement of analytical basis for strategic thinking and formulation, and provide a critical assessment of sector 6 Thailand performance, issues, and options to meet the existing and anticipated challenges. It will be undertaken during 2007/08. 2. A study on public-private partnership (PPP) strategies for infrastructure. This proposed study will review Thailand‘s experiences with private sector participation in infrastructure financing; examine contributing factors to the success and failure; and identify feasible PPP strategies, especially the key elements required for a conducive policy environment where private financing of infrastructure could yield significant and sustainable benefits. The study may be undertaken in the second year of the CDP- INFRA. 3. A series of knowledge sharing seminars on international experiences and practices. The topics would be determined on an as-needed basis, and may include the following: global trends in logistics development, infrastructure financing, environmental and social safeguards, stakeholder involvement in infrastructure, and sub-national government financing. The seminars will be arranged on the basis of availability of expert speakers. In recent months, the NESDB has initiated some ground work in setting infrastructure and logistics strategy. The NESDB also plans to publish the Thailand Infrastructure Annual Reports. The first annual report is currently being prepared by NESDB staff, assisted in a limited way by the World Bank. It is agreed that the studies defined under this component may be disseminated through the annual reports. Component 2: Technical support to renewable energy development and energy efficiency This component includes collaborative activities with the energy sector agencies to explore technological and policy options in support of long-term, secure and sustainable renewable energy. The objective is to support the Government to achieve the renewable energy and energy efficiency targets. The activities involve analytical works and knowledge sharing, especially in the form of international experience sharing. 1. A study on Thailand‘s alternative energy and energy policy. Specifically, this item entails setting energy targets in the work agenda of the NESDB. The study will assess the natural endowment of renewable energy including biofuels in Thailand, and explore economically feasible options for renewable energy development. This study will also provide input into the long-term infrastructure development strategy. The Asia Sustainable and Alternative Energy Program (ASTAE) has provided funding for the study, and consultants will be engaged. The consultancy is expected to be completed by end of June 2007. 2. Workshops. The first workshop was successfully conducted in late August 2006, and focused on international knowledge dissemination. The second workshop was held in March 2007, and it focused on sustainable energy project financing and its challenges. Additional workshops are planned for the dissemination of the Thailand‘s alternative energy and energy policy study, approximately in the second half of 2007. CDP-Infrastructure 7 3. Development of a coherent energy efficiency database for Thailand. While the energy efficiency data are largely available, they are scattered throughout different agencies. Consolidation and collection of data are necessary. While NESDB is in the process of hiring a consultant to build an energy-sector database for Thailand, the Bank will provide guidance on best practices on the activity. 4. Carbon finance knowledge sharing. Thailand is yet to participate in carbon finance. More systematic information on carbon finance and the benefits to Thailand from selling carbon credits under the Kyoto Protocol is needed to raise public awareness and gain public support. It is proposed that a paper be produced focused on the process for Thai companies and banks to register for and obtain carbon credit agreements. This will be followed by one or more workshops and other activities to catalyze Thailand‘s involvement in the clean development mechanism (CDM), as defined under the Kyoto Protocol. 5. Exploration of commercially financed renewable energy and energy efficiency projects. Bankability of energy-related investment projects is a topic of great interest to the Government. Activities under this sub-component will involve a survey of financial sector regulations, which might prevent commercial banks from increasing their exposure in this sector. As not many commercial banks have knowledge and understanding of the opportunities that the sector offers, proposed initiatives will enhance the foundation for private participation in financing renewable energy projects, with understanding and support from the national policy authority. 6. Field study tours. NESDB wishes to expand its knowledge base to include comprehensive understanding of the energy sector, and requests the Bank to assist with a field program for NESDB staff to visit a number of countries and to learn from their experiences in the development of the energy sector. Under this activity, two NESDB staff will take part in the workshop on International Best Practices in Institutional Frameworks for Energy Efficiency Implementation in South Korea being held on September 28 and 29, 2006. In addition, NESDB finances one staff member‘s on-the-job training at the Bank‘s headquarters for three months. Component 3: Technical support to urban transport development This component is defined as an Urban Transport Development Partnership (UTDP) and is supported by several international financial institutions (IFIs), including ADB, AFD, JBIC and the World Bank Group. The UTDP is a knowledge-based partnership, providing technical advisory support in a fully coordinated manner to the Government‘s development and implementation of urban transport strategy, policy, plans, programs, projects and related regulatory and institutional capacity building activities. The ultimate goal of the UTDP is to help improve the effectiveness, efficiency, and sustainability of the Bangkok metropolitan region‘s multi-modal transport system. Over the last 12 months, ADB has provided technical assistance (TA) to the Government on options of public transport integration, advice on the development of an MRT concession model, analysis of options and implications of integrated fares and ticketing, and development of an 8 Thailand MRT financial model. JBIC has been in discussion with the Government on financing priority MRT projects. The World Bank has provided advisory services to the Government regarding procurement methods and private sector financing modalities. The key inputs of the World Bank Group during 2007/08 under the UTDP include: 1. Strategic urban transport policy directions for Bangkok. The primary objective of the study is to advise government policy makers on specifically, the existing problems that undermine performance of the mass rail transit investment, and, generally, the breadth, depth and causes of urban transport problems in Bangkok metropolitan, the potential options, and a practical sequence of actions to address these problems. 2. A technical workshop. Planned for mid-2007, the workshop will disseminate the completed and on-going works under the UTDP and continue discussions on various issues relating to MRT and urban transport development. 3. Proposed IFC advisory services for private financing transaction. This is proposed as a supportive effort to the Government‘s search for private financing for the mass rail transit projects. IFC could serve as a multilateral advisor for the Government throughout the private financing transaction process, and provide complete advisory services from technical due diligence, legal services, financial structuring, and bidding, to transaction and post-transaction services, depending on the needs and the preparation status. Component 4: Technical support to the capacity building program of the national telecommunication commission (NTC) The objective of this component is for the Bank to continue advising the NTC on various regulation issues, building on the successful collaboration between the NTC and the Bank over the past year. Funded by PPIAF, the Bank has mobilized international experts to work with NTC on the following priorities: the telecom master plan, interconnection and costing, public consultation, licensing, universal service and training. NTC has agreed to continue the collaboration into the second phase with its own funding. The component will include the following activities: 1. The second phase of NTC capacity building. It is expected to deliver briefings and workshops to NTC commissioners and senior staff on a range of regulatory topics, which will be determined soon. 2. Possible capacity building for other regulatory agencies. Built on the experience of collaboration with NTC, the Bank could mobilize the resources to support other regulatory agencies. Skills and the regulatory decision making process could be enhanced through information exchange, experience sharing, and training programs available from the East Asia and Pacific Infrastructure Regulatory Forum. CDP-Infrastructure 9 Component 5: Implementation support to a pilot demonstration project for rural water supply and income generation Through support to a pilot demonstration project for rural water supply and income generation, this component will help to demonstrate an innovative approach that speeds up the provision of rural water infrastructure services. Unlike the conventional approach that relies entirely on the public sector for rural water provision, this alternative approach possesses the following key features: (i) provision of piped water systems on a commercial basis through private sector financing; (ii) community participation in the management of the systems including operations and maintenance and service management; and (iii) introduction of cash-earning farming practices that are made possible through the available water, to improve the affordability and, hence, the commercial viability. The pilot demonstration project will support the provision of sustainable village piped water systems in 20 to 40 selected poor villages through private sector financing, community participation and an income-generation mechanism. The project is expected to build a strong case for the Government to fund the scaling-up of the innovative model. The project will accomplish both the quick expansion of rural access to clean water, as well as demonstrate a working model applicable to neighboring countries. It is also expected to facilitate private-sector financiers‘ participation and commitment in financing rural piped water systems. Trust fund financing will be sought by the World Bank to support the implementation of village capacity- building activities that assist villages to run the systems built by the private sector. The main deliveries include the following elements: 1. Implementation support to the pilot demonstration project in 40 selected poor villages. The main scope of implementation work includes the design of an overall work program, negotiation with commercial banks on the financing terms for the construction of the water works, village capacity building for water system operations, maintenance and management, and income-generation farming practices. The pilot project will be implemented in two stages, with the first stage covering 15 villages, and the second stage covering 25 villages. 2. Preparation of an operational manual. The manual will summarize the experience gained from the pilot project in a user-friendly manner to provide clear guidance to the Government and other organizations. 3. A dissemination study tour. This will be designed for relevant central and local government officials from Thailand, Thai mass media, and government officials from each of the neighboring countries (Cambodia, Lao PDR, and Vietnam). V. Results Measurement and Management Results measurement of the CDP-INFRA will be crucial but challenging as the outcomes and impact of the knowledge partnership will depend on contributions from many partners and stakeholders. The results measurement should focus on the actual outcomes of the CDP-INFRA activities. Two matrices are designed as tools for results measurement and management. 10 Thailand The development matrix summarizes the objectives, inputs, outputs, and outcomes. It is part of a results-based monitoring system that allows the progress in each component to be monitored by all stakeholders. The deliverables, responsibility and contribution matrices identify the type of deliverables, activities, responsible parties, and committed contribution under each component. The deliverables correspond to outputs in the development matrices. This allows all stakeholders to clearly identify the linkages between the inputs, the deliverables, the outputs, and the objectives in each component and across components of the CDP-INFRA. The monitoring activities help ensure appropriate inputs and processes to achieve satisfactory outputs and outcomes. The NESDB and the World Bank will take a lead to oversee the progress and ensure the delivery of results according to the development matrix. Annual workshops, to be led by the NESDB, will also be conducted to review the progress, identify problems, and brainstorm for solutions. Consequently, the matrices will be updated as necessary and as the program progresses. VI. Partnership Arrangement The NESDB—Thailand‘s principal planning agency—is a long time counterpart of the World Bank operations in Thailand, and is the lead Government agency for the umbrella CDP with the World Bank Group. The NESDB will also be the lead agency for the CDP-INFRA. Other government agencies involved include the Ministry of Finance (MOF), the Bureau of Budget (BOB), the Ministry of Transport (MOT) and its Office of Transport and Traffic Policy and Planning (OTP), the Ministry of Energy (MOE) and its Energy Policy and Planning Office (EPPO), and the Ministry of Natural Resources and Environment (MONRE). The other partners include the national Telecommunications Commission (NTC), Chamber of Commerce, Thai Federation of Logistics (TFL), state enterprises, and private sector. The UTDP, of which the works supported by the World Bank Group are included in component three, is a program jointly supported by ADB, AFD, JBIC and the World Bank, and will be managed jointly by the four agencies. Other relevant international development agencies will be consulted throughout the CDP-INFRA