The fate of a wind energy project in Thailand was thrown into doubt following a Supreme Administrative Court ruling in which renting Sor Por Kor land to build a wind farm in Chaiyaphum was deemed a misuse of the land, which was designated for farming purposes.
Following the ruling, the energy regulator is set to hold urgent talks with the Agricultural Land Reform Office (Alro), which leased the Sor Por Kor land for building wind energy projects, as it fears that the ruling will set a precedent for other future projects.
The land at the centre of the dispute is located in a Grade 1B area and was originally intended for distribution to farmers under the agricultural land reform scheme, known as Sor Por Kor.
- Earlier report: Court revokes wind farm's land lease
On Sept 23, 2009, the land reform committee of Chaiyaphum province adopted a resolution to rent the land to Thep Sathit Wind Farm Co -- 100%-owned by Energy Absolute Plc (EA), a SET-listed renewable power generator -- to build a wind farm to produce electricity.
Based on the provincial land reform committee's decision, Alro signed a contract in 2012 allowing the company to rent the 39-rai plot for 27 years to run a wind farm. The rent was calculated at 32,000 baht per rai/year. The wind farm would have a generating capacity of 90MW and cost about 6 billion baht to build.
Alro's secretary-general, Sompong Inthong, said he ordered the provincial committee to revoke the lease after the court's ruling which is considered final.
However, he said it will take Alro officials a few days to review the legal issues and determine how to execute the court order.
Agriculture Minister, Gen Chatchai Sarikulya, said that a total of 22 wind farms covering almost 700 rai are scattered on Sor Por Kor land in the two northeastern provinces of Nakhon Ratchasima and Chaiyaphum.
He said most of the land rental contracts are valid for 27 years.
The decision has sparked concerns among energy officials because state agencies have signed power purchase agreements (PPA) with the operators of wind farms, several of which are located on land reform plots in the Northeast.
Veerapol Jirapraditthakul, spokesman for the Energy Regulatory Commission, said the commission is seeking to hold talks with Alro over the matter. He said that state agencies have signed PPAs with a capacity of 1,585MW with wind farms and more than 300MW have met the commercial operation date (COD). Most of the wind farms are located on Sor Por Kor plots.
Mr Veerapol insisted that the officials concerned had discussed the legal possibility of renting the Sor Por Kor land for the wind farm project and that Alro approved regulations in 2008-2009 to allow the land to be rented for such a purpose.
He said the commission's approval of licences to build wind farms on Sor Por Kor land is based on those regulations. However, he said the issue still needs to be discussed.
According to the court case, 10 residents of tambon Ban Rai and the Association of Lawyers for Environmental Protection filed a lawsuit with the Administrative Court against officials for allowing the land lease to Thep Sathit Wind Farm Co.
The lawsuit named Alro secretary-general, the Chaiyaphum land reform committee, and Thep Sathit Wind Farm as the defendants.
The Nakhon Ratchasima Administrative Court ruled that the Chaiyaphum land reform committee's decision to rent the land to the company was unlawful and ordered the revocation of the resolution.
The defendants took the case to the Supreme Administrative Court.
The court on Tuesday ruled that as the wind farm was not farming as outlined by the Sor Por Kor land scheme, the land's rental use is in breach of the announcement by the Agriculture and Cooperatives Ministry on agricultural land reform.
The court upheld the lower court's decision revoking the resolution.
EA told the Stock Exchange Commission Wednesday that Thep Sathit Wind Farm Co has not signed any PPA and has not actually started operations.
According to EA, the wind farm project by Thep Sathit is not part of its 260MW wind farm known as Hanuman project in Chaiyaphum, with construction to start soon and operations starting in the second half of 2018. However, EA said its Hanuman project is located on a Sor Por Kor land plot and the company has signed a rental contract to prepare for the project's development.
It added that Alro has not informed the company of any legal complications.
In 2009, the National Energy Policy Committee assigned the Energy Ministry to hold talks with the Agriculture Ministry and the Natural Resources and Environment Ministry over cooperation in wind energy development in Sor Por Kor areas after findings of a study listed state-controlled land as suitable for project development.