1. How was Thai Tap Water Supply Plc. ("TTW") set up ?
In 1983, the Environmental Policy and Planning Office was instructed to collaborate with the Department of Water Resources and the Royal Thai Survey Department to monitor the groundwater and land subsidence situation in Bangkok and surrounding areas because there were sign of land subsidence and the intrusion of saline water into the underground water sources caused by excessive use of groundwater in such areas. Subsequently, on 23 May 1995, the Cabinet passed a resolution to announce that 6 provinces, which were Bangkok, Nonthaburi, Samutprakan, Samutsakhon, Nakornpathom, and Pathumthani, were under groundwater and land subsidence crisis, then to be controlled areas. In order to alleviate the problems of land subsidence and the intrusion of saline water into the underground water sources, the Department of Water Resources was assigned to control and reduce groundwater consumption. The Bureau of the Budget was, then, instructed to expedite the budget allocation for Provincial Waterworks Authority ("PWA") and Metropolitance Waterworks Authority ("MWA") to expand their tap water services, using surface water resource, to cover all of the critical areas.
From the Government's policy, Thai Tap Water Supply Plc. ("the Company") was incorporated on 11 September 2000 to engage in the business of producing and distributing tap water to PWA in the 5 districts, which are Nakorn Chaisri, Samphran, and Phutthamonthon in Nakornpathom Province, and Krathumbaen, and Mueng Samutsakhon in Samutsakhon Province, under 30-year Water Purchase and Sale Agreement with PWA.
2. What does TTW do ?
The Company produces and distributes tap water in Nakhon Pathom Province, and Samut Sakhon Province to the Provincial Waterworks Authority ("PWA") (Click for more information)
3. What is PTW ?
PTW is used for refering to "Pathum Thani Water Co., Ltd." - a subsidiary of the Company which the Company held 98% of the total shares (another 2% held by PWA) PTW has a 25-year Water Perchase Sales Agreement with PWA, started from 1998 (Click here for more detail)
4. How many business unit the Company's has ?
|Name Customers||Provincial Waterworks Authority (PWA)||Provincial Waterworks Authority (PWA)|
|Contract period||WPSA - 30 years (21 July 2004 to 20 July 2034)||
|Type of the Contract||Build-Own-Operate ("BOO") - remain the ownership in productions and distributions system after the contract end.||Build-Own-Operate-Transfer ("BOOT") - Transfer the ownership in productions and distributions system to PWA after the contract end.|
||all of Pathum Thani Province|
|Maximum capacity||540,000 M3 / day||488,000 M3 / day|
|Minimum Off-take Quantity (MOQ) PWA has to purchase||354,000 M3 / day (As of 29 Dec 2008)||358,000 M3 / day (As of 29 Dec 2008)|
|Consession for operating tap water business||25 years (11 March 2005 to 10 March 2030) from the Ministry of Natural Resource and Environment||25 years (13 January 2000 to 12 January 2025) from the Ministry of Interia|
|Operation and Maintenance by||Thai Water Operations Co., Ltd. - the subsidiary of TTW and PTW||Thai Water Operations Co., Ltd. - the subsidiary of TTW and PTW|
1. How the Company adjust the water tariff ?
According to the contracts, water tariff of TTW and PTW will be adjusted every January. The formula for calculating the new tariff are as follow:
|Pn+1||Water tariff as of 1 January in year n+1 , unit is cu.m. , count until decimal place 6th|
|Pn||Water tariff as of 1 January in year n , initial value on 31 December 1999 = 13.900000 Baht / Cu.m.|
|CPIn-1||Consumer Price Index of Central region, announced by the Bureau of Trade and Economic Indices, Department Of Business Economics, Ministry of Commerce, for December year n-1 , initial value on December 1998 = 128.1|
|CPIn||Consumer Price Index of Central region in December year n (*)|
|K||A constant factor for water tariff adjustment, which varies as follow:|
|year 1st to year 7th (2000 to 2006) = 1.03000|
|year 8th to year 10th (2007 to 2009) = 1.02500|
|year 11th to year 14th (2010 to 2014) = 1.01000|
|From year 15th (2015) onward = 1.00000|
|(*)||In case CPI of December in year n is not officially announced before the date of issue the bill for January of year n+1, the existing water tariff will be used until the official CPI is announced, then the difference will be calculated and paid in the next payment.|
(*) In case CPI of December in year n is not officially announced before the date of issue the bill for January of year n+1, the existing water tariff will be used until the official CPI is announced, then the difference will be calculated and paid in the next payment.
