(February 26, 2003) Praphat Panyachartrak, minister for natural resources and the environment, turned heads on Monday when he announced plans to scrap the contract to build a controversial wastewater treatment plant in Samut Prakan province.

(Editorial) The winning consortium, which has been working on the plant since 1998, was charged with failure to modify the terms of the contract after the withdrawal of experts.

The termination of the contract brings an end to construction as well as payments. However, there is room for renegotiation, the minister said, and work could resume after some revision.

The idea of renegotiation was met with mixed reactions. The prospect of a renegotiated contract raises comfort levels because it would be a criminal waste of resources, time and effort to abandon a project that is 95% complete, and in which more than 20 billion baht has been invested. But the renegotiation also raises questions of why the government has scrapped the contract. The answer to this seems to lie more in politics than economics.

The government has much to gain politically from the dramatic interruption. For starters, it shows political will to break a deadlock. Without the contract termination, the building of the last 1,200m of the project would face continued opposition from neighbouring villagers. The terms of the contract bar the consortium from seeking government intervention.

By terminating the contract with the possibility of negotiating new terms, the government is offering a carrot to both sides. The consortium effectively escapes being penalised for failing to complete the project, and can look forward to negotiating for government help in times of need. And the project opponents have been granted a window of opportunity to ensure their problems are addressed.  Work on the plant is due for completion this year. But the project has a long history of corruption involving an array of political figures, starting with reports of irregularities from the time the land was acquired. Subsequently, there have been allegations of corruption in the procurement of pipes and the specification of systems. One department director-general has been transferred and several lower level officials look sure to be made scapegoats.

The idea of a wastewater plant in Samut Prakan is sound enough. The province is home to 5,000 factories with a potential to pollute. The plant will collect wastewater from factories and households, remove toxic elements, and release the treated water into the Gulf of Thailand. Asian Development Bank, the Japan Bank for International Cooperation and the government are co-financing the plant.

As well as opposition from neighbours, who say the plant will affect the salinity of water in the Gulf needed for their mussel farms, the project will face cash flow problems. Local factories are reluctant to use the plant as most have their own treatment systems.

Prime Minister Thaksin Shinawatra, who inspected the area last May, yesterday joined the debate with a characteristic shoot-first, pay-later contribution. He said the “ghost” of an idea to install wastewater treatment plants at two sites would be resurrected and the wastewater pond would be turned into an aquarium.

Given the size and long history of this project, time would be best spent talking to stakeholders, investigating the depth of their problems and addressing them. Before renegotiating the contract with the builders, Mr Praphat should spend time talking to neighbours, order tests on the impact of the wastewater effluence on their livelihoods, and seek out technology to minimise this. Without a genuine effort to solve these problems, no amount of dramatic effects will help.

Bangkok Post, February 26, 2003