The Korea Herald

지나쌤

Thailand’s mega water project adrift: sources

By Seo Jee-yeon

Published : June 3, 2013 - 20:32

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Doubts about whether Thailand’s $12 billion water-related project will proceed as planned are rising among Korean builders.

The Thai government is scheduled to select preferred bidders for the nine project modules on Tuesday, but Korean participating firms believe that the announcement will be delayed without a fixed deadline due to differences over price.

“We expect the announcement to be made around June 11, but we haven’t received any official notice from the Thai government on the adjusted timeline,” an official from the Korea Water Resources Corp., or K-water, said.

A K-water-led Korean consortium and three other bidders ― ITD-Power China Joint Venture, Summit SUT and Loxley ― are competing for Thailand’s water management and flood prevention mega project.

“The bidding process is at the final stage, but it seems the selection committee needs more time to negotiate the project price by module and terms of reference with bidders who passed the first round of the final review on May 27,” the official said.

The final review by the selection committee is being carried out in two phases: technical and price level reviews.

Other sources raised the possibility of the suspension of the project due to not only escalating opposition against the project from various sectors in Thailand, but also complaints of bidders on the terms of reference.

According to recent reports from The Nation, a leading English-language daily in Thailand, the project faces mounting opposition and criticism from some groups, including environmental activists, academia and even insiders within the government.

These opposition groups, above all, point out that there is no proper feasibility study on the project and so it is highly likely to see the project fall into a failure or corruption in the course of the project implementation.

In the latest development regarding public resistance against the project, a group of villagers from river basins in the north and northeast of Thailand gathered outside the South Korean Embassy in Bangkok last Saturday and called on K-water to suspend its bidding, The Nation reported.

Another challenge ahead of the project stems from complaints of bidders over the terms of the contract, many of which they think fall behind international standards.

“Bidders on the final list are in negotiation with the Thai government to improve some of terms of reference, including the term of land expropriation, which will be a major stumbling block to push for the project later,” an official from the Korea Rural Community Corporation said. The corporation is part of the Korean consortium.

According to the original terms of reference, for instance, project winners have to deal with land expropriation on their own without support from the government.

“In other international biddings, it is common for a local government to intervene in the issue as international bidders have no knowhow in negotiating with locals,” the official said.

Back in early May, two other qualified bidders ― Team Thailand Joint Venture and Thailand-Japan JV ― pulled out from the bidding, raising questions about the profitability of the project.

The Korean consortium also admitted that the Thai water project could be a high-risk business unless the original terms of reference are amended.

“For now, our stance is that we will do our best to win modules as much as we can, while continuing to negotiate terms of the contract. We have a certain amount of time before and after the announcement of preferred bidders for negotiation. However, if we conclude that the project is not feasible, we could drop the project before signing the contract,” the K-water official said.

The Korean consortium is composed of seven organizations, including the nation’s top builders like Hyundai Engineering & Construction, Samsung C&T and Daewoo Engineering & Construction. It has sought to win half of nine modules of the mega water project.

By Seo Jee-yeon (jyseo@heraldcorp.com)