implementation period. The CDP-INFRA is intended to be an open platform for all interested organizations to participate. Therefore, collaboration with other international development agencies will be defined, where appropriate. The arrangement is summarized in the following table. Component Lead Agency Collaborating Agencies Infrastructure Strategies NESDB MOF, BOB, MONRE, MOT, MOE, COC, TFL Renewable Energy and Energy Efficiency NESDB MOE (DEDE), EPPO Urban Transport Development Partnership MOF (PDMO), MOT (OTP) BMA, MRTA, BMTA jointly supported by ADB, AFD, JBIC and World Bank Group Regulatory Capacity Building NTC Rural Water Supply MONRE PDA, TAOs CDP-Infrastructure 11 VII. Budget and Resource Mobilization (Indicative) The resources available to the CDP-INFRA for FY07 and FY08 are shown below. These are indicative only and subject to modification. The resources for FY09 are not shown here but will be provided when available and during the annual progress review of the CDP-INFRA. Resources from the Government for the CDP-INFRA include both budget support and in-kind contributions such as staff time. Due to the annual nature of the government budgeting process, the budget for FY07 is relatively firm, and the budget for FY08 is indicative only. Throughout the CDP-INFRA, effort will be made to mobilize more resources that accommodate emerging work to be undertaken under the CDP-INFRA. FY07 FY08 Funding COMPONENT THB US$ THB US$ Source (000,000) (000) (000,000) (000) 1. Support to the development and NESDB 6.0 70.0 12.0 70.0 implementation of infrastructure strategy WBI 35.0 35.0 PPIAF 75.0 2. Renewable energy and energy NESDB 4.0 18.0 efficiency ASTAE 200.0 200.0 ESMAP TBA TBA 3. Urban Transport Development World Bank 100.0 60.0 Partnership (UTDP) jointly supported by ADB 400.0 TBA ADB, AFD, JBIC, and World Bank AFD TBA TBA IFC TBA TBA PDMO and In-kind In-kind OTP 4. Capacity building for the national NTC 8.0 TBA telecommunication commission (NTC) World Bank 30.0 30.0 5. Pilot demonstration project for rural PPIAF 160.0 250.0 water supply and income generation DGR In-kind In-kind Participating In-kind In-kind Villages TOTAL (excluding in-kind and TBA) 18.0 995.0 30.0 520.0 Note: NESDB and NTC financial inputs are additional to in-kind inputs (staff, facility, etc). VIII. Risks and Mitigation Measures The implementation of the CDP-INFRA will inevitably face potential risks. These risks need to be clearly identified so that mitigation measures can be put in place. The first risk, and perhaps the most important one, is the commitment of all participating agencies to CDP-INFRA in terms of financial resources, time, staff, and prioritization. Lack of commitment may result in delayed progress and lower effectiveness in achieving outcomes. The second risk lies in the coordination among all participating ministries and agencies. The third risk is the degree of influence of CDP-INFRA activities to the government policies, which often depend to a great extent on political climate and situation. 12 Thailand The mitigating measures regarding the first risk involve close and consistent dialogue, not only through the steering committee and at the management level, but also with the implementing staff. This is to ensure full and continuing commitment from participating agencies. Close monitoring and supervision from both the NESDB and the Bank will also ensure timely progress of the CDP-INFRA. For the second risk, the Bank can facilitate the coordination through regular consultation and dialogue with NESDB and other agencies. The Bank can also support NESDB to reach out to the ministries and other agencies to promote the harmonized implementation of priority policies. The third risk should be addressed with a certain level of flexibility. The CDP- INFRA can be adjusted in terms of scope, scale, and resources. Regular monitoring of the progress and constant dialogue with relevant government agencies are required as the key elements of the risk mitigation measures. CDP-Infrastructure 13 MATRICES Matrix 1: CDP-INFRA Development Matrix Component #1: Analytical advisory activities to support the development and implementation of sustainable infrastructure strategies Objectives Inputs Outputs Expected Outcome Partners To provide International Thailand infrastructure Strategic direction and NESDB analytical consultant services sector study report recommendations underpinning to (including a background adopted by the support the Domestic report on cluster Government for more development consultant services development and an sustainable and infrastructure database) infrastructure implementation IFI expertise and development that of sustainable staff inputs A study report on better facilitates infrastructure Thailand‘s infrastructure economic growth, strategy Government agency public-private enhances national staff inputs partnership financing competitiveness and strategies improves the well- Seminars and being of the population workshops A report on Cluster Development as an input Training for the 10th Five-year Plan Training of NESDB staff Component #2: Technical assistance for renewable energy and energy efficiency Objectives Inputs Outputs Expected Outcome Partners To provide International A study on Thailand‘s Institutional capacity NESDB, technical consultant services alternative energy and enhanced and effective MOEN, EPPO, support to energy policy policies adopted in private explore Domestic consultant improving energy mix, developers and technological services Workshops on reducing oil and gas investors and policy alternative energy and dependency, and options for the IFI expertise and policies achieving better long- development of staff inputs term energy security renewable Knowledge sharing on energy and Government agency Carbon Financing and improvement of staff inputs CDM processes energy efficiency Seminars and Government staff workshops training Training Energy efficiency database 14 Thailand Component #3: Urban transport development partnership jointly supported by ADB, AFD, JBIC and World Bank Group Objectives WBG Inputs Output Expected Outcome Partners To provide technical International A study report on the Strategic roadmap for MOF, BOB, advisory support in a consultant services Bangkok urban sustainable urban MOT, OTP, fully coordinated transport transport MRTA, BMTA, manner to the WBG expertise development development adopted BMA and other Government‘s and staff inputs strategic roadmap relevant development and Actions adopted to agencies and implementation of Technical Technical workshops maximize the benefits service operators urban transport workshops of heavy mass rail strategy, policies, Complete advisory transit investments plans, projects and Transaction-based services for the related regulatory advisory services private financing Priority mass rail and institutional transaction transit projects capacity building financed with private sector participation Component #4: Technical assistance for capacity building of the National Telecommunication Commission Objectives WBG Inputs Output Expected Outcome Partners nd To provide 2 Phase of World Enhanced NTC NTC regulatory NTC information on Bank‘s technical capacity to carry out capacity improved international best assistance to NTC its responsibilities practice experience and expertise to the Selection and NTC in carrying out supervision of its responsibilities consultants in capacity-building activities Component #5: Implementation support for a pilot demonstration project for rural water supply and income generation Objectives Inputs Outputs Expected Outcomes Partners To demonstrate that PPIAF funding Water systems built A convincing DGR, PDA, rural water supply support for and managed by alternative model of selected villages, services can be about 40 villages rural water supply relevant provided in a more WB expertise and available for scaling provincial efficient and staff inputs An operational up government and sustainable manner, manual prepared Tambon through a pilot Government, NGO Rural access to clean Administrative demonstration project and community Study tour organized water improved Offices on the basis of participation for government commercial and agencies and More incomes earned community Commercial bank neighboring countries by the beneficiary participation loans households Consultant services CDP-Infrastructure 15 Matrix 2: Deliverables – Actions/Contribution Matrix Deliverables Responsibility Contribution Component 1: Analytical advisory activities to the development and implementation of infrastructure strategies Infrastructure Annual - NESDB prepares draft reports in Thai - Each contributes staff time Reports - Bank summarizes in English and provides - Bank finances the publication of the comments 1st Report; NESDB finances the 2nd and 3rd report Thailand Infrastructure - Bank and NESDB jointly conduct the study - Each agency contributes staff time Sector Study A Study on the - Bank, MOF and NESDB jointly conduct the - Each agency contributes staff time Infrastructure Public- study Private Partnership (PPP) Strategies Consultant Report on - Bank funds an international consultancy to - Bank finances the study Cluster Development support the NESDB Seminars, workshops, - Bank provides expertise through seminars, - Each contributes staff time training courses workshops, and training courses, which may - NESDB provides some include global trends in logistics development, seminars/workshops arrangement stakeholder‘s involvement in infrastructure, sub- - Bank supports video conference, national government financing, etc. travel, and arrangement of speakers - NESDB indicates needs, organizes workshops costs where appropriate and training, and reaches out to related stakeholders Component 2: Technical assistance for renewable energy development and energy efficiency A study on Thailand‘s - Bank funds an international consultancy to - Each contributes staff time alternative energy and explore renewable energy potentials and - ASTAE supports the consultancy energy policy financing of renewable energy projects - NESDB works with the consultants Workshops - Workshops co-arranged jointly by the Bank and - Agencies provide financial, in-kind or NESDB, EPPO, DEDE, and other related logistics contributions to the agencies workshops (ASTAE from the Bank‘s side) Energy Efficiency - Consultant hired by NESDB - NESDB budget Database - Bank provides guidance/comment - Bank provides staff time & expertise Carbon Finance - NESDB prepares paper - Each contributes staff time Knowledge Sharing, - Bank provides relevant information and including CDM guidance, or also can hold knowledge-based processes sessions on the issue Field Study Tours - NESDB participates in field study tours - ASTAE finances the study tours - NESDB finances on-the-job training‘s travel & accommodation expenses - Bank provides mentoring & matches the staffs‘ work program Component 3: Technical assistance to urban transport development Bangkok Urban - Bank hires a consultant to conduct the study - Bank‘s budget Transport Development Strategic Roadmap A technical workshop - IFIs, OTP and PDMO jointly arrange a technical - ADB, AFD, JBIC, and World Bank workshop to disseminate findings in related TA jointly support the workshop and studies - OTP and related agencies contribute in-kinds Proposed IFC advisory - IFC serves as a multilateral adviser to the (Tentative) services for private government. The complete advisory services financing transaction include technical due diligence, legal service, financial structuring, bidding, and post transaction service 16 Thailand Deliverables Responsibility Contribution Component 4: Technical assistance for capacity building of the National Telecommunication Commission (NTC) NTC Capacity Building - NTC hires consultant(s) for capacity building - NTC Budget activities with Bank‘s expert support - Bank staff‘s time Possible Capacity - Build on the experience of collaboration with (Tentative) Building for other NTC, the Bank can mobilize resources to support regulatory agencies other regulatory agencies Component 5: Implementation support for pilot demonstration project for rural water supply and income generation A pilot demonstration - PDA & consultants implement the project - PPIAF Fund project for rural water - Community participates in the pilot - Commercial financing supply system - Bank supervises the pilot project - Community in-kind Operational manual - Consultants will prepare an operational manual, - PPIAF Fund summarizing the experience gained in the pilot, for the purpose of possible scale-up by the government and other organizations A dissemination study - Upon the completion of the pilot, relevant central - PPIAF Fund tour and local government officials from Thailand, Thai mass media, and government officials from neighboring countries are invited to observe the program. CDP-Infrastructure Annexes Page I ANNEX 1: Background and scope of work for Component 1: Technical support for the formulation and implementation of infrastructure strategies Background Historical context. The infrastructure development priorities in Thailand have evolved over the last several decades. The priority accorded to infrastructure in the National Socioeconomic Development First and Second Five-Year Plans (1961-1971) was to support emerging industries. Transportation and communications were given the top priority, followed by energy. The emphasis shifted to infrastructure for agriculture in the Third and Fourth Plans (1972-1981). Energy development dominated the budget during the Fifth and Sixth Plans (1984-1997), because there was high energy demand from the manufacturing industry, which was a key sector in the export-oriented strategies. In the period of the Seventh and Eighth Plans (1992-2001), infrastructure development was characterized first by an increase in private sector financing and then a significant drop in both public and private financing due to the Asian financial crisis in 1997, which put enormous pressure on the budget and capital expenditures. However, there was sizable transport investment during the Eighth Plan, mostly on expressways to alleviate congestion. The past infrastructure development patterns appear to have been pragmatically oriented to support the economy, respond to growing demand, and attend to specific emerging needs arising from broad economic development strategies. Thailand has now started to adopt a more forward-looking approach and take more assertive steps in