Announcement of Sixty Six Million Dollars Loan in Thailand on August 21, 1957

WORLD INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 PRESS RELEASE NO. 495 For Release SUBJECT: $66 miliion loan A.M. Newspapers in Thailand Wednesday, August 21, 1957. The World Bank today approved a loan in various currencies equivalent to $66 million to assist in carrying out the first stage of the Bhumiphol multi- purpose project in Thailand. The signing of the loan will take place a~er the enactment by the National Assembly of Thailand of satisfactory legislation estab- lishing the new Bhumiphol Electricit,y Authority, which would be the borrower. This project is the largest yet undertaken in that country and includes the first steps toward the installation of an i~ter-connected electric power system, ~ with sufficient capacity to meet a large part of Thailand's estimated needs for a number of years ahead. It will also make possible the control of floods which at present cause heavy damage, and Will provide additional irrigation water for more than 2 million acres, which will make it possible to increase agricultural production by amounts valued at about $15 million a year. The bo~rower is to be the Bhumiphol Electricity Authority, an independent agency being established to operate the project and all major power generating plants a...11d transmission systems in the central part of Thaila..11d. The Bank's approval assures the Kingdom of Thailand that external finance will be forthcoming to supplement local capital in carrying out the project. The Governm.e~t is placing before the National Assembly the legislation needed to bring the new Authority into existence. It is expected that this process will • be completed in the near future • The Bhumipho~ project formerly bore the name of Yanhee~ central importance to the country's development, King Bhumiphol of Thailand In view of its agreed to the Government's request that he lend his name to the project·.  w - 2 - Of the project's three principal objectives, power, flood control and irriga- tion, the most important is to bring to an end the increasingly acute shortage ~· of electricity which Thailand has been experiencing for several years. Demand. for power in Bangkok, for example, has been rising at a rate of 15% annually over the past six years, despite the severe restrictions which have been in force, and this growth is expected to continue, although at a lower annual rate. The existing capacity of the public utility systems is so inadequate and the service so restricted that all large consumers must install their own generating units; the total power so produced, in fact, exceeds that of the public utility systems. The first stage of the Bhumiphol project includes the construction, 260 miles northwest of Bangkok, of a 500 feet high arch dam across the Ping River, an important tributary of the Chao Phya, and.the installation of two generating units with a total capacity of 140,000 kilowatts in a new powerhouse below the dam. Provision is included for a switch-yard, two transmission lines to Bangkok, of a combined total length ~f 650 miles, supplying 11 load centers • en route, and the necessary sub-stations. The estimated cost of this Bank- financed project is $100 million eq11Jlivalent, of which the Bank loan would provide the foreign exchange required. As is customary w:i.th Bank-financed projects, ·bidding for the project will be open to international competition. In the meantime, in order to meet the minimum requirements of the growing power demand, particularly in Bangkok, additional thermal capacity is required. Also, the present distribution systems in the Bangkok area are inadequate and will have to be modernized and expanded. Although not part of the Bank-financed. project, the construction of additional thermal capacity and of new distribution systems will be carried out simultaneously with it. Twenty 1,000-kilowa.tt diesel l)Ilits are now on order and preliminary studies are in progress for a new steam plant of about 20,000 kilowatts. •  l. •• \ \ \ l T \ BHUMIPHOL \~ ·, RESERVOIR ;'.' \. \ '\ DAM SITE \ ... \ '7 \ \ KAM PANG PETCH \/·'1 . i ..r·v· ~ ) t N ( \ ! .,.....; • _.,,.,.../ \ \ l \ \ \ ·,. '·'·\ \ \) Bay of BHUMIPHOL PROJECT Bengal INITIAL STAGE 138KV TRANSMISSION LINES • INTERNATIONAL BOUNDARIES •-·-·-· 0 20 40 60 80 IOOKM O 20 40 60 BOMILES I I I I I I E::=:====3====E=====E===3 AUGUST 1957 IBRD-364  ' - 3 - The first stage of the Bhumiphol pro}ect will be completed in 1963, and its future development would comprise successive installation of additional genera- ting unit.$ in step with the growing powe:?:~ demand until the full capacity of about ., 500,000 kilowatts is reached. Two additional high-tension transmission lines to Bangkok and other transmission lines will ultimately connect 33 of Thailand's 71 provinces. According to present estimates, the entire capacity of the power plant would be fully utilized by 1975. The flood control aspects of the project a.rise from the fact that the Ping River is an important part of the Chao Phya River system which intersects Thailand from North to South. During the rainy season the flow of all the rivers in the system is greatly enlarged, leading to periodic floods in the central plain above Bangkok. Control of the Ping River is expected to reduce the annual flood crest to a point where damage in the plain will be reduced in normal seasons. This fact, together with use of the Bhumiphol storage to maintain river flow in the Chao Phya River during the dry season, will also be of great value to river navigation, which plays a key part in the economy of • Thailand. The project will also have important effects on irrigation, a matter of great importance to a country which depends on agriculture, especially on rice, for the greater part of its national income and its earnings from exports. The reservoir which will build up behind the Bhumiphol dam will be able to hold about 12 billion cubic meters of water, equivalent to half the storage of all the reservoirs in the TVA system. This will be available for use throughout the dry season to maintain a flow down to the large new irrigation system which has 'been constructed in the Chao Phya R:Lver basin with the help of a Bank loan of $18 million made in 1950. The main features of this earlier project were the recently completed Chainat barrage, about 100 miles above Bangkok, and a system • of canals and water distribution channels which w-111 irrigate an area of about 2,260,000 acres in the central plain of Thailand. This system, how~ver, has  • • - 4 - comparatively little storage and is dependent mainly on the flow of the Chao Phya, which is fully adequate for irrigation only for six to seven months of the year. The water from.the Bhumiphol reservoir will therefore make possible the irrigation of large areas throughout the year and allow culti- vation of new dry-season crops, ·E~uch as beans, corn and sugar, over a large . area. It is estimated that this f'eature of the project will lead to an annual increase in agricultural production of about $15 to $20 million, of which $5 million will be from additional rice available for export. The Bhumiphol project has been under study for more than five years. When it was first submitted to the Bank for consideration in 1952, the Bank recommended, in view c,f the magnitude o:f:" the project and its many-sided effects on the development of Thailand, that consultants be employed to carry out a • thorough engineering study. The Government engaged the United States Bureau of Reclamation for this work and the Bureau's report was ~ade available to the Bank in 1956. The report showed that the project was technically sound and the Bank, after further studies, decided that it should be given h~gh priority in the development plans of Thailand. Negotiations have since been cmnpleted on the various aspects of the loan, including the setting up of the new Authority, and agreement on the new distribution systems and additional thermal power capacity for the Bangkok area. The Bank's loan would be for a term of 25 years, the rat~ of int~rest to be tl.etennined at the time of signature. .Amortization would begin on October 15, 1963 and would be calculated to retire the loan on October 15, 1982. The loan '\.' ls to be guaranteed by the Kingdom of Thailand. The Bank has previously ma.de five loans to Thailand, totaling $40.8 I •• million. In addition to the irrigation project previously :mentioned, these liJans have been for railways and for the port of Bangkok.