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Monday, November 17, 2008

Power pact to receive assistance

MANILA — Japan and the Asian Development Bank (ADB) will help develop a financing plan for a US$240 million power transmission project that will enable Laos to export hydro-electric power to Viet Nam.

The Japan Special Fund will provide, through ADB, a $1 million grant, while the Lao and Vietnamese governments will each contribute $150,000 to develop the plan.

The financing plan will involve the preparation of two loans, one each for Laos and Viet Nam. The loans will be structured and scheduled to suit the commercial operations schedule of the 11 hydro-power projects that will provide the 1,000 MW of electricity targeted for export.

The model and arrangements for the operation and maintenance of transmission facilities will also be drawn up.

Xavier Humbert, senior energy specialist of ADB’s Southeast Asia Department, says the estimated cost of developing the power transmission facilities will be around $150 million in Laos and $120 million in Viet Nam.

Roughly $55 million has been included in ADB’s 2010 lending programme for financing the project but a budget plan for the development of the power transmission facilities still needs to be finalised, Humbert said. It will be completed after discussion with potential co-financiers in both countries.

The power transmission project has four components: a 65-km, 500kV double circuit transmission line to be built from the Ban Sok substation in Laos to the Viet Nam border; a 100 km, 500kV double circuit transmission line from Loas to the Pleiku substation in Viet Nam; a 500/230 kV Ban Sok sbustation in Laos; and an upgrade of the Pleiku station.

According to ADB, Laos has only tapped 663MW of its 18,000 MW hydropower potential.

"Maximising the countrys hydroelectric power potential is challenging due to financing constraints," says Humbert. "The government recognises this, and has been strongly promoting private sector involvement."

Given soft domestic demand, most of Laos’ hydropower is targeted for export. Earnings from the exports, in turn, help fund projects that provide rural areas with electricity as well as various social development projects and poverty reduction efforts.

In contrast, Viet Nam is faced with an alarming electricity supply deficit because of an average annual growth rate of 7.5 per cent over the last decade. The nation’s Sixth Power Development Plan (2006-2020) estimates domestic power demand to rise 16 per cent annually from 2006 to 2010, by 11 per cent a year from 2011 to 2015, and by 9 per cent annually until 2020.

To meet this demand, Viet Nam is turning to its neighbours, including Laos, to purchase electricity. In March, both countries signed an agreement transferring as much as 5,000 MW by 2020. — VNS

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