infrastructure development. The new expectation for infrastructure involves several dimensions, including support to the production sector, and the enhancement of overall economic efficiency, competitiveness, long-term development prospects, and environmental sustainability. Recent emphasis on infrastructure development. The Government is formulating the tenth Five- Year National Development Plan, and is preparing to implement major infrastructure investment programs proposed by line agencies for the next five years to meet the growing demand for services and improve Thailand‘s competitiveness and the well-being of the population. Further investment will be needed in the longer term to maintain a high-level of national competitiveness and improve the energy mix and efficiency. Given the extent of the expenditure envisaged (in the order of magnitude of trillion Baht), and the increasing competitiveness of the East Asian and global economies, it is recognized that infrastructure investment should be aligned with and prioritized to support the future economy, demographics, and energy security of Thailand. Moreover, the proposed large-scale infrastructure investment requires monitoring of both macro economic implications (especially on the current account), as well as environmental and social (distributional) impacts. Logistics. Thailand is considered an open economy, therefore, a major concern related to national competitiveness is the cost of logistics. The results of an evaluation of port efficiency, customs environment, regulatory environment and e-business usage in Thailand appear to be on average or below compared to other Asian countries. Compared to Japan, Thailand‘s cost of logistics as a ratio to sales revenue is higher in every key industry. There are deficiencies in both software and hardware parts of the logistics sector. The Government‘s required procedures on Annexes Page II Thailand import and export are complicated and time consuming, adding non-value added cost to many exporters and importers. Moreover, the main port-of-entries have become bottlenecked (e.g. the Lam-Chabang Port). Traffic congestion around factories and ports and on intercity highways increases logistics costs. The Government is determined to improve logistics competitiveness. Following the logistics roadmap drafted in 2004, the NESDB drafted the Five-year Logistic Development Master Plan in 2005. NESDB addressed three critical issues, as follows: (i) how logistics development can support the key strategic sectors so that Thailand can be competitive in the world arena; (ii) how logistics development can capture economic value from FTAs, and to support a key strategy for Thailand to become the hub of Asia; and (iii) how logistics development can grow along with economic opportunities. Five strategies have been proposed, as follows: (i) business logistics improvement for efficient logistics and a traceable supply chain; (ii) new trade lanes and logistics network optimization to improve and place Thailand as a logistics hub in the region; (iii) logistics business internationalization to raise Thai logistics to international competitive standards; (iv) trade facilitation enhancement to reduce costs of export-import activities; and (v) capacity building to develop skilled laborers and a monitoring mechanism for the growing logistics industry. The implementation of the above strategies will be supervised by Thailand‘s Competitiveness Development Commission, and carried out by respective line ministries. NESDB and the Thai Federation of Logistics will be in charge of the monitoring and evaluation, and report to the Commission. Cluster development. The Government also intends to strengthen sub-national development performance through significant infrastructure investment that builds on strong geographic clusters. The four key clusters are: (i) northern Thailand, linking to the greater Mekong sub- region, (ii) Phuket – Pang Nga, related to rehabilitation and revitalization of the regional economy post-tsunami, (iii) the eastern seaboard, focusing on a competitive clean industrial base, and (iv) the upper south, focusing on amenity based development. The cluster development concept needs to be further developed and put into operation. Infrastructure financing. The demand for infrastructure investment is obvious, as the level of investment dropped significantly since the Southeast Asian financial crisis of 1997. The recent recovery of the economy is creating new demand for infrastructure services. The challenge facing the country is the efficiency of the infrastructure financing and implementation—how to select good projects, and how to finance and implement the projects quickly and appropriately. This is not a small challenge. Since the financial crisis, private sector investment in infrastructure has diminished. It is unclear how soon they will return. A survey undertaken for the recently published East Asia infrastructure study shows that private sector sentiment is contingent on policy improvements and reduced risks.1 Private sector involvement in the provision of infrastructure in Thailand has an irregular record. A few areas such as expressways, electricity generation, water supply, telecommunications, and affordable housing, have performed remarkably well. However, there was little private interest shown in other sectors such as waste water. Much of the framework in which private sector is 1 ADB, JBIC, and World Bank (2005), Connecting East Asia: A New Framework for Infrastructure. CDP-Infrastructure Annexes Page III currently working was set in 1992. A major problem is an unclear regulatory environment or specific subsector guidelines at both national and local levels. Recently, a remodeling of the legal framework, particularly in defining clear guidelines for public-private partnerships (PPP), has been undertaken. Other areas such as the evaluation of projects and guidelines for feasibility studies are also under a much needed reform. With updates in the law, new regulatory bodies, and improved monitoring processes, scope exists for considerably increased private sector participation in infrastructure delivery in Thailand. Sub-national governments could presumably play a significant role in delivering local infrastructure. The 1997 Constitution set a target that 35 percent of public expenditure be made at the sub-national level by 2005. While the actual achievement—about 25 percent in 2005— falls short of the target, it is more alarming that the process to date has reduced the efficiency of infrastructure delivery in Thailand. Much of the problem is related to the structure of decentralization—the process focused too much on very lower levels of government, particularly at the sub-district Tambon Administration Organizations (TAOs) whose implementation capacity is very weak. The Government is trying to rectify this problem by focusing on the provincial scale, as well as by attempts to consolidate TAOs (through the TAO consolidation legislation). Objective The objective of this component is to provide an analytical underpinning and support to the Government‘s on-going effort to develop and implement sustainable infrastructure and logistics strategy. The component will include analytical and advisory activities (AAA), to help the Government better define its long-term infrastructure strategic directions, prioritize the medium- term development programs, and enhance the legal, institutional, and managerial frameworks to support sustainable infrastructure development. Scope of work 1. Thailand infrastructure sector study This study will build on the current international and domestic knowledge, support a critical assessment of the strategic issues facing Thailand, and articulate and put into operation the strategic thinking on sustainable infrastructure development. The scope of work is envisaged to cover the following topics: (i) a critical assessment of Thailand‘s infrastructure development and performance in each sub-sector; (ii) analysis of the key drivers influencing Thailand‘s socio- economic future and their implication to the future infrastructure and logistics needs; (iii) analysis of the linkages between public and private investment and between infrastructure and the investment climate; (iv) policies to promote sustainability and efficiency of infrastructure services; (v) infrastructure financing including fiscal space, private sector financing, and public private partnership modalities; (vi) legal and regulatory framework; (vii) planning and policy making process; (viii) environmental and social issues and people‘s participation; (ix) subsidy and pricing policies; and (x) local infrastructure service delivery, including sub national financing of infrastructure. Annexes Page IV Thailand An infrastructure database will be developed as part of the exercise for the long-term infrastructure strategy. This will also include the development of key sector performance indicators. A background report will also be prepared on the cluster development concept and will include the following analytical tasks:  Assess, at a strategic level, policies and initiatives currently being put forward regarding implementation of a geographic cluster approach to development in Thailand, identifying key issues requiring attention.  Working backwards from identified geographic clusters, undertake an initial assessment of the strength of regional economies (and economic clusters in particular) to support future development in these key geographic areas, identify possible means to deepen and/or broaden existing clusters, and facilitate emergence of new clusters in each of the four geographic areas.  Identify, for consideration, priority types of strategic thrusts or policy frameworks (national and/or sub-national) that leverage rapid realization of the development potential of the key geographic clusters.  Identify, at a meso scale, infrastructure implications (transportation, logistics, communications) of proposed geographic cluster development, taking into account both intra and inter cluster spatial dynamics.  Related to the above task, indicate major national spatial planning implications (including cross-border development) of the proposed geographic cluster developments. For example, to determine to what extent is the past spatial development framework still relevant.2 2. Study on infrastructure public-private partnership (PPP) strategies This activity is an integral part of the CDP-INFRA, given that significant gains from PPP could be realized contingent upon improvements in the enabling environment and risk mitigating measures that benefit both private investors as well as the users of Thai infrastructure. The critical choice facing Thailand in infrastructure provision is whether to build on past experience in private infrastructure projects, or to return to public procurement and risk losing the progress achieved. Private delivery of infrastructure can yield significant benefits in conducive policy environments; as a corollary, reliance upon private finance can result in disappointment if expectations are unrealistic or if individual PPP transactions are not structured correctly. A pertinent question to ask is what constitutes a conducive policy environment? The concerns surrounding private infrastructure projects in Thailand rest partly on the region-wide contagion effect and deficiencies in the enabling environment. But this is only a starting point to understand the challenges facing private infrastructure projects in Thailand. A detailed study is 2 In 1996, with the assistance of Norconsult, the NESDB developed a Spatial Development Framework for Thailand. CDP-Infrastructure Annexes Page V called for to fully appreciate the nature and extent to which specific policies contributed to the triumphs and pitfalls of private provision of infrastructure. Insights into what private investors look for in potential investments/projects is critical; among other things, it is important to understand instruments such as guarantees, hedging products and other incentives that serve as risk mitigating provisions for investors, and enhance the attractiveness of Thailand as a site for investment. A related study is to look at infrastructure financing and conduct sensitivity analyses of scenarios with various shares of public and private funding for infrastructure with corresponding costs and benefits. These studies would form the basis of a PPP strategy within which specific PPP transactions with risk mitigation provisions for all parties will be designed. A PPP strategy devised on the basis of a sound understanding of the Government‘s and private investors‘ preferences will address squarely the oft-neglected issues of risk allocation and accountability. The proposed study will focus on the issues raised above. It will review the experience of Thailand in private participation in infrastructure financing, examine the contributing factors to the success and failure, and identify the feasible PPP strategies—especially key elements required for a conducive policy environment where private financing of infrastructure could yield significant and sustainable benefits. The study process would include diagnostic analysis, capacity building activities, and consultative and dissemination workshops with key stakeholders (including users, government, private investors, and development partners). The study may be undertaken in the second year of the CDP-INFRA. 