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dam-l EGAT Delays Power Purchase

Bangkok Post June 25, 1998 

ELECTRICITY 

 Egat delays power purchase 

 Commissioning date for controversial
 Nam Thuen 2 postponed 

 Boonsong Kositchotethana Yuthana Priwan

 The Electricity Generating Authority of Thailand (Egat) will defer
 purchases of electricity from several multi-billion-dollar projects in
 Laos, citing the slowdown in Thailand's power demand.

 As a result, Laos will have to wait longer to see earnings from its only
 major export, seen as the country's best ticket to escape poverty.

 The commissioning dates will be postponed by two years to 2006 at
 four hydroelectric projects: Nam Thuen 2, Xe Pien-Xe Nam Noi,
 Nam Ngum 2 and Nam Ngum 3.

 Egat made the decision as Vientiane was about to propose a new
 round of negotiations on power tariffs from Nam Thuen 2.

 The project developing group, including Electricite de France and the
 Laotian government, wants to establish a new power sale agreement
 to replace the one signed in February 1995 with Egat. That agreement
 expired in September 1996 because the group could not complete the
 681-megawatt project by 2000 as originally proposed.

 The postponement of the projects stems from the views taken by Laos
 and project developers that they may not be able to complete
 construction as planned due to funding problems, aggravated by the
 Asian financial crisis, Egat officials said.

 The slowdown in Thai power demand, short-term doubts over
 Thailand's commitment to purchase power, as well as the
 creditworthiness of some of the Thai partners were all blamed for
 potential lenders' reluctance to provide financing to get the projects
 started.

 Given numerous uncertainties, it may be safe for Egat to postpone the
 starting date of power purchases to the end of the period specified in
 the original memorandum of understanding. It called on Thailand to
 purchase up to 3,000 megawatts from Laos by 2006.

 To date, Egat has finalised purchase agreements for only two Laotian
 projects under the memorandum: Thuen Hinboun (187 MW) and
 Houay Ho (126 MW). Deliveries of Thuen Hinboun power started on
 April 1.

 Egat said it would secure power supplies from other sources in place
 of the capacity that would have come from Laos, Egat officials said.

 The decision to defer purchases was also influenced by demands from
 Vientiane and the developing groups for Thailand to review the tariff
 structure for purchases from future Laotian projects. The goal would
 be to reduce risk exposure resulting from fluctuating exchange rates.

 Current agreements call for payments to be made equally in baht and
 US dollars. Half of the baht portion is based on the exchange rate on
 the day when the power sale agreement is signed, and the other part is
 based on the actual exchange rate on the day the power supply is
 delivered.

 Meanwhile, 14 Thai conservation groups have called on Prime
 Minister Chuan Leekpai to abort Egat's plan to purchase power from
 Nam Thuen 2.

 In a letter to Mr Chuan, the Thai activists renewed international
 environmental groups' attack on the project for the potentially
 irreversible impact it could have on tribal people and the environment.

 Nam Thuen 2 was proposed to be constructed on the Nakai Plateau,
 declared the largest biodiversity-conservation area in central Laos.
 About 450 square kilometres of forest would be inundated to create
 the reservoir for the dam. 


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Aviva Imhof, Mekong Program Coordinator
International Rivers Network
1847 Berkeley Way, Berkeley CA 94703 USA
Tel: + 1 510 848 1155 (ext. 312), Fax: + 1 510 848 1008
Email: aviva@irn.org, Web: http://www.irn.org
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