Asian Development Bank approves loan for Nam Ndum 3 hydro project

VIENTIANE, Laos, 11/3/11 (Pennwell) — The Asian Development Bank has announced a US $465 million loan to the Nam Ngum 3 hydropower project in the Lao People’s Democratic Republic.

When completed in 2017, the 440 MW hydro plant will benefit not only energy-hungry Thailand, but also the Lao PDR, where it is hoped earnings from the Nam Ngum 3 project will help stimulate the impoverished country.

It is expected that 2,072 GWh exported annually to Thailand will generate nearly $770 million in revenue – $200 million of which have been earmarked specifically for social services and environmental protection programs.

“Earnings from clean energy exports are vital to poverty reduction efforts,” said Christopher Thieme, director of ADB’s Private Sector Operations Department. “One in every three people survive on less than $1.25 a day.”

The Nam Ngum 3 project will also be of significant environmental benefit to Thailand, where approximately half of all current greenhouse gas emissions come from natural gas-burning power plants.

“By using hydropower instead of fossil fuels, Thailand will avoid an average one million tons of carbon dioxide emissions every year — the equivalent of taking 175,000 vehicles off the road,” said Anthony Jude, Director in ADB’s Southeast Asia Department.

The Nam Ngum 3 project will comprise a 220-meter-high dam that will create a 27.5 square kilometer reservoir.

The plant, estimated to cost around $1 billion, will be built and operated for 27 years by the Nam Ngum 3 Power Company (NN3PC), which is owned by three private sector companies: Thailand’s GMS Lao Company Ltd. and Ratchaburi Electricity Generating Holding PCL, together with Axia Power Holdings, a wholly owned subsidiary of Japan’s Marubeni Corporation. The Government of Lao PDR will also hold a stake through the Lao Holding State Enterprises (LHSE).

ADB will lend up to $350 million to NN3PC. Under a risk participation agreement, commercial financial firms will assume the risk on up to $150 million of that. Thai banks and other international financial institutions will also provide loans to the project. ADB is also lending approximately $115 million to the Lao PDR government to finance LHSE’s equity stake in NN3PC. 

The plant will be located upstream of two existing hydropower plants, and downstream from another plant that is currently under construction. The Nam Ngum 4 A and B plants are also planned upstream of Nam Ngum 3.

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Asian Development Bank to provide $97 million for new hydro plant in Pakistan

MANILA, Philippines, 10/13/11 (PennWell) — The Asian Development Bank will provide $97 million to help fund a new private sector hydroelectric plant in Pakistan, which will ease power shortages and create thousands of new jobs.

“Shops and factories across Pakistan are having to scale back operations because of electricity shortages,” said Takeo Koike, Principal Investment Specialist of ADB’s Private Sector Operations Department. “This new, renewable energy generating plant will power businesses and light homes across the country.”

Pakistan has an acute shortage of power, estimated at over 4,200 MW during peak demand, which has led to worsening brownouts and blackouts across the country, necessitating power rationing.

Most of Pakistan’s energy is generated from imported oil, putting a severe strain on the country’s finances as global oil prices rise and the local currency depreciates.

The ADB Board of Directors’ approval of the $97 million loan for the 147-megawatt (MW) run-of-the-river Patrind hydropower plant, between the Kunhar and Jhelum rivers near Muzaffarabad, will help mitigate power shortages and diversify Pakistan’s energy mix.

The loan is being provided to Star Hydro Power Limited, which is jointly owned by Korea Water Resources Corporation (K-water), along with Daewoo Engineering and Construction Company and Sambu Construction Company, which are both listed on the Korea Stock Exchange.

The project marks the first investment in Pakistan’s power sector by a consortium of companies from the Republic of Korea.

The independent power producer (IPP) — which will revert to government ownership after 30 years — is expected to create 2,700 local jobs and generate over $240 million from purchases of local goods and services. It will also avoid about 280,000 tons of carbon dioxide emissions a year.

The plant is expected to be up and running in 2016.

ADB has played a leading role in the development of the power sector in Pakistan, and the financing arrangements for the new plant draw on the experiences of the New Bong Escape Hydropower Project — Pakistan’s first private hydro IPP facility, which was partly financed by ADB.