Vietiane Times, 10 December 2012

The Xayaboury run-of-river dam in Xayaboury province is expected to play a significant role in boosting Laos’ economic growth when it becomes operational in 2018.

The government held a groundbreaking ceremony for the 1,285MW dam on November 7 after taking steps to address the concerns expressed by environmentalists and neighbouring countries.

Speaking at the ongoing session of the National Assembly in Vientiane, Minister of Energy and Mines Mr Soulivong Daravong said that when the power plant is built and it becomes operational, it will generate 7,370 GWh of electricity per year.

According to Mr Soulivong, 4,750 GWh of the power generated each year will be primary energy, 1,520 GWh will be secondary energy, and the rest will be excess energy.

Most of the power will be sold to Thailand for 7.476 cents per kilowatt hour for primary energy; 4.859 cents for secondary energy and 4.112 cents for excess energy. The dam will also sell 420 GWh a year to Electricite du Laos (EDL) for domestic consumption, he said.

The cost of electricity generated by hydropower plants is cheaper than the power sourced from diesel and gas driven electricity generators.

The minister did not provide information on the cost of the electricity that will be sold to EDL. However, he said the project will earn US$450 million a year from the sale of electricity to both Laos and Thailand.

Mr Soulivong said the shareholders in the project are Electricite du Laos, which holds a 20 percent share, Ch. Karn Chang Public Company (Thai) which holds a 30 percent share, Natee Synergy Co Ltd (Thai) which owns a 25 percent share, and EGCO (Thai) which holds a 12.5 percent share.

Bangkok Expressway Public Co Ltd (Thai) and PT Construction (Lao) hold 7.5 percent and 5 percent of the shares respectively.

He said the project developers will invest US$3.5 billion in the dam, adding that 70 percent of the funds will be in the form of loans from financial institutions in Thailand, while the rest will come from private investors.

Despite the huge investment in the project, Mr Soulivong said the Internal Rate of Return will be 10.82 percent. The project concession period is 29 years.

He said the government expected to earn US$3.9 billion from the Xayaboury dam throughout the 29 year concession period, including US$1.897 billion in royalties and US$637 million in taxes. The average annual revenue which the Lao government will earn from the project is estimated at US$135 million a year.

The government expects to use the income earned to reduce poverty in the country, according to officials.