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DAM-L LS: June news on Nam Theun 2 PPA (fwd)
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Subject: LS: June news on Nam Theun 2 PPA
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Sorry for the delay in posting these articles on negotiations between the
Thai and Lao governments regarding the Power Purchase Agreement for Nam
Theun 2.
061501 Power deal with Vientiane (The Nation)
Thailand has agreed to sign a purchasing power agreement (PPA) with Laos
for the future output of the Nam Theun 2 hydroelectric dam in Laos to
enable the dam’s investors to seek a loan guarantee from the World Bank by
the end of this year.
The PPA, which had long been delayed, was agreed upon during Prime Minister
Thaksin Shinawatra’s visit to Laos on Wednesday. Laotian Deputy Prime
Minister Somsavat Lengsavad said Laotian Prime Minister Bounnyang had asked
Thaksin during their meeting on Wednesday to urge the staterun Electricity
Generating Authority of Thailand (Egat) to sign the power purchasing
agreement by July.
Somsavat said the PPA would then be used as a supporting document for the
Laotian government and other investors to seek a loan from the World Bank
by the end of this year.
“If Egat can’t sign it by July, we won’t be able to seek the loan by the
end of this year and won’t be able to finish the project by December 2006,”
Somsavat said.
Foreign Minister Surakiart Sathirathai said, “We agreed to sign the PPA
first so (investors) can seek loans from the bank. We do whatever we can to
support each other.”
The US$1.2 billion (Bt54.5 billion) Nam Theun Dam 2, 35 per cent owned by
Electricite de France, was originally scheduled to be completed in 2006 but
the PPA has been delayed due to construction problems and slack domestic
demand in Thailand.
Laotian officials said they will ask Egat to share half the cost of
building substations in Laos and would extend the dam concession for
investors to 30 years from 25 years currently.
Moreover, Thailand and Laos also agreed to set up a dispute mediating
committee with Laos to solve business conflicts between the private sectors
of both countries including more than 30 disputes reported so far,
Surakiart said. Surakiart said both sides agreed at a meeting between him
and Lao Deputy Prime Minister and Foreign Minister Somsavat Lengsavad on
Wednesday.
Among the business disputes is the concession for a lignite mine for
Thaiowned Hongsa Lignite Co.
Thai trade representative Prachuab Chaiyasarn would preside over a
subcommittee before forwarding problematic issues to the full committee
later, Surakiart said.
Thailand and Laos also agreed to conduct “account trade” or trading through
their own currencies without having to use US dollars as a medium currency.
Voranaree Khochajandra
The Nation, Reuters
© 2000 Nation Multimedia Group
061301 Laos upbeat about PM's visit (The Nation)
Prime Minister Thaksin Shinawatra is not new to Laotian leaders. His Shin
Corporation mobile-phone business is by far Laos' biggest Thai investment
partner.
After this year, his cellular business - worth US$4 million (Bt181 million)
between 1997 and last year - will have to compete with other foreign
investors in accordance with Laos' new telecommunications act.
Recently Thaksin reportedly told government officials involved that he
would not touch on this business during his two-day visit, which starts
today, to pre-empt criticism of the abuse of power to influence business
decisions in that country.
Indeed, what enticed Lao leaders is not Thaksin's business, but his Thai
Rak Thai Party's populist business-oriented policy toward neighbouring
countries.
Regardless of whether he will remain as premier after the Constitution
Court rules on his alleged concealment of assets, Laos extended the
invitation to Thaksin in May on learning he was planning a familiarisation
swing through Asean, the official said.
That Laos is upbeat about the visit is understandable. Since the 1997
financial crisis, foreign investment in the country, mostly from Thailand,
has dried up. Laos hopes his "think business approach" will not only
resolve some lingering investment hitches, but also inject life into the
Laotian economy.
Disputes with Thailand are holding up two large construction projects in
Laos - Nam Thuen 2, the country's largest hydropower dam, and the
250km-long land route from Laos' Huay Xai riverside town bordering
Thailand's Chiang Rai to Bo Ten, the Lao town adjacent to Yunnan in China.
Further delay in concluding a power-purchase agreement for the output of
the $1.2-billion project, which is crucial to getting a loan guarantee from
the World Bank, will deal a major blow to Laos. It badly needs hard
currency from the sale of electricity from the dam to improve its finances,
which depend heavily on foreign assistance.
Negotiations on the agreement recently hit another snag over which side
should be responsible for paying for a $200-million substation to be
constructed to transfer the electricity from the dam site before it enters
Thailand.
"It has been almost a year since the wrangling over the issue broke out.
