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Power Development Fund as strategy to curb resource curse

Thailand is seeking to diversify its natural-gas heavy energy portfolio with coal plants, but recent sour experiences with health hazards and recalcitrant companies have helped block new plants. However, new legislation taxes fossil fuel power generation and returns money for development projects in communities affected by power plant operations.

LKYSPP writes,

"Resistance to new plants, however, may abate given the recent passage of legislation to compensate people affected by power plants. Through the June 2007 establishment of a Power Development Fund administered by the Energy Regulatory Commission, all power generators are levied an electricity fee collected through the tariff and determined by the energy source. Coal and hydro exact the highest charges at Baht 0.02 per unit, whereas wind and solar are assessed none. Accrued funds are distributed to communities living within 5 kilometres of a power plant to cover local development projects in education, public health and environmental management, relocation expenses and to compensate for health costs incurred by affected individuals. Since its inception, the funds have accumulated about Baht 4 billion (US$124 million)."

Implications

LSYPP highlights Thailand's Fund as an example intervention to protect the poor against negative externalities of energy infrastructure:

"Health and environment compensation funds — Thailand’s recently enacted Power Development Fund represents an effective tool for levy collection from power generators to offset the environmental and public health externalities caused by power production. Fees should be pegged to the energy source based on scientific criteria. Funds administration must include substantial representation of community members and civil society organisations."

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Sources:

LKYSPP Asian Trends Monitoring Bulletin, April 2010, pg 17, 18:
http://newsletters.clearsignals.org/LKYSPP_apr2010.pdf