Mekong Utility Watch

Laos Hydro Developers Want Purchase Rate Increase

Voice of America
May 8, 2008

Laos dam investors to ask EGAT to increase purchasing rate

Laos energy developers and their foreign partners investing jointly in four hydro-electric power projects say they will ask the Electricity Generating Authority of Thailand, or EGAT, to increase the previously agreed-upon purchasing rate to make up for the increasing costs of construction.

Developers of the Nam Theun I, Nam Ngum 3, Nam Ngiep 1, and Nam Ou expect their construction costs will increase 305 due to rising fuel price worldwide. So they will ask EGAT to raise the agreed-upon rate of US 6 cents per kilowatt-hour to 8 cents, or to extend the concession period. Otherwise, it will not be worthwhile for them to go on with the projects.

EGAT has not commented on this development, saying it has not received a formal request yet. However, officials have expressed concern that the four projects might not be completed by the years 2013-14 as agreed upon. They added that the amount of electricity Thailand has agreed to buy from Laos is only a tiny portion of what it needs for domestic consumption, and that is forcing Thailand to look to nuclear energy to meet its energy demand, which is increasing at an annual rate of 5%-6%.

Thailand has signed a MOU with Laos, agreeing to purchase more than 7,000 megawatts of electricity from its communist neighbor by 2020. By that time, Laos expects to produce over 25,000 megawatts of electricity which, besides selling to Thailand, it will sell 5,000 MW to Vietnam and another 3,000 to Cambodia.

To be able to produce that much energy, Laos has set a goal of developing some 29 hydro-electric power projects, out of the more than 60 planned. But it faces an uphill battle in the forms of capital shortage and objections by environmental groups such as the International Rivers Networks.

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