Asian Development Bank

Asian Development Bank

Bangkok Post
May 4, 2000
Finance stands firm on charging for Irrigation, Agriculture wants loan clause removed

The Finance Ministry insists that it must charge for water from new irrigation schemes,
which will be paid for by a loan from the Asian Development Bank, to ensure that
investment assists in expanding available cultivated land.

The decision will almost certainly lead to confrontation with farmer groups and
non-government organisations which have insisted all along they are opposed to the
imposition of fees on water projects.

Activists are now gathering in Chiang Mai where they will demonstrate at the annual
meeting of the bank later this week. The water charge attached to the loan is an item on
their protest agenda.

Sommai Phasee, deputy finance permanent secretary, said by sharing costs with
farmers, maximum gains would be achieved from irrigation systems built through new

Revamping the charge system is one condition of a US$600 million agricultural
programme loan taken out by the government with the ADB.

Currently, the government collects an annual fee from farmers to help cover costs of
waterworks investment.

Charges are collected until 20% of the total investment costs are paid, with the
remaining 80% picked up by the state.

Under the ADB loan, the system would increase costs borne by beneficiaries of new
investment to 30% next year and up to 50% by 2003.

Mr Sommai said the government had sought to minimise the costs paid by farmers,
noting that in some areas, annual charges totalled 100 baht a rai. “Once the investment
costs are repaid, no more charges are collected,” he said. Officials argue that
revamping the existing system is necessary to ensure efficient use of resources and fund
new investment in water infrastructure, helping boost the amount of land under

But local farmer groups have resisted the plan, complaining that costs would increase at
a time when commodities prices are already at low levels.

Kingkorn Narinthorn na Ayutthaya, a co-ordinator of the Northern Development
Foundation, said farmers have paid their share of taxes. To collect more fees would
amount to double-taxation.

While some farmers would be able to afford the cost, the majority, who are small and
poor, would be left out from the state service.

It was worrying that the state would assume monopolistic control over the management
of water resource, thus depriving local people of the right to manage local resources.

The Agriculture and Co-operatives Ministry, under pressure from local farmers groups,
is moving to lift the water charge condition from the ADB loan.

In any case, the Finance Ministry insists that the principle behind the condition remains
sound policy.

The ministries will have to settle the issue before submitting details on how waterworks
investment will be managed to the ADB for final loan approval.

Thailand currently has 18 ongoing projects funded through loans from the ADB,
totalling some $1.6 billion.

Projects include a rural enterprise credit project run by the Bank for Agriculture and
Agricultural Co-operatives and a power transmission expansion scheme run by the
Electricity Generating Authority of Thailand.

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