BANGKOK (Dow Jones)–Thai Energy Minister Prommin Lertsuridej said Friday his country still wants to buy power from Laos’long-delayed Nam Theun 2 hydroelectric power project, but would wait only one more year before looking elsewhere after the lead developer quit the project.

Electricite de France (F.EDF) said in a statement issued in Paris late Thursday that it is backing out of the project. Its unit EDF International is the biggest holder in the consortium formed to develop the planned 1,070-megawatt dam and power plant.

Prommin and Sitthiporn Rattanopas, governor of the state Electricity Generating Authority of Thailand, or EGAT, jointly told a press conference that the signing of a power purchase agreement earlier expected to take Friday had been postponed at the request of EDF.

“If in one year there is no progress, we will find other projects to replace this,” Sitthiporn said.

EDF said it will continue to assist the project until the end of the year while a new financial structure that excludes EDF is found. The withdrawal is “part of EDF’s strategy to consolidate its assets and to refocus its priority on Europe,” the French company said.

“The board of EDF International, after hearing the advice from the strategic committee and representatives of the (French) state, has made the decision to withdraw from the Nam Theun dam project in Laos and, therefore, will not sign the power purchase agreement with EGAT,” EDF said.

The pullout comes after a recent report by a French parliamentary commission said the chairmen of EDF – among other state-owned companies – had taken unnecessary risks with taxpayers’money in expansion plans that were “a failure.”

Non-governmental organizations have long criticized the project’s potential for causing environmental and social damage and have questioned the developers’ projections for revenue as well as silting from the dam.

EDF International was the leader of the consortium developing the Nam Theun 2 Power Co. Ltd. and held a 35% stake. The other major holders are the Laotian government and EGAT affiliate Electricity Generating PCL (H.EGA) with 25% each, and Thai construction company Italian-Thai Development PCL (H.ITD) with the remaining 15%.

Thailand Has Many Options, Laos Few Sitthiporn said there were several alternatives available, so the security of Thailand’s power supply won’t be affected.

EGAT has plans to adjust transmission lines in the northeastern part of the country to supply areas which were to be fed by the imported power.

“If worse comes to worst, we will find a new project. It’s likely to be a gas turbine power plant, which would take less than four years to construct,” he said.

Laos’s one-party government, still lagging China and Vietnam in emerging from poverty and a closed-market economic system, could suffer if the project doesn’t materialize because of the country’s heavy dependence on revenue from hydropower.

The 25-year power purchase agreement which was to have been signed Friday would have committed EGAT to buying at least 920 megawatts of the 995 megawatts Laos hopes to export to Thailand.

Under the agreement, which was approved by the Thai Cabinet July 8, EGAT would have purchased power at 1.64 baht ($1=THB41.620) a kilowatt-hour.

Sitthiporn said he didn’t expect Thailand’s relations with Laos to suffer, however, because the developer’s internal business problems had nothing to do with the government.

Thai Firm Seeks New Partner, Funds, World Bk Guarantees Speaking in his role as chairman of Electricity Generating, Sitthiporn said that finding new partners to replace EDF should be easy, because the projected returns on investment are good.

Any new partner would need to bring in about $300 million in equity, as well as sources of funding for the project’s construction, he said. Sitthiporn said he didn’t expect EDF’s withdrawal to affect a decision by the World Bank on whether to guarantee the financing,
because that decision will be based on the project’s viability.

But the World Bank, after supporting the project since funding an initial feasibility study in 1989, has been more coy in its statements recently, noting that it hasn’t made a final decision on any guarantees.

International Rivers Network, a U.S.-based non-governmental organization, said in a statement Thursday that the project would have serious social and environmental effects, wouldn’t be economically viable and wouldn’t receive any commercial funding without financial guarantees.

“A political risk guarantee from the World Bank is crucial for developers. Without the World Bank to protect them, neither commercial banks nor export credit agencies would dare invest in Nam Theun 2,” IRN said.

However, Electricity Generating said Friday in a statement to the Stock Exchange of Thailand that once a power purchase agreement can be signed by the developer, EGAT and the state Electricite de Laos, it is confident that the project can proceed and enhance shareholder value.

The Thai company’s shares fell on the news of EDF’s withdrawal, closing the morning session down 2.5% at THB57.50. Fellow consortium member Italian-Thai Development lost 2.6% to THB37.75, while the overall market was up 0.3%.