BANGKOK (Dow Jones)–EDF, which has recently been criticized by French politicians for its expansion plans, said late Thursday in a statement issued in Paris that it had decided to divest its 35% stake in the Nam Theun consortium as part of a strategic refocusing on its business in Europe.

“This decision obviously affects the future of the proposed project, though we do note that EDF is reported to have said it is looking for a substitute lead financier,” a World Bank spokesman said in Bangkok.

The spokesman said the World Bank had not yet been formally notified or given an explanation of EDF’s decision and was reserving its final judgment on the news.

“In the days ahead, we will be looking in more detail at this decision and the implications it has,” he said.

He added the World Bank, which had funded early studies of the project and is expected by the consortium to provide part of the needed loans, was also still considering whether to extend such loans.

“This has always been a highly complex and in some ways risky project, and we
have been studying all aspects of it to see if we could provide assistance in the form of a partial risk guarantee. The World Bank had not reached a decision, and probably would not have for many months,” he said.

The project has been heavily criticized by environmentalists groups for its negative impact on Laos’ natural resources and the population inhabiting the area.

“Whatever happens to the project, our concern all along has been for the people
of Lao PDR. We remain committed to doing all we can to assist them, including in the areas of social, environmental and human development, as well as policy advice and support,” the spokesman added.

EDF’s decision came as a 25-year power purchase agreement for the project was to be signed Friday between Thailand’s Electricity Generating Authority of Thailand, the project’s expected main customer, and the consortium. The other partners in the Nam Theun 2 project are the Laotian governmentand Thailand’s Electricity Generating PCL (H.EGA), with 25% each, and leading Thai construction firm Italian-Thai Development PCL (H.ITD), which holds the remaining 15%.

Under the pending agreement, EGAT commits to buying at least 920 megawatts of the 995 megawatts Laos hopes to export to Thailand once the project goes on line in 2009.
Another 75 MW, of the planned total capacity of 1,070 MW would be used by Laos.