(June 3, 2000) The Memorandum of Understanding for the purchase of electricity from Nam Theun 2 … followed years of wrangling during which Laos understandably tried to secure the highest possible price for what will become the country’s main foreign exchanger earner

The Memorandum of Understanding for the purchase of electricity from Nam Theun 2-which is expected to be followed up by a fully-fledged power purchase agreement towards the end of this year-followed years of wrangling during which Laos understandably tried to secure the highest possible price for what will become the country’s main foreign exchanger earner.

A basic agreement reached a month ago on the price of 4.2 US cents per kilowatt hour for the annual delivery of 5,354 gigawatt hours for 25 years starting from the year 2006, enabled the heads of the two countries’ electricity generating authorities to sign the MOU in Vientiane on May 26.

The preliminary move showed that Laos, which would be hard put to find a better buyer than Thailand, had woken up to the realities of the free market economy.

At the same time, Thailand, which would not be hard put to tap other sources of energy to fuel its industries, showed it was serious about economic co-operation with Laos.

Energy is one of six sectors covered in a framework for economic co-operation which the two countries are now fine-tuning, after agreeing on the principle of forging such a plan early last month.

Prime Minister Chuan Leekpai’s presence at the signing of the MOU was important as he had initiated during his first government in 1993 the move to buy 1,500 megawatts of electricity from Laos, a quantity the Chavalit Yongchaiyudh government doubled under an MOU signed in 1996.

Nam Theun 2 is the biggest of a total of eight power projects through which Laos is to supply the 3,000 MW of electricity that Thailand needs.

Two have already gone onstream. Nam Theun 2 is among three due to start doing so in December 2006.

Hongsa Lignite, the site which Prime Minister Chuan visited during his three-day visit, is among three other projects due to go onstream in March 2008.

The year-end signing of the full purchase agreement for power from Nam Theun 2 would clear the final hurdle for construction of the dam, as environmental impact studies have already been approved.

The billion-dollar project is drawing investments from the Laotian government mainly with soft loans from the World Bank, Transfield of Australia, Elecricite de France and Italian-Thai.

Prime Minister Chuan’s visit to Laos also saw progress in the battle against drugs, not least because it was Laos’ Prime Minister Sisavath Keobounphanh who raised the question first.

Deputy Prime Minister Banyat Bantadtan subsequently suggested that the two sides launch a joint patrol against drugs along their common border.

At the initiative of the United Nations Drugs Control Programme, a move is afoot for Thailand to train Laos in controlling opium-producing areas.

The seizure of 398,000 methamphetamine pills from a truck in the northern Laotian province of Luang Namtha, and the claim by three Laotian nationals arrested with the haul on May 15 that the drug had come from Thai traffickers, should leave no doubt in the minds of concerned authorities that heightened co-operation is required at every possible level.

With work close to finish on the framework for economic co-operation and the cultural agreement, Thai-Lao relations are entering a new stage of maturity.

The financial crisis of the past three years has taught all affected countries that inter-dependence is a fact of life.

The political leadership in Thailand and Laos, whose people have been hurt economically and socially, should allow no delay in projects that would help solve these problems.

Bangkok Post, June 3, 2000