Bangkok Post
May 3, 2000

Japanese drawn into Nam Ngum 3

The sponsor of the Nam Ngum 3 hydro power project in Laos is moving to kick-start the stalled US$600 million scheme, developed to export its electrical output to Thailand.

The two key project partners-the Thai infrastructure contractor MDX and the Laotian government-are drawing a Japanese consortium into the venture which will be carried out by Nam Ngum 3 Power Co (NN3PC), the joint-venture firm.

At the same time, NN3PC has begun the process of finding contractors to build a 220-metre-high concrete-face rockfill dam, a 440-megawatt underground power station and a 133-kilometre, 230-kilovolt transmission line to the border with Thailand.

The project was undertaken in spite of unresolved financial problems in the MDX Group which was hard hit by the Thai economic crisis as well as the absence of a formal power sale agreement with the Electricity Generating Authority of Thailand (Egat), the sole major outlet for Nam Ngum 3 power.

MDX executives refuse to discuss their firm’s debt problems and argue that its power project developing subsidiaries-GMS Power (formerly MDX Power) and its branch MDX Lao Co, the holding firm in NN3PC-are financially capable of proceeding with the Laotian project.

Subin Pinkayan, honorary adviser to GMS Power, suggested that the Nam Ngum 3 development would be driven by the cash generated from the Thuen Hinboun hydro project in Laos in which GMS Power is a major shareholder.

Thuen Hinboun began delivering 187 MW to Thailand, or more specifically to Egat, in April 1998.

Mr Subin said the 210-MW Thuen Hinboun project had a good operating record and could generate some funding to partially finance the Nam Ngum 3 venture.

Meanwhile, NN3PC plans to seek up to 70% of total project funding for the Nam Ngum 3 venture from the Asian Development Bank and Japan’s Overseas Economic Co-operation Fund.

The company is basing its loans pitch on Nam Ngum 3’s status as a development project in the Greater Mekong Subregion and Laos’ eligibility for international aid and financing in applying for soft loans.

MDX executives said a memorandum has been signed with a Japanese consortium, which they declined to name, to become a partner in the Nam Ngum 3 venture.

Nam Ngum 3, to be constructed across the Nam Ngum river, is one of three major hydro power projects in Laos, which Vientiane has targeted to complete by December 2006, to export electricity to Thailand.

The other schemes are the 900-MW Nam Thuen 2 project being sponsored by an international group led by Electricite de France and the 553-MW Nam Ngum 2 plan to be undertaken by an international consortium including Siemens AG of Germany.

“To achieve that target date we have to start looking for contractors now and begin construction next year,” said a GMS Power executive.

NN3PC is still negotiating the power sale accord with the Egat but a company executive said the firm has already accepted in principle the sale prerequisites laid down by the Thai state power utility.

This includes a commitment that the power it purchases from private power producers must not exceed Egat’s self-generated costs or the minimum tariff benchmark already offered by independent power producers.

Nam Ngum 3 is among a total of six Laotian power generation projects, with a combined generating capacity of slightly over 3,200 MW, which are facing delays due to the Thai economic crisis which has severely curtailed Thailand’s electricity demand growth.

The Thai government has now agreed on a new timetable for the start-up of power purchases from the six schemes-1,883 MW (three projects including Nam Ngum 3) in December 2006 and 1,380 MW (three schemes) in March 2008.

Under the original memorandum, Thailand would buy 3,000 MW from Laos in 2006.

As part of the memorandum, Egat has started buying power from Thuen Hinboun (187 MW) and Houay Ho (126 MW).

Deputy Prime Minister Supachai Panitchpakdi said recently that Thailand should promote regional co-operation by speeding up its negotiations on power-purchase agreements with Laos.

“Laos was also hit hard by the regional crisis as its currency has depreciated considerably,” Dr Supachai said.

“Therefore, we should speed up the signing of power-purchase contracts,” he said.