The Nam Theun 2 Power Company (NTPC) is an industrial and development investment owned by two private shareholders and the Lao Government, backed by commercial lenders and international financial institutions including the World Bank and the Asian Development Bank. It is described by the Lao Government as “an essential part of the country’s development framework” that “is likely to provide the first real possibility for Laos to gradually reduce its dependence on Official Development Assistance”.
The Nam Theun 2 Hydroelectric Plant began producing electricity commercially in 2010 after almost two decades of planning and construction activities. The Power station has an installed capacity of 1,070 MW that can generate 6000 Gwh of electricity per year. About 95% of the power is exported to Thailand.
Nam Theun 2 has been designed to incorporate a complete set of economic, environmental and social programmes to mitigate its effects on local people and ecosystems, and to improve living standards in the areas over entire Project area. These programmes cover catchment, reservoir and downstream areas, and have been designed in consultation with local villagers, under international guidelines and recommendations from various international financial institutions.
NTPC is a key company for Lao PDR development and is expected to generate 2 billion US$ in government revenue over the 25 year concession period.
In June 1993, the Government of the Lao PDR (GOL) and the Government of the Kingdom of Thailand signed a Memorandum of Understanding (MOU) to support the development of power projects in the Lao PDR through the supply of up to 1,500 MW of electricity to Thailand. In June 1996, the agreement was superseded by a new MOU increasing the scope of supply to 3,000 MW. Since then further understandings between the two countries have been signed agreeing on supply of 5,000 MW to Thailand up to 2015 and another 2,000+ MW after 2015.
These agreements represent the formalisation of a long history of bilateral electricity trade. Thailand began buying electricity from Laos in 1971 (from the Nam Ngum 150 MW hydroelectric dam) and has continued to purchase electricity since. Meanwhile Laos has been purchasing low voltage electricity from Thailand to supply its border provinces for many years.
Whilst Thailand presents a long-term viable customer for power generated from the Lao PDR, importing 2,806 GWh of power from the Lao PDR in 2002, the current trade represents a fraction of the potential electricity exchanges between the two countries. So far, only the 214 MW Theun-Hinboun and 126 MW Houay Ho projects (i.e. 340 MW or just over 10% of the agreed capacity) have been constructed under the MOU.
The NT2 Project, which had been previously identified by the World Bank as a potential key aspect of the economic and social development program of the Lao PDR, was nominated by the GOL as a potential supplier of generating capacity and electrical energy to EGAT under the MOU and was reconfirmed several times as a priority project. Thanks to its strong economic fundamentals and its particular focus on the Lao PDR’s social and economic development, the Project has remained under active development since 1994, and is now being implemented in the framework of Power Purchase Agreements with both EGAT and EDL that were signed on 8 November 2003 in Vientiane.