3. Knowledge sharing seminars on international best practices The topics would be determined on the need basis, and may include the following: project cycle, infrastructure financing, environmental and social safeguard, stakeholder involvement in infrastructure, and sub-national government financing. The seminars would be arranged on the basis of the availability of expert speakers. Annexes Page VI Thailand ANNEX 2: Background and scope of work for Component 2: Technical support for renewable energy development and energy efficiency Background In the wake of increasing oil prices, Thailand faces a new challenge to improving its energy development strategy. Like many other countries, Thailand is a net oil importer, but has started to feel the need to shift away from oil dependency and achieve a more efficient utilization of energy. Thailand will have to carefully plan and strategize its next move to achieve better energy security. Thai energy consumption relies mostly on fossil fuels. Biomass takes up about 16-17 percent of the total energy consumption in 2004, and both fossil fuels and biomass together take up more than 98 percent of primary energy consumption (PEC). In terms of final energy consumption (FEC), fossil fuels are still the main component followed by biomass (17.1 percent) and electricity (16.1 percent). The trend of the FEC by sector has been steady in both its increases as well as its proportion. Transportation and industrial sectors are the main consumers (37.1 percent and 36.6 percent respectively in 2004). In terms of electricity generation, natural gas has become the main source followed by coal and lignite. Hydro source and fuel oil has played a smaller role than before. There are several critical energy problems for Thailand. First, Thailand has limited indigenous fossil fuel reserves. The main fossil fuel resources are natural gas and lignite. Natural gas will last approximately another 25-30 years at the current utilization rate, and lignite approximately 60-100 years. The second problem is that Thailand has been unable to add more indigenous energy resources to satisfy demand. This includes hydropower and lignite sources. The main obstacle to these resource-related projects is public resistance. Third, renewable energy‘s contribution to commercial demand is not significant. Due to its low-capacity nature, biomass, solar power, and wind turbine systems cannot significantly support the commercial and industrial demands. Last, but not least, rising oil prices have put more and more pressure on the Thai energy sector in terms of not only production costs, but also on the country‘s current account deficit. With energy security as the ultimate goal, there are two main targets, as follows: (1) improvement of the energy mix (to depend less on crude oil imports) and (2) improved energy efficiency. (1) Improving energy mix. Two key questions should be answered. Firstly, what energy sources should be selected to replace crude oil and/or any other energy imports? Secondly, how should the introduction of new energy sources and decommission of the imported sources (crude oil) be carried out? (2) Improving energy efficiency. Thailand‘s energy intensity, that is, the ratio of energy consumption to GDP, is approximately 1.4, which is quite high. Thailand‘s target is to make this CDP-Infrastructure Annexes Page VII ratio one-to-one with the GDP. The important question is ―how?‖ in terms of behavior, regulation, and technology adoption. Although some energy efficiency improvement activities can be encouraged and implemented quickly, the improvement of the energy mix requires careful planning based on careful analytical work. It would take substantial time and resource inputs to achieve the desirable changes in the energy mix. It is unadvisable to go through the trial-and-error process often. In addition, Thailand has not compiled any solid energy strategy other than the use of demand management and energy efficiency programs. The National Economics and Social Development Board (NESDB), the country‘s planning agency, is trying to answer these important questions through analytical work in order to set forth the energy strategic plan for Thailand‘s sustainable development in the longer run. The World Bank is requested to provide technical support on the basis of a NESDB-World Bank knowledge partnership. Main issues This section aims to elaborate more on the two targets mentioned earlier. The main issues involve the following elements: (1) The selection of alternative energy sources. It is an important task to determine which energy resources should be selected to replace crude oil. The selection criteria can be based on resource availability, production potentials, extraction and utilization costs, and the long-term sustainability of the resources themselves. (2) Policies for achieving targeted energy mix and energy efficiency. There are many options in terms of policy choices, as well as some innovative and new ideas. But it is important to be able to identify policies that have a potential of success. The factors surrounding the policy issues are, as follows: a. Determination of targets b. Policy choices c. Monitoring and evaluation mechanism d. An ability to replicate and expand successful programs (3) Cost and feasibility of introducing alternative energy. Success is eventually determined by an increased share of domestic, perhaps renewable, energy sources and lower energy intensity; that is, higher efficiency. These goals cannot happen if the energy producers and consumers think it is not cost-efficient or feasible for them to adopt new energy sources or purchase more energy-efficient products. This will certainly add cost to the government, who will have to determine the feasibility at the macro-level. Thailand has been promoting energy efficiency through demand management, and on a voluntary basis, which has not been really successful. The demand and behavioral approach alone cannot sufficiently tackle the aforementioned issues. Supply management and enforcement are also required to a certain extent. Being relatively inexperienced in the approach, Annexes Page VIII Thailand Thailand requires international experience and expertise in order to ensure good initial planning and, consequently, smooth implementation. Government initiatives A few initiatives have been taken regarding the energy issues. Here are recent governmental policies and programs put in place related to renewable energy: - Energy Conservation (ENCON) program in 1994. The program promoted renewable energy through funding support, such as a subsidy to biomass projects and pig farm biogas projects. - Ministry of Energy’s Strategy for Competitiveness in 2003. The Ministry aimed to promote more efficient use of energy in the transport sector and conservation in industrial sector. The goal was also to increase the share of renewable energy from 0.5 percent in 2002 to eight percent in 2011 of commercial primary energy by enforcing the Renewable Portfolio Standard (RPS, which basically requires power plants to have four to five percent of their generating capacity come from renewable sources) and other fiscal incentive measures. - New Energy Strategic Plan in 2005. The cabinet approved the new plan with aggressive targets for renewable energy. About 25 percent of oil for the transportation sector should be replaced with the use of natural gas, gasohol, and biodiesel by 2009. In particular, biodiesel should replace ten percent of diesel consumption by 2012. And, the agricultural sector will increasingly play an important role in energy supply. Although actions have been taken, more is needed. It is crucial for Thailand in the longer term to have well-defined energy strategies in term of both appropriate energy mix and energy efficiency. Biomass: Current situation, potential, and challenges The main biomass resources in Thailand consist of residue from forest plantations, agricultural sectors, and wood industries, as well as biomass for ethanol and biodiesel production (e.g. cassava, sugarcane, and palm oil). Agro-industry biomass waste and municipal waste can also be used for energy production. The current biomass situation can be viewed from three perspectives: traditional use, power generation, and biofuel for transport. (1) Traditional use. Although biomass currently accounts for 16 percent of Thailand‘s energy use, most biomass is used in the form of traditional energy, that is, cooking and residential heating. About 65 percent of residential energy use is from wood and charcoal. So, significant improvement can be made to overall efficiency in this area. (2) Power generation. The government has been promoting biomass in power generation through small power producers (SPP) and very-small power producers (VSPP) programs. For example, bagasse has been used to generate electricity for sugar mills. CDP-Infrastructure Annexes Page IX (3) Biofuel for transport. Both gasohol (E10: mixing 90 percent gasoline with 10 percent ethanol) and biodiesel (B3: three percent of biodiesel in diesel) has been promoted using policies such as excise tax exemption and pricing policy. About 25 percent of ULG95 has already been replaced by gasohol. One of Thailand‘s opportunities for biomass as an energy source lies in the supplies. Thailand, as an agricultural country, is well-endowed with biomass resources. The potential in this aspect includes better land management, genetic improvement of crops, and regulated crop growing areas. For power generation, several methods have been analyzed for their potential; the methods are biogas (365 MWe), biomass residues (4400 MWe), short-rotation trees (1400-12000 MWe), and municipal solid waste (400 MWe). In terms of the potential in the transportation sector, ethanol can be produced up to 2,800,000 liter/day from cassava and molasses. Up to 400,000 liter/day of biodiesel can be produced based on surplus palm oil. More can be produced if there is an increase in oil palm production. The items above are so-called technical potential or opportunities. The real potential can be much lower due to several barriers and obstacles. Some challenges to overcome are the following: (1) Feedstock problems. It is difficult to collect large quantities of biomass residue, and it is also costly to transport them. There is also fluctuation of crops‘ annual yields, which depend on climate and many other factors. The fluctuation will be reflected in the energy price. (2) Competing uses. Biomass residues are widely used for many other purposes. Therefore, the cost of biomass energy will be affected by those industries. Some examples of competing uses are wood used for particle board, palm oil used in the food and cosmetic industry, and cassava, which is used as a starch and in animal feeds. (3) Institutional barriers. Institutional barriers exist because of poor coordination and conflicting policies among government agencies, implementation difficulties, and the lack of a well-defined regulatory body. (4) Improvement of promotional mechanisms. Incentive schemes such as tax incentives and subsidies can be improved, also in need of improvement are supporting measures for pricing decisions and creation of public awareness. Other renewable energy sources Although biomass has been the major renewable energy contributor, other renewable energy sources are also consistently contributing to the energy pool. The development of these energy Annexes Page X Thailand sources has not been significant due to economic and social reasons, but their potential should not be neglected. - Solar energy. Due to climate and location, Thailand is a promising place for solar energy. The installation of solar energy systems started in residential areas, not in the commercial sector. The prospect for solar energy lies mostly in remote areas with small-scale power demand. The aim for solar energy development is to satisfy the consumption demand; for example, hospitals, homes, and buildings, rather than to support production. EGAT and EPPO are responsible entities for solar energy development. - Mini- and micro-hydropower. There are several small hydropower plants in the northern part of Thailand. Twenty-five of these were built by the Department of Alternative Energy Development and Efficiency or DEDE with total capacity of 132 MW. The Provincial Electricity Authority (PEA) is also involved with 3.8-MW small hydropower plants. Recently, hydropower energy has been unpopular due to negative environmental and community impact. - Wind energy. Thailand‘s wind velocity is very low. A feasibility study has been done, to determine whether Thailand can utilize wind energy for power generation in a serious manner. - Geothermal. There is only one geothermal power plant in Thailand (located in Chiang Mai with 300-kW capacity). Thailand has abundant renewable energy sources, particularly biomass. But there is much to be done in order to fully utilize the potential. The Government has taken several initiatives with few significant results. Careful planning and results-based actions are needed for Thailand to improve its energy mix and energy efficiency. Approach and strategy Renewable energy is included in the CDP-INFRA, the country development partnership program between NESDB and the Bank for the infrastructure sector. While NESDB has committed to include energy policy in the national plan, the Bank will support NESDB with analytical expertise and international experiences. This will assist NESDB to determine the direction and approach of the national energy policy, which is expected to kick-start renewable energy and energy efficiency programs and projects for Thailand. World Bank support under the CDP-INFRA The objective of this is to collaborate with NESDB and other sector agencies in exploring technological and policy options for the development of renewable energy sources in order to ensure long-term energy security and sustainability. The activities involve analytical works and knowledge sharing, particularly in the form of studying international experience. CDP-Infrastructure Annexes Page XI Starting with the Renewable Energy and Energy Efficiency Workshop held in late August 2006, NESDB and the Bank had follow-up dialogue to decide on the action plan and the way forward. There are four areas of focus as follows: 1. Development and maintenance of energy efficiency database in Thailand. While the data are largely available, they are scattered throughout different agencies. Consolidation and collection of data is necessary. NESDB will engage a consultant to build an energy- sector database for Thailand, and the Bank primarily will provide advisory support. In addition, the Bank facilitated and partially financed NESDB to send three staff to participate in the international workshop on Best Practices in Institutional Frameworks for Energy Efficiency Implementation. 2. Carbon finance. NESDB is interested in more information on carbon finance and the possibility of Thailand benefiting by selling carbon credits under the Kyoto Protocol. It is proposed to produce an exploratory paper focusing on the process for Thai companies and banks to register for and obtain carbon credit agreements. Workshops and other activities can follow as a catalyst for Thailand‘s further involvement in the clean development mechanism (CDM) and carbon financing. 