Thailand renewables update: ALRO land - new Order and Applications

Thailand renewables update: ALRO land - new Order and Applications

BACKGROUND

By way of background, since the Agricultural Land Reform Act B.E. 2518
(1975), command certain agricultural land in Thailand has been designated as
Sor Por Kor land and is intended to be used only for farming purposes in
order to support farmers in the Kingdom. The Agricultural Land Reform Office
(ALRO) is the relevant government authority designated to supervise the
occupation of such agricultural land.

Concerns emerged with respect to the development of wind farm projects on
Sor Por Kor land following a Supreme Administrative Court ruling on 26
August 2016 which held that Thepsathit Wind Farm Co., Ltd. (Thepsathit),
whose project is located on agricultural land, misused the land by
developing a wind farm business (as opposed to using the land for its
intended farming purpose). As part of its judgment, the Supreme
Administrative Court suspended the permission of Thepsathit to develop its
project.

RECENT UPDATE (AS AT 31 JULY)

The government has now amended the law to enable ALRO to approve the use of
Sor Por Kor land for purposes in addition to the purposes set out in the
Land Reform Act (under which only farmers are allowed to use the Sor Por Kor
lands for agricultural purposes). Now, use is permitted to the extent
necessary and where intended to benefit the energy sector, the use of
natural resources or the public interests.

The amendment was made by means of the attached order pursuant to Section 44
of the interim Constitution (2015) in conjunction with Section 265 of the
Constitution (2017) which was published in the Royal Gazette on 23 June 2017
and became effective on the same day (the Order).

Article 44 empowers the Head of the National Council for Peace and Order
(NCPO), ie the Prime Minister, with the approval of the NCPO to order,
restrain, or perform any act with legislative, executive, or judicial effect
(effectively passing laws which bypass the legislative, executive and
judiciary). The Constitution (2017) permits continued use of Section 44
until the next elected government comes to power in Thailand.

The Order provides a clear legal basis for ALRO to grant land leases to wind
farms and other renewable energy projects, but the detail of the Order is
still to be set out in ministerial regulations. The Order requires the
Ministry of Agriculture and Cooperatives to issue new regulations to replace
the existing regulations within 90 days (which would be 21 September 2017,
although it is not unusual for departments to issue regulations later than
planned).

The Order requires certain users of Sor Por Kor land to make an application
to ALRO (an Application) and the new regulations are to specify:

- the criteria stating which users of Sor Por Kor land will be obliged to
make an Application;

- the criteria stating which Applications to ALRO will additionally require
Cabinet approval (possibly linked to the size and type of user e.g. small
projects could be exempted); and

- the process and conditions for the Applications.

The Order also provides that those who were already permitted to use Sor Por
Kor land to operate under the previous ALRO rules1 before this Order has
become effective may seek an extension of their land use rights by
submitting an Application within 60 days from the date such ministerial
regulations are issued and may continue using the land while waiting for the
result.

It is not clear from the Order what the consequences of being late or
failing to apply would be

- however pending further detail we would expect that:

- any existing project which is permitted to use Sor Por Kor land to operate
under the previous ALRO rules but has not yet submitted an Application
within the 60 day window would be open to challenge in the courts; and - any
existing project company which had made undertakings to lenders to obtain
and maintain all necessary permits could be in breach of the undertakings by
failing to apply within the 60 day window and may be obliged to notify such
lenders.

The Order confirms ALRO's previous practice of collecting fees from
renewable energy projects or other Sor Por Kor land users for the
Agricultural Land Reform Fund for the benefit of farmers as well as rent for
the use of the Sor Por Kor land.

Please refer to the Thai language copy of the Order: Order of the Head of
the National Council for Peace and Order (NCPO) No. 31/2560 (2017) Re: the
Utilisation of Agricultural Land under the Laws on Agricultural Land Reform
for the Utmost Benefits on Farmers and Public Interests.

Note: The judgment in the Thepsathit case is not yet available on the court
website. While Supreme Administrative Court cases are made publicly
available, this is likely because the judgment has not yet been completed
and made public.

--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

Link to Original Article:
https://www.lexology.com/library/detail.aspx?g=f72af475-57f0-4cc5-9ad4-0ecd1
9159040

--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com