(June 27, 2008) Thailand’s policy to increase reliance on large hydro projects in neighbouring Lao PDR and Burma just got more expensive.

The country’s state utility, Electricity Generating Authority of Thailand, has agreed to renegotiate the price of power purchased from three planned hydro projects in Laos to reflect the rising cost of construction, Bangkok Post reported on June 27, 2008.

Egat governor,Sombat Sarntijaree, is quoted saying that an electrical steel shortage had raised the dams’ construction costs by 30 percent and that the rate agreed to in their original memorandum of understanding is unlikely to cover the cost increase. Before construction can go ahead, Egat and its partners are expected to negotiate a higher rate, which would likely be fixed under a long-term power purchasing agreement.

All three power projects facing higher costs are situated on Mekong tributaries in Laos and are partly owned by EGAT’s private subsidiaries. They are:

440-megawatt Nam Ngum 3 to be developed by Marubeni (Japan), MDX (Thailand), Ratchburi Electricity Generating (EGAT subsidiary) and the Laotian government, with operation slated for 2013;

523-megawatt Nam Theun 1, to be developed by Egco Group (EGAT subsidiary), Gamuga  (Malaysia) and the Laotian government, is set to start in 2014; and

261-megawatt Nam Ngiep, to be developed by Kansai (Japan), EGAT International Company, and the Laotian government, with operation slated for 2014.

Mr Sombat also said the authority would negotiate with the Burmese junta to revise the construction cost of the 1,300-megawatt Hutgi hydropower project on the Salween River.

June 27, 2008