Still no solution could be found," said an official close to the conflict
between the project's investors and the Electricity Generating Authority of
Thailand (Egat).
"Egat insists it could not afford the additional cost since the price [of
electricity] from the neighbour is much higher than what it could obtain
from local power producers," the official said.
"At the same time, Nam Thuen 2 investors do not want to bear any more
expenses given the multiple delays of the project, which has cost them a
lot a month," he added.
Meanwhile, Joint Economic Quandrangle Development Corp is under pressure
from Laos to terminate its contract to build the road from Huay Xai to Bo
Ten |on the grounds it did not finish construction on schedule last year.
As a compromise, Laos has agreed to pay compensation of more than $250
million, but the sum is not even half of what the Thai company is seeking.
Laos will find new investors for the project and China reportedly agreed to
finance the construction of half of the route's length to its border. Laos
wants Thailand to jointly finance the other half with it.
Thaksin's business-oriented policy with Thailand's neighbours will be put
to the test, as he will find himself in the middle of these two key issues.
The Thai leader himself has ambitious plans for this visit. Aside from his
top agenda item to expand trade and economic cooperation with Laos, he will
seek to build trust and foster closer ties with the country.
Receiving Laos' backing for his anti-drug drive - including a joint
Thai-Lao patrol along the Mekong River and a drug summit with China, Burma,
Thailand and Laos - would help boost prospects for success at next week's
trip to Burma.
Any other deals he can secure during this trip will be a plus for him, as
he is expected to still wield power behind his successor if he is forced to
quit as prime minister.
Kulachada Chaipipat
the nation
© 2000 Nation Multimedia Group
061201 Thai PM urged to settle power sale row with Laos (Reuters)
By Songrit Pongern
BANGKOK, June 12 (Reuters) - Thai Prime Minister Thaksin Shinawatra will be
urged by his Laotian counterpart this week to end a row which is holding up
a $1.2 billion hydroelectric dam project, Laotian officials said on Tuesday.
Completion of the Nam Theun II dam project, 35 percent owned by Electricite
de France , has been delayed by at least a year from 2006 by disagreements
over contract terms between investors and a Thai government-owned power
buyer, investors have said.
A Laotian official told Reuters Laotian Prime Minister Bounnyang Vorachit
would ask Thaksin to help mediate between investors and the Thai buyer, the
state-run Electricity Generating Authority of Thailand (EGAT).
Sources close to the project said the disagreement over the terms of a
power purchasing agreement (PPA) with EGAT had held up financing for the
project, the largest power scheme in Indochina.
Even if both the buyer and the seller can reach an agreement and sign the
PPA by the end of this year, the sources say the project would still not be
completed before the end of 2007.
In May 2000, state-run EGAT signed a deal with the Laotian government to
buy 980 of the plant's 1,060 megawatts (MW) output. The other 80 MW will be
used by the state-run Electricite de Laos. Prime Ministers of both
countries witnessed the ceremony.
But since then, neither side has signed the PPA because they disagree on
the purchasing prices and who should be paying for sub-stations to transfer
the power from Laos to Thailand.
The Laotian official said Vientiane would ask EGAT to share half the cost
of the sub-stations and would extend the dam concession for investors to 30
years from 25 years currently.
"MOST IMPORTANT EXPORT"
"Thailand should show its sincerity to help Laos by pushing the dam project
up and running soon since electricity is the most important export of Laos
now," the official told Reuters.
Neither side wants to pay for the construction of substations, which EGAT
insists are necessary for the delivery of electricity.
EGAT officials told Reuters dam investors would have to bear the
construction cost of sub-stations in Laos to ensure the efficient delivery
of the electricity.
The PPA delay had prevented the group from seeking a bank guarantee from
the World Bank, which was prolonging the completion of the project.
Nam Theun II is the most developed dam scheme among various dam projects in
landlocked Laos where most of its 5.2 million population earn less than a
dollar a day.
Hydroelectric production is one of the country's few industries and is a
major export that brings scarce hard currency.
The remaining 65 percent of the Nam Theun II Electricity Consortium is
owned 25 percent by the Laotian government, 25 percent by the Electricity
Generating Plc , and 15 percent by Thai construction contractor
Italian-Thai Development Plc .
Other issues to be discussed at the summit include cooperation on economic
development, drug suppression and transnational crime, Thai and Laotian
officials said.
(With additional reporting by Nopporn Wong-Anan)
Copyright © 2001 Reuters Limited. All rights reserved. Republication or
redissemination of the contents of this screen are expressly prohibited
without the written consent of Reuters Limited
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