3. Bankability aspects of energy-related investment projects. Commercial banks in Thailand do not have much knowledge and understanding of energy-sector investment. Furthermore, there may be a number of strict financial sector regulations preventing more exposure for banks in this sector. Possible activities to encourage the financial sector involvement includes a workshop or training sessions for Thai banks to become familiar with energy-sector financing, related risks, and risk mitigating measures. 4. In-depth analysis of energy efficiency and renewable energy targets. NESDB is concerned with how existing renewable energy targets can be achieved or whether the current targets are achievable. An analysis of proper targets and potential is anticipated. In addition, the Bank has been supporting NESDB in exploring the experience in other countries with the formulation of energy policy. This is to widen the perspective on what has been done globally and which strategy can be adapted for implementation in Thailand. The overall outcome will be the enrichment of NESDB and its staff with increased knowledge and a clearer picture of Thailand‘s energy potential, and more importantly, various options and approaches for energy sector development. Draft terms of reference for consultant study on the Government’s energy policies and private financing on renewable energy projects Background While Thailand has instituted important policies to encourage financial sector participation in the financing of renewable energy and energy efficiency projects, the level of investment is not enough to achieve a target of eight percent electricity generated from renewable resources. The WB, as part of its infrastructure country dialogue with Thailand, is in discussion with NESDB to develop an integrated strategy, which will require initiatives on a number of fronts, including utility regulation, economic analysis of the costs and/or benefits Annexes Page XII Thailand of enhanced RE and EE investments. Based on such an analysis a possible incentive structure can be accomplished. One of the possible incentives will most likely come from the enhancement of financing for EE and RE investments. To analyze the current financial incentives and recommend improvements, the WB requires short term consultants, working in a team of two, with local WB Bangkok office support as needed, to interact with the financial sector on financing issues related to renewable sources, energy efficiency, and carbon. The purpose of this assignment is to address the current lack or minimal level of private sector involvement in the area of sustainable energy in Thailand. The team will review policy, including current subsidies and any guarantees offered by the Government, for example, the Thailand Energy Efficiency Revolving Fund, and the regulatory framework, to identify specific barriers to private sector investment, and propose changes as needed. The team will consult with policy makers and local banks and will also organize a series of workshops. These workshops will present the business case for sustainable energy finance in Thailand and the involvement of the private sector and private project financing banks. The workshops will also be used to gain valuable feedback from the participants. This feedback will be used in recommendations to the Thai Government. Tasks The STC‘s tasks comprise a review of policy documentation; discussions with WB/IFC staff, local FIs, key officials in the Energy Policy and Planning Office (EPPO), EGAT, Thai Bankers Association, ASEAN Banks Association, Central Bank of Thailand; consultation with other IFIs where appropriate; preparation and delivery of briefing sessions/workshops; and reporting: (1) Objective 1: Assess current energy policy and other documents to identify specific barriers to private sector financing of sustainable energy. (2) Objective 2: Discussions with Thai Government, utility officials and others to gain a clearer understanding of the current market (3) Objective 3: Preparation and delivery of a draft report presenting findings and recommendations (4) Objective 4: Preparation and delivery of a series of up to five two-day seminars or workshops on sustainable energy financing and potential options, and seeking feedback from the market. (5) Objective 5: Production of the draft final report containing succinct and practical recommendations to address any gaps in energy policy or practice. Deliverables The deliverables for this assignment are: 1. Draft paper for WB and NESDB following meetings and policy review assessment. 2. Series of up to five briefing seminars/workshops in Bangkok for local FIs, central bank, policy makers. 3. Final report after comments received containing concise recommendations as needed on policy and investment conditions required to support and encourage more private sector investment in sustainable energy. Location The assignment will be undertaken in Bangkok, and the consultant‘s office base as needed. Schedule The term of the STC contract is a maximum of 45 days to be undertaken between January 10th and March 31st, 2007. Time allocation: CDP-Infrastructure Annexes Page XIII Objective 1: 5 days Objective 2: 5 days Objective 3: 5 days Objective 4: Preparation of materials 5 days, Organization prep. 4 days, Delivery 5x2 – 10 days Objective 5: 7 days Travel: 4 days inclusive of travel, meetings and reporting. Draft terms of reference for consultant study on strategic road-mapping exercise for promoting energy efficiency and renewable energy Background Thailand continues to suffer from relatively high energy intensity across sectors, high energy- GDP elasticity, a low share of renewable energy sources in its energy mix, and very high dependence on oil. Various initiatives of the Government since the 1990‘s have envisaged the importance of these issues, such as the Energy Conservation Program (ENCON) of 1994, Ministry of Energy Strategy for Competitiveness in 2003, and the New Energy Strategic Plan of 2005. While several initiatives and policies, especially in the area of promoting demand side energy efficiency measures (e.g., the refrigerator labeling program, Energy Efficiency Revolving Fund, and the Thai DSM Program) and Renewable Portfolio Standards are innovative, their actual success in catalyzing overall improvements in the share of renewable energy and energy efficiency or in transforming these markets in a sustainable manner has been quite limited. Commercially financed investments in the sustainable energy sector remains low as institutional, regulatory, financial barriers and lack of capacity, particularly in the financial sector, continue to prevail. The targets set up by the Government of Thailand under its National Energy Policy are ambitious: Reduce total energy consumption by 20 percent by 2009; increase the share of renewable energy to eight percent of total energy consumption; reduce energy-GDP elasticity from 1.4 to 1.0 by 2011; reduce oil use in transportation by 25 percent by 2009; reduce oil consumption in industrial sector by 25 percent by 2008; reduce energy consumption in household sector by 10 percent, starting June 2005; and reduce energy consumption in public offices and buildings by ten to 15 percent immediately. It is unclear how these targets will be achieved, therefore it is necessary to develop an integrated energy sector policy for promoting renewable energy and energy efficiency in a strategic and systematic manner. The World Bank, through its dialogue with the Government of Thailand under the country development partnership on infrastructure, is in discussions with the National Economic and Social Development Board (NESDB) to carry out a strategic road-mapping exercise for promoting energy efficiency and renewable energy. This exercise would lead to a blueprint of a comprehensive initiative that relies on a number of fronts: (i) regulatory policies and programs; (ii) financial incentives, including leveraging carbon finance; (iii) institutional framework, (iv) legislations; and (v) capacity building. The approach will be to look at the issues in a holistic manner with a view to scale up in both size and scope the programs and policy practices that have been successful, and to introduce measures for new and innovative policy and market-based mechanisms to further increase energy efficiency and renewable energy investments. One of the key areas of focus will be the development of a robust system of tracking sustainable energy indicators covering both renewable energy and energy efficiency. For the energy efficiency indicators, the suggested framework will cover various supply (energy/fuel) sources, consumption sectors and end-use levels. They will move beyond macro-level analyses to the end-use level such as buildings, industry, and transport, to Annexes Page XIV Thailand promote understanding of the interaction between the drivers of energy use, the energy and environmental performance of end-use technologies, and structural change. The separation of impacts on energy use from changes in activity, structure and intensity is critical for policy analysis as most energy-related policies target energy intensity and efficiency, often promoting new technologies. Accurately tracking changes in intensity and share of renewable sources helps measure the effects of these new technologies. Factoral decomposition where changes in energy use per sector can be analyzed in terms of sectoral activity, sectoral structure, and the energy intensity of each of the sub-sectors. This analyses can be done using standard techniques such as the Divisia Index method. Depending upon the context of the analyses, this decomposition can be applied at national, sectoral, or sub-sectoral level, or at aggregated energy level or by fuel type. The work done on energy efficiency indicators could draw upon the World Bank‘s current initiative on energy efficiency indicators in G5 countries and similar work done in Thailand under the aegis of the APEC Energy Efficiency Indicators Project in 2000-2001. The Renewable Energy Toolkit (developed by the World Bank) is also a useful resource for developing the framework for renewable energy indicators. A harmonized framework of sustainable energy indicators will help the Government in three aspects: (i) allow comparisons between countries of their relative situations, at national as well as sub-regional levels and by fuel types and sectors; (ii) prioritize actions to be taken for energy efficiency and renewable energy policy development; (iii) monitor and evaluate the impact of sustainable energy policies; and (iv) understand and communicate the impact of sustainable energy policies, legislation and institutional development, how these are turned into actions on ground and how they are implemented. In the above context, the World Bank requires the services of short term consultant(s) (STCs) with international experience to review and analyze the current policies, programs, institutional framework, and sectoral targets in place in Thailand, and to recommend actions required under an integrated and strategic roadmap for scaling up energy efficiency and renewable energy investments. The STCs will be working in a team, along with the World Bank Washington and Bangkok office support as needed, and in close coordination with NESDB and other relevant local counterparts and experts. The STCs team will review current policies, regulatory framework and programs pertaining to renewable energy and energy efficiency markets and analyze barriers to their scale up vis-à-vis the targets established under the National Energy Program, with the objective of developing a strategy for ensuring long-term energy security and sustainability. The team will consult with relevant policy making and planning agencies, EGAT, local financial sector, National Statistics Office, ESCOs and energy practitioners, and other stakeholders. They may also have to assist in organizing a study tour and provide inputs to the development and preparation of relevant workshops. The STCs team will coordinate with the other STC working on the financial sector issues, as and when required. Tasks The STCs‘ tasks comprise comprehensive review of documentation and current status, discussions with key officials in the Energy Policy and Planning Office (EPPO), DEDE, EGAT, Thai financial sector, ESCO industry, and with local energy experts, bilateral donors, and other relevant stakeholders where appropriate, to prepare and deliver reports, and inputs for briefing sessions/workshops, and help organize a study tour. The specific tasks are described below in detail: Task 1: Review and analyze current relevant policies, regulatory and programs across various sectors (electric power, industry, household, commercial and transportation), and approaches to developing system of indicators related to energy efficiency and renewable energy and assess and analyze specific barriers to scaling up these investments vis-à-vis the CDP-Infrastructure Annexes Page XV targets specified under the National Energy Policy. Task 2: Preparation and delivery of a draft report on a strategic roadmap for promoting energy efficiency and renewable energy building upon successful programs and practices within Thailand and new approaches based on international best practices and knowledge, and drawing upon findings and recommendations from Task 1. This document will also include recommendations on institutional aspects. Task 3: Preparation and delivery of a robust framework of sustainable energy indicators, covering both renewable energy and energy efficiency, based on international best practices using various metrices used across energy or fuel sources, consumption sectors and end uses. The output from this task would be integrated into the draft report on the Strategic Roadmap for Energy Efficiency and Renewable Energy, under Task 2. Task 4: Production of draft final report on Strategic Roadmap for Energy Efficiency and Renewable Energy (integrating inputs from Task 2 and 3) containing succinct and practical recommendations, to address any gaps in energy policy or practices, linked to targets at national/macro, sectoral and end-use levels and pertaining to the objectives of the National Energy Policy. Deliverables The deliverables for this assignment are: Draft report on a new Strategic Roadmap for Energy Efficiency and Renewable Energy for the World Bank and NESDB to review, following meetings and review of policies, programs and targets, and including recommendations on policies and regulations, programs, and framework for developing and tracking energy indicators (linked to Tasks 1, 2 and 3 above). Input to preparation of associated study tours and into relevant seminars/workshops in Bangkok to be held along