Laos Hydropower Project to Benefit Poorest of Poor

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--When the 440-megawatt (MW) Nam Ngum 3 hydroelectric power project begins operations in Laos in 2017, it will bring some relief to approximately 33% of the population who are living below the poverty subsistence line and survive on less than $1.25 a day.

The plant will export 2,072 gigawatt-hours (GWh) to neighboring Thailand annually and bring in about $700 million in revenue. Social services and environmental protection plans will receive $200 million of the revenue. Backing the project, which will take an estimated investment of about $1 billion, is the Asian Development Bank (ADB), which is providing a $465 million loan.

ADB will lend up to $350 million to the Nam Ngum 3 Power Company (NN3PC), which owns the project. Commercial financial companies will assume the risk on up to $150 million of that sum. ADB is also lending approximately $115 million to the Laos government for the project. Banks and other international financial institutions will also provide loans for the project.

The facility will have a 220-meter-high dam wall and a 27.5-square-kilometer reservoir. The plant will be sited upstream of two existing hydropower plants and downstream from a plant that is currently under construction. The Nam Ngum 4A and 4 plants are planned upstream of Nam Ngum 3.

The public-private project will be built and operated for 27 years by NN3PC, which is owned by three private-sector companies: GMS Lao Company Limited (Bangkok, Thailand/Vientiane, Laos); Ratchaburi Electricity Generating Holding PCL (BAK:RATCH) (Bangkok); and Axia Power Holdings, a wholly owned subsidiary of Japan's Marubeni Corporation (TYO:8002) (Tokyo, Japan).

ABD has imposed stringent safeguards to ensure that any environmental and social impacts will be minimized or mitigated. Households located along the upgraded national road and the transmission line will be fully compensated for losses.

ADB is supporting efforts to assess and address any cumulative impact from the hydropower plants in the river basin through then Nam Ngum River Basin Committee.

The ADB has reported that Laos has the largest hydropower potential in the Greater Mekong Subregion (GMS) at 18,000 MW, but the smallest domestic power requirement of any country in the region. As the country is centrally situated, it is well positioned to harness its hydropower potential for export to GMS countries that have limited hydropower resources and where demand for power is growing rapidly.

Laos currently has commitments under bilateral power trading agreements to export up to 5,000 MW to Thailand and 3,000 MW to Vietnam. The completion of 33 hydropower projects is expected by 2020, increasing installed capacity by 8,935 MW. In 2010, installed capacity was 2,540 MW. The increased capacity will boost revenue from power exports and increase access to electricity for the country's largely rural population.

For related information see August 19, 2011, article - Laos' Hydroelectric Capacity to Serve as Powerhouse for Southeast Asia.

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