Thailand Water Report

Executive Summary
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Thailand Water Report

Table of contents

Published Date: 01 Jan 2015

BMI Industry View

SWOT

Water

Political

11

Economic

12

Business Environment

14

Industry Forecast

16

Water Extraction

18

Table: Thailand Water Extraction, 2011-2018

19

Water Consumption

19

Table: Thailand Water Consumption, 2011-2018

20

Water Treatment & Sanitation

22

Industry Risk/Reward Ratings

23

Table: Asia Water Risk/Reward Index

23

Rewards

23

Risks

24

Market Overview

25

Water Supply & Consumption

25

Table: Reservoir Capacity

26

Industrial & Agricultural Water Consumption

27

Distribution

27

Treatment & Sanitation

28

Regulations And Tariffs

29

Table: Domestic Water Tariffs In Thailand, 2013

30

Industry Trends And Developments

31

Table: Thailand Water Projects

31

Competitive Landscape

34

Ministry Of Natural Resources And Environment

34

Ministry Of Agriculture And Cooperatives

34

Pollution Control Department

34

Water and Flood Management Commission

35

Department Of Water Resources

35

Thai Tap Water Supply Public Company Limited

35

Eastern Water Resources Development And Management Public Company Limited

35

Private Water Companies

36

Global Industry Overview

37

Latin America's Power Sector Will Be Largest Water Consumer

38

Exports and Solar Power Will Reduce MENA Power Sector Water Consumption

39

SSA Power Companies Face Water Consumption Crackdown Over Longer Term

40

Public Opinion and Political Manoeuvring Will Increase Water Costs for Power Companies in Western
Europe

41

Desire for Independence Will Insulate CEE Power Companies For Now

42

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Shale Boom Will Reduce US Power Company Water Needs

43

Demographic Forecast

45

Table: Thailand's Population By Age Group, 1990-2020 ('000)

46

Table: Thailand's Population By Age Group, 1990-2020 (% of total)

47

Table: Thailand's Key Population Ratios, 1990-2020

48

Table: Thailand's Rural And Urban Population, 1990-2020

48

Methodology

49

Industry Forecast Methodology

49

Sources

51

Risk/Reward Ratings Methodology

51

Table: Water Risk/Reward Rating Indicators

52

Table: Weighting of Indicators

54

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Thailand Water Report

Published Date: 01 Jan 2015

BMI View: This quarter we have revised and expanded our forecasts for the water sector. We now cover non mains
consumption and treated wastewater. With the continued stalling of the project pipeline and the persistent risk of both
drought and flood damage, in conjunction with high losses and limited sanitation facilities, we view the Thai water
sector as offering minimal opportunities and high risks to both services and i nfrastructure companies. T he recent
announcement that some urgently needed works are to be restarted is a positive step; however, we still anticipate
delays and cancellations.
On March 12 2014, the central bank cut the benchmark policy rate by 25 basis points to 2.00%, the lowest
since January 2011. Given that the Thai economy remains relatively fragile, we expect the benchmark interest
rate to remain at 2.00% for the remainder of 2014 and into H115 to facilitate an economic rebound, with
monetary tightening to only take place in H215. Domestic borrowing costs could therefore remain attractive
for construction companies to take up new projects or carry out capital-intensive construction works. The
re-establishment of the country's legislative body - the National Legislative Assembly (NLA) - and the
formation of an interim government in August 2014 have increased political stability in Thailand over the
near-term. This in turn has also provided greater clarity over Thailand's public sector disbursements for
fixed-asset investment in FY2014/15.
There is a strong possibility for additional protests and violent confrontations to take place in Thailand. Should
this be the case, an extended period of political instability will likely lead to fresh delays in project execution
and dampen foreign interest in long-term investments such as water infrastructure. This is intensified by the
cancellation of the various phases of the flood management scheme which had been awarded to various water
infrastructure companies. Political stability is critical in ensuring the viability of infrastructure investment. This
is because political unrest typically increases security threats to project sites and requires the government to
devote considerable resources and attention to resolve the crisis. These scenarios often result in construction
works and project negotiations being stalled or cancelled.
We also believe that the issue of financing is not resolved. Thailand does not have the fiscal strength to finance
the infrastructure master plan on its own as the government's fiscal position is already stretched by welfare
spending. In addition, we believe that the private sector will remain cautious in providing large-scale financing
for long-term construction projects given the potential for further political turmoil. At present, Thailand's
State Enterprise Policy Office (Sepo) is seeking support from the Thai military government to accelerate the
use of public-private partnerships and infrastructure funds to spur infrastructure development.
The government has stated it will spend USD3.97bn on water management projects which they classify as
'urgent' over the coming fiscal year. These projects will form part of the annual budget, which has not been
fully mapped out, with the potential to overview the entire system being mooted at present. However,
although we see this as a move in the right direction to alleviate the issues plaguing much of the beleaguered
water sector, we remain cautious. There have been no plans to renew the majority of the stalled flood
management pipeline and the various contracts awarded earlier in 2014. In fact, much of this scheme has been
scrapped entirely, highlighting the risks to water infrastructure companies in Thailand and private sector
investors.

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Recent D evelopments:

The Thai government plans to invest around THB78bn (USD2.4bn) in the development of the country's
waterways infrastructure over the next decade, according to Transport Minister Prajin Juntong.
The government has stated it will spend USD3.97bn on water management projects which they classify as
'urgent' over the coming fiscal year.
According to government spokesmen, there will be a new water management plan launched in 2016, and
stretching to 2026, worth THB952mn.
Thailand is facing serious droughts in many areas as reservoirs run low. The droughts are likely to continue,
with around 12% of rural regions facing water shortages over the first quarter of 2015, according to
government projections.

Key BMI Forecasts:

We forecast total mains water extraction will reach 3,533mn cubic meters over 2015, an increase of 2.6% on
2014 levels. The widespread droughts and flood damage have contributed to our expectation of lower
growth over 2015.
Mains water consumption will reach 2,709mn cubic meters over 2015, of which 2,167mn cubic meters will
be used by household consumers - an increase of 3.8% on 2014.
However, although non mains consumption is set to see slower growth over 2015 than household and mains
consumption, of just 1%, it will continue to dwarf mains consumption, accounting for almost 92% of total
consumption.
Losses will also remain high, at over 20% of total mains water extraction throughout our forecast period of
2015 to 2018.
Treated wastewater will see strong growth over 2015, of 7.7%, as facilities improve and collection networks
see moderate expansion, resulting in a total treated wastewater level of 472mn cubic meters.

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Thailand Water Report

Published Date: 01 Jan 2015

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