with local FIs, policy makers, planning organizations, ESCOS, and other stakeholders. Final report after comments received containing concise recommendations as needed on policy and programmatic approaches required to support the scaling up of energy efficiency and renewable energy, and to developing and maintaining a robust framework of energy efficiency indicators. Location The assignment will be undertaken in Bangkok, and in the consultants‘ respective offices as needed. Schedule The term of the STCs‘ contract will be a maximum of 60 days to be undertaken between January 15 and April 30, 2007, and expected to be split between two STCs. The estimated break-down of the level of effort required for the specific tasks are as follows: Task 1: 10 days Task 2: 15 days Task 3: 10 days Task 4: 10 days Associated travel: 15 days inclusive of travel and meetings. Annexes Page XVI Thailand ANNEX 3: Background and scope of work for Component 3: Urban Transport Development Partnership (UTDP) jointly supported by ADB, AFD, JBIC, and World Bank Group Background The Government of Thailand is considering the implementation of three new or extended mass rail transit (MRT) lines in the Bangkok metropolitan region with a total investment of at least Baht 160 billion (or about $4 billion) over the next few years. The objective of the Government in making these investments is to provide an extensive MRT network covering the entire metropolitan area. This is expected to increase public transport ridership and reduce the use of private cars with related improvements in mobility, air quality and congestion. However, a series of technical, administrative, financial, institutional and regulatory issues remain unresolved, including project prioritization/coordination and integration with different public transport modes and providers. In particular, the Government wishes to improve fare integration among existing MRT concessions, extensions to them and new lines in order to provide fares that are consistent, understandable, easy to pay, and more affordable; thus, attracting even higher ridership. To facilitate public transport integration and development, the Government is considering the creation of a Bangkok integrated transport authority (BITA) as the single agency in charge of planning, priority-setting, coordination, integration, regulation, and management for all mass rapid transit systems. However, the exact functions and the structure of the BITA and its relationships to other, existing institutions remain unresolved. The Government has expressed interest in working with the international development agencies (ADB, AFD, JBIC, and World Bank), both technically and financially, for the development and management of MRT systems. A TA funded by ADB to advise the Government on the options of public transport integration was completed in January 2006. At the request of the Government, an extension of the TA covers the following topics: (i) development of an MRT concession model; (ii) analysis of options and implications of integrated fares and ticketing; and (iii) development of an MRT financial model. In addition, ADB, AFD, JBIC and World Bank share the following understanding that: (i) There is enormous need for improved public transport in general and MRT in particular in the Bangkok metropolitan region (ii) The technical advisory and financial support from international development agencies will yield better results and impact if the agencies collaborate with their Thai partners; (iii) An Urban Transport Development Partnership (UTDP), defined in more detail below, is a desirable means for the external agencies to collaborate with their Thai partners on dealing with MRT policy, financing, institutional, regulatory, management and technical issues. CDP-Infrastructure Annexes Page XVII (iv) Due diligence work is required to inform decision making on the financing of future MRT improvements. The required work could be carried out through the proposed UTDP. Goal and objectives of the proposed UTDP The ultimate goal of the UTDP is to improve the effectiveness, efficiency, and sustainability of the Bangkok metropolitan Region‘s multi-modal transport system. To this end, the UTDP will provide support to the Government‘s development and implementation of urban transport strategies, policies, plans, programs, projects and related regulatory and institution-building activities. Objectives consistent with this basic goal include the following:  Making Bangkok‘s public transport system more accessible, available, secure and safer for residents of all income groups through increases in service quality, quantity and coverage and reductions in costs and fares;  Minimizing the financing costs and implementation risks of planned MRT improvements;  Making the institutional, integration, coordination and other changes necessary to guarantee the maximum benefit from currently operating and future MRT lines. UTDP framework: Basic approach and strategy The UTDP will be a knowledge-based partnership, providing analytical, advisory, training and other services related to the Government‘s urban transport development agenda, especially for public transport. It will be led by the Government with the active cooperation of international development agencies including ADB, AFD, JBIC and the World Bank as well as other interested agencies. It will also serve as a vehicle for engaging other direct stakeholders such as local officials from the Bangkok metropolitan area, civil society, the private sector, and others in planning, priority-setting, design, implementation, and monitoring. Potential scope of work A number of knowledge sharing activities could be included under the UTDP. These activities will help the Government address both short and longer term issues. The key short-term issues are mainly related to the implementation of Government‘s MRT projects, and include but are not limited to the following: a) Integration and coordination of various public transport modes and providers; b) Proper allocation of risks among the public and private parties under public-private partnerships (PPP); c) Strengthening of the project implementation processes and procedures, to conform to high technical, economic, project/program/financial management, and other safeguard standards. In the longer term, a number of outstanding institutional, planning, priority-setting, financing, regulatory, and management issues should be addressed in order to achieve more efficient, Annexes Page XVIII Thailand affordable and sustainable urban transport. This requires the development of a long-term urban transport sector strategy and the formulation of a specific implementation plan for it. A draft matrix indicating activities, objectives, inputs and expected outcomes is provided below. The list of issues and related activities can be expanded or consolidated upon further discussions between the Government and the international development institutions. Tentative List of Priority UTDP Support Activities Activity Objectives Inputs Outputs Outcomes CDP-Infrastructure 1. Knowledge sharing  To reduce the institutional  Policy advice by ADB,  Recommendations for  Improved urban public and technical support fragmentation in urban JBIC and World Bank public transport/mass transport services (in relating to public transport that has become the through TAs; rail transit integration terms of efficiency and transport and MRT most significant barrier to the activities; affordability) in the integration and  Training and other provision of sustainable and Bangkok metropolitan coordination, as well knowledge sharing  Training (and study affordable urban public area through an as capacity building activities tours) for the BITA transport services in the integrated urban for the possible new and associated Bangkok metropolitan area. transport management Bangkok integrated agencies; structure and a clear transit authority  To enhance MOT and BITA‘s  Recommended regulatory and public- (BITA) and associated institutional capacity for urban technical and private partnership agencies public transport planning, administrative framework priority setting, financing, processes and management and regulation;  More efficient, procedures for new effective and  To advise the government on BITA; affordable public an improved policy framework  Recommended public transport for public transport pricing and transport fare structure subsidies and public-private and subsidy allocation partnerships policy and implementation mechanisms. Annexes Page XIX Activity Objectives Inputs Outputs Outcomes 2. Support the improvement  To identify major  Training and capacity  Knowledge  A more efficient urban Annexes Page of MRT project bottlenecks and building for project dissemination and transport infrastructure implementation processes deficiencies in the identification, transfer to relevant project delivery process that XX and procedures program and evaluation and Government and local follows international good project delivery prioritization; agencies, state practices for economic, system; enterprises, and other financial, environmental and  The cooperative stakeholders; social sustainability  To support assessment of country requirements institutional and systems for  Action plans for legal changes and procurement, financial, improved delivery capacity management, system enhancement for program/project and reducing portfolio management, administrative time and environmental and cost and and social safeguards remove bottlenecks and deficiencies 3. Support the development  To lay a strategic  TA  A long-term urban A more sustainable, effective and of a long-term urban foundation for the transport strategy efficient urban transport system o International transport strategy and an long-term document; supported by: expert advisory implementation plan for it sustainable services  A strategy  an improved governance development of implementation plan; structure; Bangkok‘s transport o Seminars and system; workshops  Improved urban  more capable institutions; transport planning and  improved planning, priority  To provide a  Study tours management setting, development and detailed roadmap  Training capabilities, including implementation processes for the phased the use of state-of-the- and procedures; implementation of art planning tools.  predictable, accessible the strategy. financing mechanisms that provide the proper incentives for efficiency and effectiveness. Thailand CDP-Infrastructure Annexes Page XXI Terms of reference for consultant study on strategic roadmap for urban transport development in the Bangkok metropolitan area Background The Government of Thailand (GOT) plans to implement five new or extended mass rail transit (MRT) lines in the Bangkok metropolitan area in the next five to six years. The projects, with a total length of 118 km and an estimated total investment of around US$4.5 billion, aim to increase public transport ridership and reduce the use of private cars with related improvements in mobility, air quality, congestion and fuel consumption. To achieve the maximum outcomes possible from the heavy investment, it is recognized that different transport modes and services should be fully integrated, and a series of policy, planning, institutional, and regulatory issues should be resolved progressively to enable the integration and efficiency improvement of all transport services. International financial institutions (IFI), including ADB, JBIC, World Bank, and most recently AFD, have joined effort to support the GOT‘s urban transport development agenda under an Urban Transport Development Partnership (UTDP). The UTDP is a knowledge-based partnership, providing technical advisory support to the GOT‘s development and implementation of urban transport strategies, policies, plans, programs, projects and related regulatory and institution-building activities. The ultimate goal of the UTDP is to help improve the effectiveness, efficiency, and sustainability of the Bangkok metropolitan region‘s multi-modal transport system. Over the last 12 months, ADB has provided TA to advise the GOT on the following: (i) the options of public transport integration; (ii) development of an MRT concession model; (iii) analysis of options and implications of integrated fares and ticketing; and (iv) development of an MRT financial model. Discussion has been on going between the GOT and JBIC on JBIC concessional loans to finance the priority MRT projects. The World Bank has also provided advisory services to the GOT on procurement methods and private sector financing modalities. In the next step, ADB intends to support a TA on the integrated ticketing system. It is also agreed among government agencies and IFIs that a study of the strategic urban transport development roadmap is needed to clarify what other policy, institutional, and investment actions the GOT should take in the next few years to ensure the high social return of the heavy investment in MRT and the significant improvement of urban transport performance in the Bangkok metropolitan area. The World Bank has agreed to support consultant services required for the study. The following sections specify the terms of reference for the proposed consultant services. Objectives of the consultant services The primary objective of the study is to advise government policy makers specifically on the existing problems that undermine performance of the MRT investment and generally the breadth, depth and causes of urban transport problems in the Bangkok metropolitan area, the potential Annexes Page XXII Thailand options, and a practical sequence of actions to address these problems. The specific objectives of the consultant services are as follows: (i) update the current situation of urban transport management and performance; (ii) provide a diagnostic analysis on the key policy, planning, institutional, regulatory and management issues that would constrain the performance of public transport services including the heavy investment in MRT system; and (iii) recommend a strategic urban transport development roadmap, with a menu of proposed policy and institutional actions, for the government to resolve these issues. Scope of work Task 1: Overview of Bangkok transport. This task will provide an updated review of the multi-modal urban transport situation and trends in the Bangkok metropolitan area, including the following aspects: general performance of urban transport systems (including both public transport and street/highway