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Lao power sales cancelled

Citing its own economic slowdown, as well as doubts about project viability, Thailand has postponed all purchases of power from four planned Lao PDR hydro projects. The purchases have been postponed until 2006.

In doing so, Thailand has wrecked Lao economic development plans which were based on hydro power sales to Thailand.

The projects are shown in the table opposite. The latest date reflects the end of the current power purchase agreement between the two countries, not a realistic commissioning date. This would likely be up to several years later, but cannot be set until the Thai economy stabilises, at present expected mid to late 1999.

The postponements are far more serious to the Lao PDR than their face value suggests. Although they together represent some 2000MW installed capacity, they are only part of an agreement under which Thailand would have bought up to 3000MW of power from Lao by 2006. Lao was hoping to extend the agreement to 4254MW by 2010.

In comparison, US$20M annual dividends from the recently commissioned 187MW Theun-Hinboun hydro project will boost annual Lao gross domestic product (GDP) by 7%.

Putting the Lao hydro programme back together promises to be extremely difficult. Not only must pricing and project financing deals be renegotiated within a new economic climate, but fossil fuel prices are declining even as new technologies make them more attractive.