The Nation
February 12, 2000

After two years of delay, GMS Power Co aims to kick-start its Nam Ngum III hydropower project in Laos and is looking for foreign partners and financing with the hope of beginning construction early next year.  Although its parent company, the MDX Group, has not yet been able to solve its debt problem, GMS Power is optimistic it can progress with the US$600-million hydroelectric project.

GMS Power honorary adviser Subin Pinkayan said the project would be helped by the company’s successful completion in April 1998 of a previous dam in Laos – the Nam Theun Hinboun dam. He said the 210-megawatt dam had a good operating record and could generate some funding to partially finance the new venture.

Laos had attracted a lot of interest from Thai and international investors interested in hydro-electric power development following a bilateral agreement under which Thailand has agreed to buy 3,000 megawatts (MW) of power by 2006. But the recent economic crisis severely hit Thailand’s electricity demand and put a hold on several projects, including the Nam Ngum III.

However, deputy prime minister Supachai Panitchpakdi, in his address to a Greater Mekong Sub-region workshop held in Bangkok on Thursday, said Thailand should promote regional co-operation by speeding up its negotiations on power-purchase agreements with Laos concerning dam projects.

Supachai also told reporters that he had just come back from Laos, where he looked into ways to expand bilateral co-operation.

“Laos was also hit hard by the regional crisis as its currency has depreciated considerably. Therefore, we should speed up the signing of power-purchase contracts. Wood is another potential market worth exploring. Presently, Laos does not like to export timber, but there is the possibility of it developing a wood-processing industry, whose end products we could import to service our furniture industry,” Supachai said. Subin said GMS Power, which hopes to complete the 450 MW Nam Ngum III project by 2004, would soon open bidding for the project.

He said the Asian Development Bank and Japan’s Overseas Economic Co-operation Fund would be approached to put up 70 per cent of the total cost.

For the remainder, GMS Power would look for foreign partners to participate in the project. Subin said that negotiations with a Japanese power company were underway.

“Hydro-power plants could become a major source of income for the Greater Mekong Sub-region (GMS), which has vast resources when looking at hydro-electric power. Income from the Theun Hinboun plant, for example, accounts for roughly 8 per cent of Laos’ gross domestic product,” he said.

Thailand would retain its status as the main outlet for electricity produced from GMS countries as its economic growth was now in the black again, Subin said. Thailand, which saw a 13 per cent per year growth in electricity consumption prior to the economic crisis, has signed memorandums of understanding to purchase another 3,000 MW of electricity from China, and 1,500 MW from Burma.

He said apart from Laos, GMS Power also has a 1,500 MW Jinghong hydropower project in Yunnan, China, for which a feasibility study has been completed.

As for Burma, Subin said the company was working with the Myanmar Electricity Planning Enterprise and Myanmar Economic Corp to lay down the foundations for a successful partnership concerning dam projects.

Burma has several potential sites for hydropower projects on the Than Lwin River and its tributaries.

The GMS covers Burma, China’s Yunnan province, Cambodia, Lao, Vietnam, and Thailand.