components), institutional set-up, policy and planning, regulation, management, financing, and on-going policy initiatives. In-depth data analysis is not required, but the consultants are expected to collect readily available data to the extent possible under the time provided in the consultant contract. Task 2: Public transport infrastructure and services. This task will assess the current performance of the public transport systems including rail, bus, and minibus, and identify and analyze the key constraints. To the extent possible given data availability, the analysis should be based on the examination of the operating and financial performance of individual modes, fares and affordability, accessibility and services, profiles of users, and system performance from the user (linked trip) perspective. Task 3. Walkability, bus priority, and private vehicle demand management. This task will provide a diagnostic analysis how walkability, bus priority, and private vehicle demand management in the Bangkok metropolitan area affects the performance of public transport systems. Task 4: Bus sector modernization and reform issues. This task will summarize progress to date of bus modernization and reform, identify the key issues, and analyze scenarios for change. Task 5: Demand growth scenarios. This task will analyze current trends in key factors such as demographic dynamics, personal income growth, and land use that are known to have an effect on travel demand, and their implications for the current transport investment plan (including the MRT system) and management. Task 6: Options and strategic roadmap. This task will highlight the pros and cons and the applicability of the technical and policy options to address the urban transport problems in Bangkok, and synthesize the practical options into a strategic roadmap with menu of proposed actions. CDP-Infrastructure Annexes Page XXIII Task 7: Role of IFIs and Urban Transport Development Partnership. This task will describe the role of the IFIs in and the modalities of IFI support to the medium-term urban transport development under the frameworks of the UTDP. Methodologies The study will be based mainly on discussions with relevant government agencies and service providers, a synthesis of existing studies, and diagnostic analysis of existing data. It is recommended that the World Bank‘s Thailand—Bangkok Urban Transport Sector Review (Draft, 1999) be used as a starting point for the sector issues update. Spatial micro-data analysis and in-depth travel demand modeling are not required. Where appropriate, the World Bank office will provide necessary technical and logistic assistance to the consultant study activities. Deliverables The deliverables include the following: (i) a final report plus necessary annexes; (ii) a power point presentation of the key findings and messages of the report; and (iii) presentation of the findings at a technical workshop. ANNEX 4: Background and scope of work for Component 4: Technical assistance for capacity building of the National Telecommunication Commission Background The National Telecommunications Commission (NTC) was formally established in October 2004 when the commission members were appointed by His Majesty the King. At about this time, most of the staff of the former Post and Telegraph Department became the initial staff of the NTC. Subsequently NTC launched its operations as the regulator of the sector. As a fairly new organization, the NTC is facing the challenges of initiating a new era of telecommunications regulation in Thailand that will determine or influence the environment for competition, large scale private investment, and adoption of new network technologies in the sector. Capacity building can make valuable contributions to NTC‘s success in meeting the challenges. NTC-World Bank Knowledge Partnership Program: Phase I Through funding from the Public-Private Infrastructure Advisory Facility (PPIAF), the World Bank provided technical support to NTC over the period of 2005-06 on the basis of the Phase 1 Knowledge Partnership Program. The specific activities included the following:  Universal service Consultants provided assistance in assessing different approaches to advancement of universal service in Thailand.  Interconnection Interconnection is always an important and complex issue in multi- operator environments, and it is complicated in Thailand because of the concession arrangements. The consultants suggested alternative ways to address interconnection issues that NTC could consider, and noted the Canadian Interconnection Steering Committee that assists in administering the network interconnection.  Competition Competition is a critical way to promote development of the telecommunications sector and customer interests. Consultants indicated the usefulness of public consultation on selected topics and indicated that development of the competition code could be supported by a public consultation process.  Price regulation Consultants reviewed the concept of economically rationale pricing and discussed the implications of the concept for pricing and regulation in the telecommunications sector.  Public consultation Consultants noted the usefulness of public consultation on selected topics and reviewed different mechanisms for public consultations.  Licensing Several sections of the license model from the 2002 PPIAF project were reviewed, such as licensing fees, emergencies, universal service, licensee‘s obligations to users, numbering, non-discrimination and fair trading, interconnection, privacy and CDP-Infrastructure Annexes Page XXV confidentiality, cost accounting, access to land and facilities, service interruption, and compliance.  Training The work on the training program identified several short training classes that could be considered as part of a broader training program for NTC management and professional staff.  Other issues include quality of services (QoS), allocating and management of radio frequency spectrum, and a wide-range of 3G-related issues. The Phase 1 work has been completed and the second phase of the NTC-World Bank collaboration is being planned. NTC-World Bank Knowledge Partnership Program: Phase II Following the successful progress of the Phase 1 NTC-World Bank Knowledge Partnership program and further to discussions between the two agencies, it was agreed that they would continue collaboration into the second phase along the following lines:  The overall focus of the second phase collaboration will be to enable NTC access to international best practice as the agency addresses important telecom regulatory issues.  The second phase is planned to start on July 1, 2006, and continue until about March or April 2007.  Consultant services required for the second phase will be defined by the NTC in consultation with the World Bank.  The NTC will entrust the World Bank to manage the consultant services. Subject to NTC approval of the terms of reference (TOR‘s) for the consultants and the selection of the consultant, the World Bank will select, engage, contract, pay and supervise the consultants. NTC will reimburse the World Bank the full cost of these consultants (both fees and approved travel) according to World Bank payment rates, retroactively. In all consultancies, the World Bank will finalize the contract with the individual consultant upon the receipt of NTC letter confirming (a) TOR‘s are agreed, (b) selection of named individual consultant is agreed, and (c) re-imbursement of fees and approved travel is agreed.  The World Bank will meet the costs of its own staff, both time and travel. Rationale for inclusion in CDP-INFRA As the first independent infrastructure regulatory agency in Thailand, the NTC will serve as an important example for other sectors where reforms are contemplated. The technical support to the NTC will help provide a positive demonstration effect for other infrastructure sectors. Moreover, the cost-sharing knowledge partnership model could be applied to newly-established regulatory bodies. Annexes Page XXVI Thailand The objective is to continue the collaboration with NTC in carrying out its responsibilities by providing information on international best practice experiences and expertise. This is already the second phase of the Bank‘s TA to NTC. The activities include the selection and supervision of consultants in capacity-building activities for the NTC. In addition, any regulatory agency can tap into the Bank‘s resources. For example, the East Asia and Pacific Infrastructure Regulatory Forum (EAPIRF), an infrastructure cross-sectoral capacity building initiative, is a very useful resource for a regulator. Under this initiative, regulators can enhance their capacity through information exchange and experience sharing. CDP-Infrastructure Annexes Page XXVII ANNEX 5: Background and scope of work for Component 5: Implementation support for pilot demonstration project for rural water supply and income generation Background Approximately 25,000 Thai villages (consisting of 11.2 million people) do not have a piped water supply system. In approximately 15,000 of these villages, water supply is considered inadequate. The Royal Government of Thailand is committed to the provision of village water supply systems. With public spending of over US$1 billion during the past two decades, about 30,000-40,000 village piped water systems (VPWS) have been installed. Although this is a major achievement, a significant number of villages will not have a chance to receive a VPWS within the next five to ten years at the current rate of public spending. The VPWS program aims to alleviate poverty in the rural villages. However, it is less effective than expected and largely unsustainable for a number of reasons. The program has been supply- driven and fully funded by the Government; thus, there is a lack of village ownership of these water systems. Due to a lack of periodic funding from the Government for maintenance, maintenance and care of the systems is largely inadequate or lacking. Abandonment often occurs when the systems fail. The poverty alleviation impact of the public expenditure, therefore, is unsustainable in many cases. In recent years, a demand-driven, virtuous circle model for rural water supply systems has been developed by the Population and Community Development Association (PDA), a well-known non-governmental organization (NGO) operating in Thailand. The model is designed not only to meet the village needs for household water, but also to provide agricultural water for income generation activities, and to assist the villages to build capacity for the management and maintenance of the systems. The income generation element enables the village households to pay back the investment needed to create the system. As a result, the private commercial banks become able to finance the investment on the commercial basis. The capacity building element ensures the sustainability of the systems through community participation. Although the virtuous circle approach is viewed as a probable solution, the government does not appear to be ready to adopt the approach before its effectiveness is proven at scale. Under this circumstance, the PPIAF funded a consultant study to evaluate the virtuous circle model and examine its scalability. The report, A Study to Develop a Strategy to Expand Rural Water Infrastructure within the Restructured Water and Wastewater Sector in Thailand, was completed in 2004, and provides recommendations to enhance the model and improve its scalability. The key features of the enhanced model are described below. The virtuous circle model The model composes of three key components: Annexes Page XXVIII Thailand 1. Hardware The piped water system, to be constructed by contractor selected by the community, and financed by commercial banks. 2. Financing The construction of the hardware will be financed by loan from private financial institutions on a commercial/micro-finance basis. 3. Software This includes the community‘s commitment and capability to manage, operate, and maintain the system. The capability is to be acquired through capacity building activities supported by the NGO or the Government. These three components are crucial to the success of the model. The system hardware is financed by private financiers, and the loan paid back over time by using the majority of the income generated from the agricultural production activities supported by the water system itself. The software component is required to help the communities build capacity for the sustainable management of the water supply system. The system management activities include the following: (i) managing the financing of the system; (ii) determining water tariff and collecting fees from households based on the use of water; (iii) facilitating the agricultural production activities for income generation; (iv) O&M; and (v) managing the revenue surplus for other community services. The capacity is expected to be built with the support of NGOs (especially PDA who first piloted the virtuous circle model) during the pilot demonstration project, and with the support of the government as well at the scale-up stage. The features of community participation and income-generation of the virtuous circle model could be incorporated into the on-going government VPWS program, to improve its sustainability. The model could also be introduced to other Mekong countries, in rural areas where the water resources permit. Pilot demonstration project and its implementation As the village piped water systems are expected to be financed by the private sector under the virtuous circle model, the pilot demonstration project will finance the software costs for about 40 selected villages and the dissemination of lessons learned from the project experience for the purpose of replication and scaling up in both Thailand and other Mekong countries (such as Cambodia, Lao PDR, and Vietnam). Key contributors to the project would include the following: - Communities to build, manage, operate, and maintain the pipe water supply system. - Private financiers to provide hardware financing. - Government agencies such as the Department of Groundwater Resources, Ministry of Natural Resources and Environment, to supervise, oversee and participate in the pilot demonstration project, to prepare for scale-up by the government. The opportunity of technical support to the income-generating activities from the Ministry of Agriculture and Agricultural Cooperatives (MAAC) will also be explored. CDP-Infrastructure