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dam-l LS: Nam Ngum 3/Laos revived

BKK Post / Wednesday, May 03, 2000

ELECTRICITY
Laotian project revived
Japanese drawn into Nam Ngum 3

Boonsong Kositchotethana
   The sponsor of the Nam Ngum 3 hydro power project in Laos is moving to
kick-start the stalled US$600 million scheme, developed to export its
electrical output to Thailand.
   The two key project partners-the Thai infrastructure contractor MDX and
the Laotian government-are drawing a Japanese consortium into the venture
which will be carried out by Nam Ngum 3 Power Co (NN3PC), the joint-venture
firm.
   At the same time, NN3PC has begun the process of finding contractors to
build a 220-metre-high concrete-face rockfill dam, a 440-megawatt
underground power station and a 133-kilometre, 230-kilovolt transmission
line to the border with Thailand.
   The project was undertaken in spite of unresolved financial problems in
the MDX Group which was hard hit by the Thai economic crisis as well as the
absence of a formal power sale agreement with the Electricity Generating
Authority of Thailand (Egat), the sole major outlet for Nam Ngum 3 power.
   MDX executives refuse to discuss their firm's debt problems and argue
that its power project developing subsidiaries-GMS Power (formerly MDX
Power) and its branch MDX Lao Co, the holding firm in NN3PC-are financially
capable of proceeding with the Laotian project.
   Subin Pinkayan, honorary adviser to GMS Power, suggested that the Nam
Ngum 3 development would be driven by the cash generated from the Thuen
Hinboun hydro project in Laos in which GMS Power is a major shareholder.
   Thuen Hinboun began delivering 187 MW to Thailand, or more specifically
to Egat, in April 1998.
   Mr Subin said the 210-MW Thuen Hinboun project had a good operating
record and could generate some funding to partially finance the Nam Ngum 3
venture.
   Meanwhile, NN3PC plans to seek up to 70% of total project funding for the
Nam Ngum 3 venture from the Asian Development Bank and Japan's Overseas
Economic Co-operation Fund.
   The company is basing its loans pitch on Nam Ngum 3's status as a
development project in the Greater Mekong Subregion and Laos' eligibility
for international aid and financing in applying for soft loans.
   MDX executives said a memorandum has been signed with a Japanese
consortium, which they declined to name, to become a partner in the Nam Ngum
3 venture.
   Nam Ngum 3, to be constructed across the Nam Ngum river, is one of three
major hydro power projects in Laos, which Vientiane has targeted to complete
by December 2006, to export electricity to Thailand.
   The other schemes are the 900-MW Nam Thuen 2 project being sponsored by
an international group led by Electricite de France and the 553-MW Nam Ngum
2 plan to be undertaken by an international consortium including Siemens AG
of Germany.
   "To achieve that target date we have to start looking for contractors now
and begin construction next year," said a GMS Power executive.
   NN3PC is still negotiating the power sale accord with the Egat but a
company executive said the firm has already accepted in principle the sale
prerequisites laid down by the Thai state power utility.
   This includes a commitment that the power it purchases from private power
producers must not exceed Egat's self-generated costs or the minimum tariff
benchmark already offered by independent power producers.
   Nam Ngum 3 is among a total of six Laotian power generation projects,
with a combined generating capacity of slightly over 3,200 MW, which are
facing delays due to the Thai economic crisis which has severely curtailed
Thailand's electricity demand growth.
   The Thai government has now agreed on a new timetable for the start-up of
power purchases from the six schemes-1,883 MW (three projects including Nam
Ngum 3) in December 2006 and 1,380 MW (three schemes) in March 2008.
   Under the original memorandum, Thailand would buy 3,000 MW from Laos in
2006.
   As part of the memorandum, Egat has started buying power from Thuen
Hinboun (187 MW) and Houay Ho (126 MW).
   Deputy Prime Minister Supachai Panitchpakdi said recently that Thailand
should promote regional co-operation by speeding up its negotiations on
power-purchase agreements with Laos.
   "Laos was also hit hard by the regional crisis as its currency has
depreciated considerably," Dr Supachai said.
   "Therefore, we should speed up the signing of power-purchase contracts,"
he said.

http://www.bangkokpost.net/today/030500_Business08.html

=====
Denis Johnson
Minneapolis, MN, USA
drjohnson1@uswest.net