CONCERNING COMMENT ON GAS-PAYMENTS

[uneoo@xxxxxxxxxxxxxxxxxxxxxxx]

/* Written Fri 20 Feb 11:00am 1998 by drunoo@xxxxxxxxxxxx in igc:reg.burma */
/* -------------" PTT comments on payments "---------------- */

CONCERNING PTT'S COMMENTS ON GAS-PAYMENTS
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1. The Yadana gas pipeline project has been controversial on
   many fronts. In Burma, the pipeline was done by using
   slave-labour and by repressing the local minority
   population. The local population on the side of Burma are
   still under pressures to keep calm by a heavy presence
   of Burmese army around the pipeline area. Also is our memory 
   still alive about the harsh treatments of refugees along
   Thai-Burmese border relating with the construction of
   the pipeline.

   In Thailand, pipeline brought destruction to the pristine
   forests of high environmental values and also cause
   disturbances to the wild life within the area.

2. There are also issues surrounding with the delay of the
   project. One in which of great concern to us are the
   possibility of the payments to the Burmese military
   government. The details of the terms of contract agreement
   between Burmese military government, the Patrol Authority of
   Thailand(PTT) and Unocal/TOTAL group are not fully disclosed
   to the public. Any contract of this nature, surely, will be
   complex. However, there are inconsistent interpretation, of
   which highly susceptible to manipulation, frequently been put
   forward by PTT officials regarding with penalty/advance
   payment to the Burmese side.

3. We would need clarification on the comment that the
   "PTT still must pay certain amount of money to the Burmese
   government even if Thailand is not ready to receive any gas
   delivery from Burma". Why should PTT be giving any money in
   advance, apart from the penalty payment to the Burmese side ?
   (see following 18/2/98 report by the Nations)

4. From our perspective, any contract PTT has made with military
   government of Burma is also illegal in nature. The State
   of Burma, at any given time, will have no obligation to
   observe the terms of agreement made by PTT. Equally, the PTT
   should not have to observe the terms of agreement made with
   illegitimate military junta.

5. The best option is PTT and Unocal/TOTAL group to re-write
   their contract with Executive Committee of National League
   for Democracy. Any penalty payment for the delay of the
   pipeline should be waived; and no payment in advance should
   be made for gas purchase from Burma.

6. Our principal interest in this matter is to prevent any
   revenue, amounting large or small, flowing into the hand of
   Burmese military. Furthermore, we are interested in using
   such money from sale of gas to support our refugees and
   refugee programs. It is appropriate that those monies be used
   for our Karen and Mon refugees living around that area.
   Therefore, it is a highly appropriate that the Royal Thai
   Government grant refugee status to those who are in the camps
   in Thailand.

6. I will advocate this case to Prime Minister Chuan Leekpai and
   our pro-democracy friends' supports to this matter are greatly
   appreciated.


With best regards, U Ne Oo.
18 Shannon Place, Adelaide SA 5000, AUSTRALIA.
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Date: Thu, 19 Feb 1998 12:25:25 +0700 (GMT+0700)
THAI PAPERS ON FEBRUARY 19, 1998
4. RATCHABURI POWER PLANT IN FOR DELAY

RATCHABURI POWER PLANT IN FOR DELAY
19.2.98/THE NATION
WATCHARAPONG THONGRUNG,
PENNAPA HONGTHONG

EGAT officials confirmed yesterday that completion of the massive
Ratchaburi power plant will be delayed, threatening the country
with blackouts and raising new questions about the timetable for
the Yadana gas pipeline.

Siridhat Klanklamdee, Egat's assistant governor, said
construction of the first gas-fired unit, which is due to burn
natural gas delivered by the pipeline from Burma starting in
July, is likely to be delayed by about one month because of
slower-than expected progress from contractors building the
plant.

However, an Egat official said the delay could last around three
months because of the recent Cabinet resolution to comply with
the International Monetary Fund's balanced budget policy for all
state enterprises, which has forced Egat to postpone payments to
suppliers and creditors for projects, including Ratchaburi.

"Amid the slowdown in electricity demand, Egat could not convince
the government to complete the power plant on time," said the
Egat source, who asked to remain anonymous.

The issue of Egat's financial liquidity problems was raised
several days ago by the Kalayanamitra Council's Pipob
Udomittipong,  a pipeline critic who testified before the
national committee set up to review the pipeline project. Pipob
said Eeat would not be able to pay off its suppliers until the
new fiscal year starts after Sept 30, and predicted the first 200
megawatt combined-cycle unit of the Ratchaburi plant will not be
ready to receive gas until November.                   

The delay has created new uncertainties for the Petroleum
Authority of Thailand's pipeline project, which is currently
being built through a pristine forest-area in Kanchanaburi
inhabited by several rare and endemic species. Critics have
called for its route to be altered, which could become more
feasible now that the power plant destined to use the gas won't
be ready on time.

The PTT's reaction to Egat's news yesterday was relatively mild.
The PTT has in the past responded to calls by conservationists to
delay the project by insisting it must be completed by July 1 or
the company would have to pay fines as high as Bt100 million per
day.

Jira Chomhimvet, the PTT official who heads local operations for
the project, said that while the PTT would indeed have to pay for
the gas Burma is supposed to deliver even if the PTT can't
receive it, the losses would be far less than suggested.

"We can eventually claim the gas we pay for once the power plant
is finished and the country is ready to take it," Jira said. "In
the end, the only money we will lose will be the interest."

The senior Egat official also disclosed yesterday that executives
from Egat and the PTT will soon go to Burma to ask Burmese
authorities to relax the penalty charge should the PTT be unable
to receive the Burmese gas on schedule.

According to the source, the extra charge will be around
Bt150--Bt170 million a month, depending on the exchange rate. He
confirmed that the charge is not simply a penalty fee but rather
an payment for the gas since some flexibility is allowed under
the gas sales contract.

He said Egat will help the PTT convince the Burmese about the
reasons why the PTT cannot receive gas on time, even though Egat
is not required to pay the PTT if the power plant is delayed.

This contradicted comments made at the pipeline committee meeting
by Egat's Siridat, who said Egat had signed a "take-or-pay"
agreement with the PTT, and so must pay for the gas even if it 
cannot take it. 

Siridat said postponement of the commissioning of the Ratchaburi
power plant will cause electricity brownouts and blackouts, each
minute of which will cost the'' country Bt1.2 million. "The
economic  cost will be doubled if the blackout occurs in big
cities or industrial zones," he said.

Without the Ratchaburi plant,  the national electricity reserve
capacity  in 1999 will stand at only 10.2 per cent,  far lower
than the 25 per cent minimum requirement. The current reserve 
capacity is 12 per cent, according to the assistant governor. "We
are well aware of the consequences [of the delay] and are
speeding up construction of the project to try and finish it on
time," he said.

Meanwhile, the national committee reviewing the pipeline project
wound up its information-gathering yesterday  and will now 
deliberate on  recommendations to offer to the prime minister
next week.
     
Testifying on the issue of safety  concerns, the PTT's Vorashai
Piyasuntaravongse told the committee that the petroleum  firm has
already paid insurance fees - totalling US$10 million for the 
pre-commissioning period and US$30 million; for the post-
commissioning period   to protect the lives of contractors,
workers and people living along the pipeline route.

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