|BWCi+1||Water tariff as of 1 January in year i+1|
|BWCi||Water tariff as of 1 January in year i|
|CPIi||General Consumer Price Index, announced by the Bureau of Trade and Economic Indices, Department Of Business Economics, Ministry of Commerce, of July of year i (start from year 1998)|
|CPIi-1||General Consumer Price Index, announced by the Bureau of Trade and Economic Indices, Department Of Business Economics, Ministry of Commerce, of July of year i-1|
The water tariff is used only when raw water quality is in normal condition according to the conditions states in the Salse-Purchase Agreement. In case the raw water quality does not comply with the written standard and it is not under the Company's responsibility, the Company could adjust the water tariff according to the higher cost of treating the low quality raw water.
2. What is K factor in the Water Purchase and Sale Agreement ?
K factor is a constant factor given in the WPSA of TTW. It is setup for helping TTW in the first few years of operation which incur high risks as there was economy crisis at the time.
3. How much is the K factor ?
1st year - 7th year (2000 - 2006) = 1.03000
8th year - 10th year (2007 - 2009) = 1.02500
11th year - 14th year (2010 - 2013) = 1.01000
4. Why PTW does not have K factor ?
Usually, CPI in Thailand grows averagely about 3-4 % each year. At the time of signing the contract of PTW, there was no sigh of economy crisis, more over, that time was the peak of the economic bubble before it bursed therefore, no one ever thought that CPI would go below zero. That's the reason PTW did not put K factor in its tariff adjustment formula.
5. How much are the current water tariffs ?
TTW - Water sale volume under 300,000 cu.m./day tariff = 29.03 Baht/cu.m.
TTW - Water sale volume above 300,000 cu.m./day tariff = 12.32 Baht/cu.m.
PTW 12.74 Baht/cu.m.
(As of 1 Jan 2019)
1. What are the costs of producing tap water ?
Major cost of production are as follow:
*Remark - Average for the year 2018
2. If the quality of raw water declined, how it affects to the Company ?
The chemical cost for water treatment would increase, however the WPSA has a clause states that if the raw water quality is lower than a standard set in the agreement, TTW could require PWA to compensate the cost of treating that low quality raw water.
1. Is East Water a director competitor of TTW?
No, because East Water's major business is delivering raw water from the government's reservoir to industrial estates, mainly in the Easthern part of Thailand.
2. Who are the Company's competitors ?
Apart from PWA, the Company doesn't have direct competitor who has similar capability in the service areas. However, the competitors could be small scale tap water operators, such as local municipal, and villages which use underground water to supply people in their areas.
1. Is there any risk of not being able to adjust the water tariff according to the contract ?
WPSA between the Company and PWA states clearly about annual water tariff adjustment. There are no other clause states any acceptional case that prevent the annual water tariff adjustment.
1. Who is PWA ?
PWA is a state enterprise who is responsible for building and managing the waterworks affairs in Thailand, accepts 3 provinces - Bangkok, Nonthaburi, and Samud Prakarn. The responsibility includes exploring water resources, and supply raw water for tap water production. More information https://en.pwa.co.th/contents/about/duty-vision
2. How much PWA charge end users ?
PWA use one-price policy on its water tariff for the whole country of Thailand although the production cost in each areas are different. However, PWA classifies its customers into 3 catagories which are Household, Commercial, and Industrial, then set the water tariff in progressive rate for each type of customers. The water tariff per unit for each range of volume consumption will not be equal. The more total water volume comsumption will incure higher price per unit than less total water volume consumption.
PWA's current minimum water tariffs
Please visit PWA's website for more details https://en.pwa.co.th/contents/service/table-price
1. Dividend Policy
To maintain a consistent dividend payment and the benefit of the shareholders, the company has set dividend payment policy as follow:
The company will prioritize the financial needs for the next five years and maintain appropriate level of the debt-equity ratio. If there is a possibility to pay dividend, the company will consider paying as high rate as possible. However, such rate shall not be less than 50% of its net profit after corporate income tax, statutory reserve, and other reserves required by terms of relevant agreements.