Vientiane Times, September 17, 2012
The government will promote the development of small hydropower plants to supply power for domestic consumption.
According to the recently released Renewable Development Strategy of Laos, the government will make it easier to invest in the construction of small hydropower plants with installed capacity of 15MW and below.
At present, the current framework governing small hydropower plant development is the same as for major hydropower plants, and small companies find it uneconomic to fulfill the framework requirements.
One of the incentives the government will offer to smaller projects is exemption from concession agreement requirements, while project negotiations will be carried out directly with provincial authorities.
However, project developers will have to ensure social safeguards and hold consultations with local communities and facilitate their becoming project shareholders.
Another incentive is to set up offtake tariffs for small power projects at appropriate levels, ensuring the investors recover project costs and earn a reasonable return on their investment. The government will have to ensure the project has access to the power grid so they can sell the power generated to Electricite du Laos and third parties.
The government will also establish a framework and programme to provide finance and guarantees to small hydropower projects and encourage local financial institutions including state owned banks to provide loans and preferential financial packages for these development projects.
Despite Laos having built many hydropower plants over the past few years, the country is still facing a power shortage as most of the electricity is exported to neighbouring countries. These projects were funded by foreign investors.
The government has had to re-import electricity for domestic use and large-scale mining operations.
Over the first six months of the current fiscal year, Laos generated 5.90 billion kWh of electricity, 57 percent more than in the same period last fiscal year. The massive increase is due to the increasing number of operational power plants and heavy rainfall last year.
Over the same period, Laos exported 3.79 billion kWh to Thailand and Vietnam, 64 percent of all electrical output. The total export value of electricity in the first six months of this current fiscal year was about US$340 million.
Laos imported about 735 million kWh from Thailand, Vietnam and China to secure electricity for border areas not accessed by the national power grid.
According to the Renewable Development Strategy, Laos has substantial potential for small hydropower development projects, which are estimated to total about 2000MW. The government plans to allow investors to build power plants with a combined power output of 600MW from 2011 to 2025.
At present, Laos has 17 operational power plants with installed power production capacity of about 2,560MW. In addition, about 70 power plants are now in the planning and feasibility study stages.
