| Abstract | Lao P.D .R's hydropower potential is one of the main resources of the country. Electricity
production currently contributes a relatively small share (1.4%) of GDP. However, the
country's hydropower resources are being developed, principally for export. The country has
an estimated potential of some 18, 000 MW from over 60 possible project sites on the Mekong
tributaries, of which only l % has been developed so far. Electricity exports will become an
increasingly important source of export revenues as Lao P.D .R. prepares to build new
hydropower schemes over the next decade. The Government has thus far signed at least 23
Memoranda of understanding (MOUs) with foreign developers to augment its hydro power
potential, proposing an install ed capacity of 7,000 MW. A protocol has been concluded with
Thailand with an intent to purchase up to 1,500 MW from Lao PDR by the end of the decade
plus an additional l ,500 MW after the year 2000. This would satisfy about 10 to 15% of
Thailand 's growing electric power demand. In addition, MOUs for power sales have been
signed with Cambodia and Vietnam.
This study attempts to understand the mechanism of project financing in the hydropower
sector in Lao P.D.R. The information used in this study was gathered through interviews and
discussions with the chief executive officers and top managers of several financial institutes,
ministries, banks and power corporations in Lao P.D .R. This study is also based on company
reports, manuals, newspaper clippings, published academic literature and business magazines.
This study analyses the problems involved in the development of project financing in
hydropower projects in Lao P .D.R. The problems examined are related to policy, financing,
risk factors, power purchase.
This study presents a li terature review, an analysis of the hydropower sector in Lao P. D.R., a
case study of "Theun Hinboun Power Company," the first hydropower project jointly
developed by the public and private sector. The conclusions and recommendations have been
drawn in the end of this study.
The Theun Hinboun Project has recently been put in operation. Its capacity is about 210 MW.
The developer, operating under a 25 years' license, is the THPC, owned by EDL of Lao
P.D.R. (60%), MDX Ltd. of Thailand (20%), and Nordic Hydropower AB of Sweden and
Norway (20%).
In conclusion, there are two approaches used in project financing to develop the hydro power
project in Lao P.D.R. :
• Traditional financing by the government
• Financing by the public and private sector with a sho11 concession period. |