Japan, Asian bank to help fund grid to export Laos hydropower

Japan and the Asian Development Bank (ADB) have agreed to help structure financing for a US$240 million transmission system to export hydropower from Laos to Vietnam.

ADB said October 17 that loans will be structured and scheduled to suit the commercial operation schedule of 11 hydropower developers that are to provide a combined 1,000 MW for export from Laos to Vietnam. Laos has hydropower potential estimated at 18,000 MW, but only 663 MW has been tapped so far. (HNN 11/23/07)

The Japan Special Fund, through ADB, is to grant US$1 million while the governments of Laos and Vietnam each will allot US$150,000 to complete the funding requirement for the program. The financial program will involve preparation of two loans, one each for laos and Vietnam.

Xavier Humbert, senior energy specialist of ADB’s Southeast Asia Department, estimated the cost of developing the transmission facilities would be about US$150 million in Laos and US$120 million in Vietnam.

“About US$55 million have been included in ADB’s 2010 lending program for financing the project, but the final financing plan for the development of the power transmission facilities still needs to be finalized after discussion with potential co-financiers in both countries,” Humbert said.

The transmission project consists of four components linking Ban Sok substation in Laos to Pleiku substation in Vietnam’s Central Highlands.

“Maximizing the country’s hydroelectric potential is challenging due to financing constraints,” Humbert said of Laos, one of the world’s poorest countries. “The government recognizes this and has been strongly promoting private sector involvement.”

In March, the two governments signed a sale agreement involving as much as 5,000 MW by 2020, ADB said. In May, Vietnam Deputy Prime Minister Nguyen Sinh Hung approved plans by Electricity of Vietnam to invest in four Laotian hydroelectric projects totaling 500 MW. (HNN 5/6/08)

Vietnam faces a growing electricity supply deficit as its economy has been expanding at an average 7.5 percent per year over the past decade. The government estimates domestic power demand to rise 16 percent annually from 2006 to 2010, slowing to 11 percent a year from 2011 to 2015 and 9 percent annually until 2020.

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