Annexes Page XXIX - Implementing organization or a consultant to work on the two following fronts: 1) facilitate and enhance the community capacity building, and 2) ensure the success of hardware financing. - Consultants to design and provide technical supervision to the implementation process, produce reports to document the findings and blueprints for adoption elsewhere. - Funding agency such as PPIAF to provide software funding in the pilot project. - The World Bank to execute the PPIAF funding and supervise the project design, implementation, monitoring and evaluation, and dissemination. The overall project concept is illustrated by the following diagram: Diagram 1: Overall Project Concept “Water as a Source of Income and Wealth� – The Virtuous Circle Model Support Village Water Organisation Committee • Training - Oversee/administer • Education All elements of • Supervision VPWS PPAIF Usage (Allocation) VPWS “Software� • Household use Reliable Subsidy • High value crops Water Supply Finance • Other projects Investment SFIs New Projects Construction Finance Tariffs Surplus Loan Servicing Consumption/ From Consumption, (Principal & Connection And High Value Interest) Surpluses Crops High value crops MNRE Policy Supervision Maintenance Administration VPWS Enhancement Project implementation activities 1. Design Consultants will be engaged for the preparation of TORs for the selected implementing organization. The consultants are also expected to undertake the following activities: (i) along with the implementing organization, to select pilot villages; (ii) prepare training plans and materials; (iii) train the trainers from the implementing organization; and (iv) secure the commitment from private financiers for participation. During the village selection process, amalgamation possibilities of village water systems will be explored where the local conditions such as distance for water to be piped and terrain levels, permit economies of scale for small villages, such as one administrative entity to serve the merged service area. Annexes Page XXX Thailand 2. Implementation at village level The implementation process includes the establishment of village water committees, training and capacity building for villagers, disbursement of hardware financing, hardware construction, and the introduction and facilitation of income earning crop farming activities. Most implementation activities are to be carried out by the implementing organization, with the supervision from the consultants. The implementing organization is the key driver of the pilot project, in which the tasks include the following: - Selection of the participating villages on the basis of village willingness to participate, available water resources, management and operating capacity, and financing potential - Ensuring the financiers‘ commitment in the pilot project - Ensuring the community‘s understanding and commitment in the pilot project - Training and guiding the community in management, operation, and maintenance of the water supply system - Holding provincial workshops to create awareness and seek support from local authorities - Exploring co-financing possibilities with local and/or national government as well as the private sector, and if found, facilitating the co-financing operation 3. Monitoring and evaluation, documentation, and dissemination Three reports will be produced by the consultants: the inception report, interim report, and final report. Short quarterly progress reports of three to five pages are also expected from the consultants. The final report is expected to be printed for dissemination. For the purpose of more effective dissemination, field visits by relevant central and local government officials from Thailand, three government officials from each of the neighboring countries (Cambodia, Lao PDR, and Vietnam), and Thai mass media will be planned and carried out. The pilot project will be implemented in two stages. The first stage will cover 15 villages. The second stage will cover the remaining 25 villages, but also allows for co-financing possibilities with local and/or national government as well as the private sector, in turn providing opportunities for more villages to benefit from the project. A part of the dissemination cost in the first stage will be used to contribute toward efforts to explore additional, co-financing possibilities. The first stage is expected to take about 12 months, with the following key milestones achieved: for over ten villages out of the 15 financial closure with commercial banks is reached, contractors hired, training activities substantially carried out, and civil works to build the water system completed. PPIAF funding would flow into the second stage upon the successful completion of the sequential milestones of the first stage. It is estimated that the first stage requires 40 percent of the PPIAF fund and the second stage 60 percent. Selection of pilot villages The project will focus on poor villages that are not in the position to receive government funding support for VPWS in the next five years and are willing to participate in the pilot project. The selection process will involve consultation with provincial and local governments. CDP-Infrastructure Annexes Page XXXI A few villages that have been selected by the government for the VPWS program could be selected, in consultation with the Department of Groundwater Resources, for the pilot demonstration project, to introduce the community participation and income-generation features on the experimental basis. Moreover, as indicated earlier, amalgamation possibilities of village water systems will be explored where the local conditions (distance for water to be piped, terrain levels) permit economies of scale for small villages. For example, in the case of a few small villages located nearby, a merged service area could be defined, with just one administrative entity to provide and manage the service. Technical feasibility In most Thai villages a nearby source of reasonable quality (under)groundwater is available, and proposed consumption volumes are comfortably within most conservative estimates of sustainable levels. Financing A 40-village (about 18,000 people) pilot project in Thailand‘s Northeast and East regions will require an investment of $240,000 to cover software support costs. It will be complemented by private sector financing to the extent of $400,000 for system hardware construction, local community ‗in kind‘ contributions of $160,000, and government ‗in kind‘ contributions of $40,000. The pilot project is expected to deliver income and wealth creation of $4 million. Additional local and central government financing could be explored during the first stage, and if successful, could be mobilized to finance more villages in the second stage of the program. A part of the dissemination cost in the first stage would contribute to the effort to explore additional, co-financing possibilities. For hardware financing, KTB, BAAC, and GSB are the three banks that have the infrastructure, experience and expertise required to finance activities in rural villages. Terms and conditions (interest rates, repayment terms, collateral) are at private sector standards, and at arms length from any of the banks' social obligations. The debt is collateralised by joint and several guarantees amongst Village obligants, has the tacit support of the Village Management Committee and Head Man, along classic micro lending lines. Expected impacts The primary impact is that the participating (40) villages will have a sustainable water supply system in place. Other expected impacts are that the Government and local authorities adopt the successful model for scaling up in other areas, so they will save cost in fulfilling their development priorities. Knowledge and lessons learned will also be disseminated to and adopted by neighboring countries, and, thereby, poverty alleviation occurs in a sustainable manner. Annexes Page XXXII Thailand Project’s input-to-impact summary Inputs training, guidance, facilitation to the participating villages through out the process of having a sustainable pipe water supply system, and between the villages and the financiers in hardware financing Process community participation & commitment (i.e. ―ownership‖ creation); community capacity enhancement; private financiers‘ participation in public utility provision Output (40) self-sustainable village water supply systems; documented reports Outcome the water supply systems are sustainable (in self-financing and operation) with their income-generating features; the pilot project demonstrates the scale-up possibility Impact poverty alleviation; government & local authorities embrace and adopt the model for scale-up projects; neighboring countries adopt the model Scale-up in Thailand and other Mekong countries It is hoped that the success of the pilot demonstration project will convince the Thai Government to accomplish the following: - Allocate budget to support the software costs of the virtuous circle model, in order to leverage the private sector financing; and - Introduce, where appropriate, the community participation and income-generation features into the on-going VPWS program, to improve the likelihood of the program‘s sustainability. CDP-Infrastructure Annexes PageXXXIII Proposed Scale-Up by the Government SUPPORT ORGANISATION Training and Supervision VILLAGE WATER SFIs COMMITTEE Construction Finance Supervision, Operation, Management VILLAGE PIPED WATER SYSTEM MOF BUDGET Owned and operated Implementation Finance MINISTRY OF FINANCE at the grass-roots Budget, Standards, Evaluation FISCAL BUDGET CONSULTANTS Jump-start Finance Planning, Supervision, Evaluation CASH SURPLUS GENERATION BOOST CONSUMPTION & ENVIRONMENTALLY SECURE • Recharge Village Fund INVESTMENT • Renewable water source • SFI Debt Service New agricultural and • No erosion or surface • New Investment non-agricultural investments contamination 5 Where the underground water resources permit, the virtuous circle model could be initiated in rural areas of Cambodia, Lao PDR, and Vietnam. Annexes Page XXXIV Thailand ANNEX 6: World Bank Press Release—National Launch of the Country Development Partnership for Infrastructure Bangkok, January 31, 2007 – The World Bank announced Wednesday a new knowledge sharing partnership with the Royal Thai Government designed to help improve Thailand‘s infrastructure in support of economic development and poverty alleviation. The ―Country Development Partnership for Infrastructure‖ or CDP-INFRA, provides for more support from the World Bank and other international partners to the Thai Government to develop and implement a national infrastructure strategy. Through a program of analytical and advisory activities, the Bank and other partners will help the Government identify new challenges in the infrastructure sector, define its role in infrastructure service provision and management from that of the private sector, and improve institutional and regulatory capacities of the National Telecommunications Commission (NTC). ―Each component of this CDP is designed to support Thailand in enhancing the quality and sustainability of the nation‘s infrastructure sector development,‖ said Ian C. Porter, the World Bank Country Director for Thailand. The Bank is confident that better infrastructure will ―contribute to the improvement of national competitiveness, economic growth, and to the well being of the Thai people,‖ Mr. Porter added. Thailand‘s systems of electricity supply, intercity transport, sea-freight shipment, urban water supply, and telecommunication services are modern and notably efficient compared with its neighbors. In recent years, the country‘s air transport has also reached a world-class standard. Each of these factors has made a significant contribution to the recent economic expansion in Thailand. Still, improvement is required in many sub-sectors, namely urban transport in large cities, logistics and energy costs, water supply in rural areas, and waste water treatment. Together with the recent oil price increase, infrastructure bottlenecks have placed real constraints on economic growth. ―There is a greater demand for a well-balanced infrastructure development strategy that links economic, social, and environmental dimensions together,‖ said Dr. Panas Simasathien, Chairman of the National Economic and Social Development Board (NESDB), the World Bank‘s key partner. Moreover, high logistics costs, heavy traffic congestion in Bangkok, high energy intensity, and energy import reliance could all reduce Thailand‘s regional and international competitiveness, if continued, Dr. Panas said. ―We need to explore technological and policy options for the development of more energy efficiency and focus on renewable energy in order to ensure long term energy security and sustainability,‖ he added. The Thai Government has been taking steps to tackle these challenges, including preparing an energy strategy to improve competitiveness and designing an investment program in response to CDP-Infrastructure Annexes Page XXXV the issue of energy demand. It also emphasized sustaining infrastructure, logistics, as well as cluster development in the 10th National Economic and Social Development Plan (2007-2011). The NTC itself was set up in 2004 to be the first independent regulatory agency for Thailand‘s infrastructure sector. ―This event will be a valuable opportunity for all development partners…to discuss among stakeholders on priorities and the way forward for infrastructure development in Thailand,‖ said Dr. Ampon Kittiampon, the NESDB Secretary-General. This is the seventh CDP in Thailand since 2000. Previous CDPs have addressed issues of poverty analysis monitoring, financial and corporate competitiveness, social protection, and governance and public sector reform in Thailand. CDPs for education and environment are on-going and a CDP for health will be launched in February 2007. For more information on the World Bank‘s program in Thailand, please see: www.worldbank.or.th For more information on the World Bank‘s infrastructure program, please see: www.worldbank.org/infra -###- CDP-Infrastructure Annexes Page 37 World Bank Office, Bangkok National Economic and Social Development Board 30th Floor Siam Tower 989 Rama I Road, Pathumwan 962 Krungkasem Rd., Pomprab Bangkok 10330, Thailand Bangkok 10100, Thailand Tel. (662) 686 8300 Tel. (662) 280 4085 Fax. (662) 686 8301 Fax. (662) 280 1860 http://www.worldbank.or.th/ http://www.nesdb.go.th/