Asian Development Bank (ADB) is supporting a 290-megawatt hydropower project in the Lao People’s Democratic Republic (Lao PDR) under a public-private partnership arrangement.
ADB signed financing agreements – on August 15, 2014 – for an assistance package consisting of a $50 million direct loan, a Bt3.04 billion (equivalent of around $95 million) baht-denominated loan, and a B loan of $72 million for nam Ngiep 1 Hydropower Project. The B loan is funded by The Bank of Tokyo-Mitsubishi UFJ, Ltd, Sumitomo Mitsui Banking Corporation, and Mizuho Bank, Ltd. with ADB acting as lender of record.
The project will also be financed by Japan Bank for International Cooperation and four Thai banks.
The Lao PDR has a hydropower potential of 20,000 megawatts from its river networks, and is strategically located to become the ‘battery’ of the Greater Mekong Subregion.
The bulk of the hydropower generated by Nam Ngiep 1 will be delivered to neighboring Thailand, which relies heavily on its dwindling natural gas reserves. With the use of hydropower, it is expected that around 500,000 tons of carbon dioxide emissions can be avoided in Thailand every year.
“The project is a win-win for the Lao PDR and Thailand. It will generate revenues for the Lao PDR’s economic and social development, and provide Thailand with cost-efficient power,” said Kurumi Fukaya, Lead Investment Specialist at ADB’s Private Sector Operations Department.
Aside from the exported power, the project—to start operations in 2019—will likewise supply power domestically and raise the Lao PDR’s household electrification rate.
The project will be constructed by the Nam Ngiep 1 Power Company (NNP1PC), jointly owned by Kansai Electric Power of Japan, EGAT International of Thailand, and the Government of the Lao PDR. Kansai is the second largest power utility in Japan, while EGAT International is an international arm of Electricity Generating Authority of Thailand, the buyer of the electricity.
The project will be constructed on the Nam Ngiep River in the provinces of Xaysomboun and Bolikhamxay in the Lao PDR. It consists of a main power station, a reservoir of 67-sq-km, a re-regulation power station, and a 125-km transmission line to connect the main power station to the Nabong substation near the capital Vientiane.
NNP1PC had engaged with communities affected by the project in the preparation of environmental and social safeguard plans. Based on these consultations, the plans were drafted to responsibly resettle the project affected people with livelihood restoration and social development support and to conserve biodiversity. The project has incorporated best international safeguard practices in mitigating impacts on the people and environment.