Mekong Utility Watch

Egat delays power purchase: Commissioning date for controversial Nam Thuen 2 postponed

Bangkok Post
June 25, 1998

Electricity Generating Authority of Thailand will defer purchases of electricity from several multi-billion-dollar projects in Laos, citing the slowdown in Thailand’s power demand.

The Electricity Generating Authority of Thailand (Egat) will defer purchases of electricity from several multi-billion-dollar projects in Laos, citing the slowdown in Thailand’s power demand.
As a result, Laos will have to wait longer to see earnings from its only major export, seen as the country’s best ticket to escape poverty.

The commissioning dates will be postponed by two years to 2006 at four hydroelectric projects: Nam Thuen 2, Xe Pien-Xe Nam Noi, Nam Ngum 2 and Nam Ngum 3.

Egat made the decision as Vientiane was about to propose a new round of negotiations on power tariffs from Nam Thuen 2.

The project developing group, including Electricite de France and the Laotian government, wants to establish a new power sale agreement to replace the one signed in February 1995 with Egat. That agreement expired in September 1996 because the group could not complete the 681-megawatt project by 2000 as originally proposed.

The postponement of the projects stems from the views taken by Laos and project developers that they may not be able to complete construction as planned due to funding problems, aggravated by the Asian financial crisis, Egat officials said.

The slowdown in Thai power demand, short-term doubts over Thailand’s commitment to purchase power, as well as the creditworthiness of some of the Thai partners were all blamed for potential lenders’ reluctance to provide financing to get the projects started.

Given numerous uncertainties, it may be safe for Egat to postpone the starting date of power purchases to the end of the period specified in the original memorandum of understanding. It called on Thailand to purchase up to 3,000 megawatts from Laos by 2006.

To date, Egat has finalised purchase agreements for only two Laotian projects under the memorandum: Thuen Hinboun (187 MW) and Houay Ho (126 MW). Deliveries of Thuen Hinboun power started on April 1.

Egat said it would secure power supplies from other sources in place of the capacity that would have come from Laos, Egat officials said.

The decision to defer purchases was also influenced by demands from Vientiane and the developing groups for Thailand to review the tariff structure for purchases from future Laotian projects. The goal would be to reduce risk exposure resulting from fluctuating exchange rates.

Current agreements call for payments to be made equally in baht and US dollars. Half of the baht portion is based on the exchange rate on the day when the power sale agreement is signed, and the other part is based on the actual exchange rate on the day the power supply is delivered.

Meanwhile, 14 Thai conservation groups have called on Prime Minister Chuan Leekpai to abort Egat’s plan to purchase power from Nam Thuen 2.

In a letter to Mr Chuan, the Thai activists renewed international environmental groups’ attack on the project for the potentially irreversible impact it could have on tribal people and the environment.

Nam Thuen 2 was proposed to be constructed on the Nakai Plateau, declared the largest biodiversity-conservation area in central Laos. About 450 square kilometres of forest would be inundated to create the reservoir for the dam.

Categories: Mekong Utility Watch

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