Statkraft’s Laotian partnership eyes major stake in Indochina’s biggest dam project

Norway’s state-owned power company Statkraft confirmed on September 10 that a Laotian partnership in which it has a one-fifth stake is eyeing assets held by Electricite de France (EdF) in Nam Theun 2 project in Laos after EdF had expressed an intention to pull out of the project.
     A Statkraft spokesman said that the Theun-Hinboun Power Company is looking into whether it would be interested in EdF’s position in the US$1.2-billion project.
     Theun-Hinboun Power Company is owned 20 per cent by Statkraft via its subsidiary Nordic Hydropower AB. The other two partners in this company are Electricite de Laos with 60 per cent and Thailand’s GMS Power with 20 per cent.
     “This company is checking whether the rights that EdF are willing to sell are of interest to the company — not Statkraft directly but the company in which we are a partner,” spokesman Ragnvald Naero said.
     He said that the Nam Theun 2 project was potentially interesting to Theun-Hinboun because the project is close to Theun-Hinboun’s 210-megawatt hydropower plant in central Laos.
     The existing plant of Theun-Hinboun was completed in 1998 and now exports the power to Thailand.
     Nam Theun 2 is Indochina’s biggest dam project. EdF International, a unit of the French state-owned EdF, is the largest shareholder with 35 per cent stake in the consortium formed to develop the dam and this 1,070 megawatt hydropower power plant.
     EdF said in July that it would pull out of the project by December to consolidate assets and focus on Europe. Power producers from Japan and China are reportedly also interested in taking EdF’s place in the project.
     Laos, which has a one-quarter stake in the Nam Theun 2 project through Electricite de Laos, has demanded a formal confirmation of the pullout from EdF by the end of this month so it could look for a new partner.
     Other partners in Nam Theun 2 include Thailand’s second biggest power generator Electricity Generating Plc (EGCO) with 25 per cent and Thai construction group Italian-Thai Development with 15 per cent.
     EGCO’s parent company, Electricity Generating Authority of Thailand (EGAT), is to be the sole foreign buyer of power from the dam. Without EdF’s intention to pull out, the signing of the power purchase agreement between EGAT and the developers of the project should have been signed on August 18.
     EGAT governor Sithiporn Rattanopas said earlier said that EGAT might scrap its plan to buy power from the project if new partners were not found within a year. EGAT would seek power elsewhere to avoid possible supply disruptions starting in 2009 when Nam Theun 2 is scheduled to start supplying power.
     The contract is critical to the developers who need it as collateral to secure loan facilities from the World Bank and other financiers.
     Of the total investment cost, US$900 million was to be acquired from commercial bank loans and the remainder from shareholder equity.
     Laos is expected to announce the replacement this week. The new shareholding structure will then be notified to EGAT, as the electricity buyer, by the end of this month for the power purchase contract signing.
     Reportedly, however, EdF may retain a stake in the project.
     “EdF said they will withdraw from the project, but after talks it is decided they will stay but reduce their share in the project,” said Viraphonh Viravong, General Manager of Electricite de Laos, in an interview with Dow Jones Newswires.
     “EdF will have to decide at what level they will stay in the project by the end of September,” he said.
     Construction of Nam Theun 2 project was scheduled to begin this year on the four-turbine, 920-megawatt plant, located 250 kilometres east of Vientiane. The plant would take at least six years to complete and electricity will be produced and supplied to EGAT by then.
     The plant is expected to supply 5,636 million units of power per year to Thailand for the main need in the Northeast.
     However, it is expected to be delayed by 6-12 months, depending on the readiness of the newcomers to carry out the project, said EGCO’s president Mr. Kraisi Karnasuta.
     Price for the electricity will average 1.64 baht per unit, based on an exchange rate of 42.5 baht to the dollar throughout the 25-year contract. The project is expected to generate annual revenue of nine billion baht.

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