Sunday, April 24, 2011

Sinohydro, CDB ink deal for Nam Ou cascade in Laos

Hydropower developers, bank ink finance deal
Vientiane Times, By Phonsavanh Vongsay
(Latest Update April 21, 2011)

The China Development Bank will provide funds or loans for the seven
hydropower plants to be built on the Nam Ou River in Phongsaly and Luang
Prabang provinces.

�The project is estimated to cost over 16 trillion kip (US$2 billion),�
an EDL senior official said.

He said EDL, on behalf of the Lao government, will hold a share of 15
percent and Sino will hold 85 percent.

However the investors have not decided when construction will start
because �we will have to discuss or negotiate further details on the
loans,� the official said.

The two developers are also in negotiations for the power purchase
agreement. �The generated electricity will be sold to the EDL power grid
to supply the local market and for export to Thailand, Vietnam and
China,� he said.

The project will take place in two phases. Phase one will consist of
three dams, mainly in Luang Prabang.

The second phase will build four dams in Phongsaly province.

�Based on the plan, we hope phase one will be completed and will have
begun commercial operations by 2016,� he said.

The finance agreement was signed after Sinohydro signed a master plan
for the Nam Ou hydropower development project with the Planning and
Investment Ministry last week.

Under the plan, Sinohydro will build two major reservoirs and seven
hydropower plants along the 475km Nam Ou - one of the largest
tributaries of the Mekong.

The river rises in China and runs through Phongsaly province before
entering the Mekong River at Pak Ou in Luang Prabang province.

When operational, the seven power stations will have a total production
capacity of 1,156 megawatts (MW), generating 5 billion kilowatts hours a
year of electricity.

Sinohydro is negotiating a concession agreement with the Lao government
and hopes to finalise the document by the middle of this year.

The developer signed the project agreement with the Lao government in
2007 and renewed it in early 2010. The company presented a project
feasibility report to the government at the end of 2010.

According to the feasibility study, the Nam Ou will be able to supply
enough water to power the plants as it runs through mountainous forested
areas and valleys and has 11 major tributaries.

Warm moist air from the Bay of Bengal and the South China Sea also bring
much rainfall to the river area.

Laos will witness the opening of at least two new power plants each year
between now and 2020. In 2006 the country had only 10 power plants with
a total capacity of 700MW. Now it has 14 plants with a total capacity of

According to the Energy Promotion and Development Department of the
Ministry of Energy and Mines, excluding the mainstream Mekong River,
Laos has the potential to generate about 26,500MW from hydropower sources.

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