hankyoreh

By Lee You Ju-hyun, staff reporter in Bangkok

The Korea Water Resources Corporation (K-Water) signed a contract last June requiring it to handle land compensation for local residents affected by a Thai government water management project, according to documents acquired by the Hankyoreh on Oct. 1.

The corporation was selected as a “priority negotiation partner” in international bidding for the 6.2 trillion won (US$5.8 billion) drainage canal and temporary reservoir building project

According to the contract and the Term of References (TORs) acquired by the Hankyoreh, K-Water would also cover any compensation costs over the contracted amount.

Experts in South Korea and Thailand called the arrangement “highly unusual” and “dangerous,” as it requires a foreign company with a limited grasp of the local situation to handle compensation claims from local residents on a major civil engineering effort that could provoke unmanageable conflicts - including possible physical confrontations.

The 11 trillion won (US$10.2 billion) effort, which involves servicing a river valley, has been called a Thai version of South Korea’s Four Major Rivers Project. Previously, K-Water and numerous South Korean conservative news outlets celebrated the selection, calling it a “new path for exporting the technology” of the South Korean project.

The TORs, drafted last March by the Thai government, serve as guidelines for the project, alerting prospective bidders to their duties and expenses, along with the contractual conditions.

Clause 4.3 of the TORs on land acquisition states that the contracted party “is obliged to actively cooperate with the relevant government institution for the acquisition of land needed for execution of the construction project and for acquisition of permission to use national land, and must bear responsibility for compensation for resident land and assets, relocation costs, indemnity, and other expenses encouraged in connection with same.”

It also states that as employer, the Thai government “shall as a rule pay only the actual costs in connection with the employee’s acquisition of land. These costs shall not exceed the land compensation limit, and the employee shall bear responsibility for any excess costs related to land compensation.”

But the TORs also state that the Thai government will subtract the difference if the actual compensation costs come out lower than the contracted amount. For example, if K-Water bid a land compensation cost of US$1 billion and a cost of US$5 billion for the remaining project, it would have to pay the difference of US$200 million even if the actual compensation cost comes out to US$1.2 billion. But if the compensation were only US$800 million, the Thai government would subtract the difference of US$200 million from the US$1 billion paid to the corporation.

Seree Supharatid, director of Rangsit University’s Climate Change Disaster Center and member of a strategic water resources management committee advising the Thai prime minister, said the terms of the contract were unfavorable to K-Water.

“As the party commissioning the project, the Thai government should be bearing the land compensation costs, but its contract has it handing them off onto the contracted party,” Supharatid said.

Kwandong University professor Park Chang-geun, noted that land compensation costs for South Korea’s Four Major Rivers Project far exceeded the initial estimates.

“The cost of land compensation is the most difficult thing to predict in any construction project,” Park said. “It’s difficult to comprehend why K-Water took this on.”

A source at K-Water said the corporation plans to try to talk the Thai government into taking on the costs during formal contract negotiations as a way of protecting the contracted party.

But Suphot Tovichakchaikul, the strategic water resource management committee‘s secretary-general, told the Hankyoreh by email that a renegotiation was extremely unlikely.

“The contracted party is obligated to gather information on the residents’ desired compensation and its costs when it conducts its feasibility study,” Tovichakchaikul said.

Ethical issues with the “export project” are also a major concern.

Yeom Hyung-chul, secretary-general of the Korean Federation for Environmental Movement, suggested there was some deception in the bidding process.

“Even though it’s becoming increasingly obvious that the Four Major Rivers Project was a failure, K-Water, which took on a key role in it, repeatedly said in Thailand that it was a ‘success,’ while ballyhooing the ‘export’ back home in South Korea,” Yeom said.

“It may just be another country to them, but I don’t think it’s right to take part in a water management project where they’re recklessly disregarding procedure and public opinion like they did with the Four Major Rivers Project and thinking only of the money they can make from it,” he added.

Please direct questions or comments to [english@hani.co.kr]