Announcement of Twenty-Six Million Loan to Thailand on September 15, 1967

• 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: 1-------------~---------------------------···-------------rt.r} EXECUTIVE 3-6360 Bank Press Release No. 67/48 Subject: $26 million loan to Thailand September 15, 1967 The World Bank has approved a loan equivalent to $26 million which will be made to the Kingdom of Thailand with the participation of the Bank of Thailand and six commercial banks in the United States. The loan will help to carry forward a pro- gram to increase agricultural production on Thailand's fertile and highly productive Central Plain, and will lead eventually to the development of additional hydroelec- tric power. Funds from the loan will be used for the construction of the Phasom Dam on :.~~~.-, Nan River in northwestern Thailand and for studies related to accelerating agricultural development and irrigation in the Chao Phya and Nan River Valley areas. • The Phasom Dam will permit storage of flood waters which can ultimately be used during the dry season for the irrigation of approximately 940,000 acres of land for the production of a second crop of agricultural products. The project, which the loan announced today will help to finance, will be the construction of the Phasom Dam and reservoir on the Nan River, together with asso- ciated facilities. The Phasom Dam will be about 100 meters high and 800 meters liong. The project also includes the constTuction of five saddle dams to close low points in the rim of the reservoir, and the construction -- which has been com- pleted of two roads including bridges to provide access to the a~ea, and campsite facilities~ In addition to the construction work, the Government is making arrangements for three studies to be c&rried out: one for irrigation schemes in the Nan River Valley, • another for the formulation of a plan ior the rapid introduction of second cropping of the Chao Phya area, and a third which relates to the timing and size of the power  - 2 - generating facilities to be installed at the Phasom Dam and included in the system • of the Yanhee Electricity Authority which supplies most of the power in Thailand. The Royal Irrigation Department, with the assistance of consultants, will be responsible for the construction, operation and maintenance of the project, Con- tracts for construction and procurement of all equipment and supplies financed by the Bank loan will be on the basis of international competitive bidding. The studies will be completed by the end of 1969 and the construction work by mid-1971. Four rivers (including the Nan) rise in the high mountains of northern Thailand and soon after entering the Central Plain join to form the country's principal river, the Chao Phya. The irrigable areas lie in the basins of the upper tributary rivers and in the Central Plain, where the Chao Phya and several other smaller projects are located. This will be the sixth loan made by the World Bank since 1950 to assist the program for the development of the Central Plain. Earlier loans totaling $115 million assisted projects which are providing irrigation, flood control, water storage, navigation and hydroelectric powe 1. The program has already resulted in a massive increase in the production of rice, Thailand's main crop, which has risen from 7.3 million tons of paddy in 1955 to nearly 12 million tons. In the Chao Phya area of the Central Plain, agriculture. is comparatively well developed due la~gely to the irrigation systems developed over the past years. The main cro{) on about 80% of the land during the flood season is rice, while about half the rema,..._ ,ing 20% is planted to other crops, mainly foodgrains and oil seeds, and half is devoted to orchards and gardens. Agriculture in the Nan River Valley to the north depends almost entirely on the flooding of the rivers and tributary systems • during the rainy season. Production is uneven because of the limitations imposed by droughts and flooding, although yields in this area are believed to be among the best in Thailand for such crops as rice, peanuts, mung beans, soybeans and sesame. Depending on the crops grown, the project will permit the irrigation of an additional 445,000 to 988,000 acres for dry season cropping in the Chao Phya area; dry season cropping of about 495,000 acres and a dependable water supply ~or wet season cropping of about 988,000 acres in the Nan River Valley. At full development the growing of. a second crop of rice on 445,000 acres in the Chao Phya area and full development of the Na'.n River Valley would result in annual net benefits to the economy of Thailand equiva- lent to about $52 million. The Bank loan will be for a term of 20 years and bear interest at the rate of 6% per annum. The total cost of the project is estimated at the equivalent of $76 million, of which the local cost, equivalent to about $50 million, will be financed by the Government from budgetary allocations. The Bank loan, amounting to $26 mil- lion, represents the estimated foreign exchange cost of the project. The Bank of Thailand is itself providing $16 million of this foreign exchange by purchasing a series· of maturities of the Bank loan starting with the second and ending with the last maturity. Six commercial banks in the United States have also agreed to parti- cipate in the loan for a total amount of $1,235,000, representing the first maturity and part of the second and thb:·d maturities which fall due between August 1973 and August 1974. The commercial banks participating will be: Manufacturt~rs Hanover Trust Company, New York; Bank of America National Trust & Savings Associati\,n, San Francisco; • Girard Trust Bank, Philadelphia; National Bank of Connnerce of Seattle; First National City Bank, New York; and Crocker-Citizens National Bank, San Francisco.