Mekong Utility Watch

Egat to postpone power buys

The Nation
May 1, 1998

THE Electricity Generating Authority of Thailand (Egat) has decided to postpone power purchases from Laos’ six major power projects with a combined capacity of 2,963 megawatts by at least one year from the original schedule of 2006.  This follows a significant downward revision of Thailand’s power demand projections.

According to the latest revised power development plan (PDP) for 1998-2001, Egat’s 1998 power production will decline 4.96 per cent from the PDP of September 1997. Its 1999 projected production is down 9.22 per cent from the earlier PDP while projections from the year 2000 to 2006 are down 13-18 per cent from earlier estimates.

As a result, Chalermchai Ratnarak, assistant governor for power purchases, said over the weekend Egat would have to delay power purchases from Laos. He added that Egat’s power reserve projected for 2001 to 2006 will be much higher than basic requirements.

According to the latest projections of the PDP for 1998-2001, the power reserve will be 56.74 per cent in 2001, 51.52 per cent in 2002, 57.48 per cent in 2003, 61.2 per cent in 2004, 50.14 per cent in 2005 and 46.17 per cent in 2006.

According to Egat, its power reserve requirement is only 25 per cent.

Chalermchai said the Laos projects included the Hongsa thermal power project, whose Unit 1 has a capacity of 304 megawatts and whose Unit 2 will have a 304 megawatt capacity when completed in 2003. Meanwhile, the Nam Ngeum 2 (553 megawatts) and Nam Ngeum 3 (430 megawatts) projects are due for completion in 2004.

Egat has already signed a memorandum of understanding (MoU) with all three projects and is negotiating power prices.

In addition, three others being negotiated are the Sepian-Senam Noi project (365 megawatts), Nam Thern 2 project (600 megawatts) and the Sekaman project (about 400 megawatt). Earlier, Egat planned to buy power from these projects around the year 2006.

An Egat source said the six projects had not started construction but developers hade invested in feasibility studies which had cost at least US$1 million per project.

The source said Thailand would have to renegotiate cautiously with Laos to avoid problems in their bilateral relations. Earlier, the two countries signed an agreement under which Thailand was to buy 3,000 megawatts of power from Laos starting in 2006.

Egat expects to begin talks with its counterparts in Laos on postponing the power purchases until after 2007, after the next 1999-2001 PDP is completed.

Power projects in Laos will likely be suspended because Thailand’s slowing electricity demand will diminish the viability of project financing since Egat is the major purchaser of power from its neighbour. ”Financial institutions are not expected to lend money to the projects because of the fact that Egat has an excess power reserve,” said the source.

Earlier, Egat signed power-purchase agreements with the developers of Laos’ Nam-thern Hin Bun and Huay Ho hydro-power projects. The source said these agreements would not be changed.

Categories: Mekong Utility Watch

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