Greater Mekong Subregion

Mr. Ty Norin, Deputy Managing Director of Electricite du Cambodge, reported that electricity generation in Cambodia is likely to grow from 150 MW and 678 GWh in 2000 to 746 MW and 2634 GWh in 2016. While the majority of this growth will occur in Phnom Penh, significant growth is expected in other provincial towns. To meet this growing demand, a Generation and National Transmission Master Plan has been formulated.

The Generation Master Plan was developed on the following criteria: base thermal generation in Sihanoukville, with its independent access to imported oil; peak thermal generation in Phnom Penh; small and mid size diesel units for base and peak load in provincial towns/ cities; expanded hydro development based on smaller, and subsequently mid size hydro projects.

Three stages of generation plans were developed as follows:

a. short term (1999-2004) involving reconstruction of pre-war project site and a stage 190 MW combined cycle plant in Sihanoukville. Cost is $150 million;

b. medium term (2005-2010) includes among others, 90 MW stage 2 combined cycle thermal plant in Sihanoukville for base load. Cost is $ 219 million;

c. Long term (2011-2016) includes development of three hydro stations and one gas turbine in various locations. Cost is $ 604 million.

Transmission Master Plan was developed with strategies designed to achieve Cambodia's energy sector objectives, as follows:

a. reduce reliance on imported oil for generation;

b. reduce reliance on transport of oil to Phnom Penh;

c. increase operational system efficiency;

d. encourage least cost development of provincial load centers;

e. increase competition in power generation by allowing access from competitively priced external sources (Viet Nam, Thailand, Lao PDR);

f. maintain reliability of power supply at level required and financially supported by customers;

g. facilitate export of energy.

People's Republic of China

In his presentation, Mr. Wei Guangyao, Director General of the Department of International Cooperation, State Power Corporation, cited the power industry achievements of China, namely: the 7.8% and 8.2% annual increase in electricity generation and installed capacity to support 9.7% GDP growth; the establishment of comprehensive power industrial system for recent 20 years; and a diversified investment structure with power plant investors of various origins and the state as network manager; tariff policy reform; opening up of capital structure; constant market reforms that aim to set up a modern enterprise system; and a legal framework led by the Electricity law. These will lay the firm foundation for future power industry development.

He then discussed the industry vision and objectives in the power industry for the next 13 years. Principles for power industry development include: active hydropower development; optimized thermal power development; appropriate nuclear power development; development of new and renewable energy together with local resources; emphasis on power network development; construction/ rehabilitation of urban-rural power grids; and nationwide grid connection.

For the next 14 years, Mr. Wei said that annual electricity generation by 2005 will be between 1557TWh and 1595TWh, with yearly increase of 4% to 4.5%. Installed capacity will reach 350,000MW. By 2010 and 2015, installed capacity will hit 436,000MW and 540,000MW respectively.

He cited the increasing power cooperation between Thailand and China, and listed the following developments: joint setting up of Sino-Thai Jinghong Power Consulting Co.; signing of MOU in 1998 transmitting 3000MW of power from Yunnan to Thailand before the year 2017; establishment of Coordinating Committee for Power transmission to Thailand, the Coordination Working Group in the State Power Corp. If it is possible, he expressed the wish to speed up the process of transmitting power to Thailand, especially to carry out the construction of the Jingshong hydropower station and transmitting 1500 MW of power to Thailand.

Lao People's Democratic Republic

Mr. Daovong Phonekeo, System Planning Department Manager, Electricite du Laos, discussed the present status of Lao PDR's energy sector. Laos is a country with relatively low power demand and large hydropower potential (about 26,500 MW) so it is expected to play a key role as net energy exporter in the GMS. At present it has total installed capacity of 577 MW, of which 563MW is hydropower and 14 MW is diesel. The largest hydropower plant is Theun Hinboun with capacity of 210 MW. The second largest is NamNgum-1 with 150MW capacity. Another government project, Nam Leuk, is currently on end phase construction and will add 60MW to the Central-1 grid.

The system in Lao PDR has 4 major networks, namely, Central-1 covering Vientiane, Central-2 covering Savannakhet and Khamouane and others, Northern grid, and Southern grid. Energy consumption in Lao PDR is about 430 GWh, or 90 kWh per capita, one of the lowest in South East Asia.

Power exports to Thailand began in 1971 from NamNgum-1 plant, initially with 30 MW installed capacity, increasing to the present 150MW. In 1991, the 45 MW Xeset-1 plant began exporting power to Thailand. Power is also imported from EGAT through the Mekong river crossing overhead lines. Additional connection points along the northwest border has been agreed with the Provincial Electricity Authority (PEA) of Thailand to supply the towns of Bokeo and Kenethao. Preliminary contact with Electricite du Cambodge was done regarding cross border sales of eletricity from Lao PDR to Cambodia.

Future Transmission expansion will include transmission line from Nam Leuk to Nam Ngum1 power station expected to be completed February 2000, among others. On power generation, the development plan to year 2010 was presented, which includes five projects with total capacity of 1,315MW scheduled for completion from 1999-2006.

Mr. Rahman inquired about the financial requirements of the presented transmission and generation program, and Mr. Phonekeo replied that the financing exceeds the capacity of the Government, and the latter welcomes the participation of the private sector for the Program to materialize. Mr. Chavalit then asked if the IPP in Laos has difficulty financing projects. Mr. Phonekeo replied that the viability of the projects depends on the price offered by the buyer.

Myanmar

U Zaw Win, Director General of the Department of Electric Power gave a background on the power sector of Myanmar. He noted that a new Department of Electric Power was formed which acts as the planning and policy making body and acts as Secretariat to the Ministry of Electric Power which promotes the effective development of the power sector.

The area of electric supply in Myanmar can be defined in two parts, namely: from the National Grid System; and supply outside of the Grid System. Total installed capacity is 973.82MW broken down into: hydroelectric, 307MW; gas turbine, 508.10MW; steam turbines, 142.5MW; and diesel, 16.22MW. Demand for electricity has been increasing rapidly. Power generation increased from 2117 GWh in 1988-89 to 4579 GWh in 1998-99. Peak demand rose from 332MW to 750MW between 1988-89 and 1998-99, more than doubling in 10 years.

U Zaw Win noted six hydroelectric and eight gas turbine power stations which feed power into the National Grid System. He noted four major hydroelectric projects under construction, and 13 major hydro projects to be implemented in the near future. Also cited were future gas and coal projects given the abundance of these resources. Export oriented projects include hydro power sites on the Thanlwin river. Thailand's current economic situation however, slowed demand and the pace of export-oriented projects to Thailand. India meanwhile, has renewed interest in importing power from Myanmar. In conclusion, he stressed that Myanmar has substantial hydro and gas resources and should be net exporter of power in the region but stressed that financial constraints are considerable, especially as Myanmar has at present no access to funds from international agencies as ADB, World Bank, etc.

Mr. Chavalit asked if there are interconnection plans with Bangladesh. U Zaw Win said that they are exploring developing hydro projects in the Western side close to India, especially the 1200 MW Tamathi Project and the Indian government is keen to develop this. There are now high level discussions on this and technical team from two countries will shortly visit the site, but as for Bangladesh there have only been some preliminary contacts.

Mr. Chavalit also asked whether there is enough power at the moment. U Zaw Win replied that due to exceptionally good rainfall this previous year, hydro plants are now operating well and further conversion of two gas turbine plants to combined cycle ones the last several months added more than 100 MW. By now generating 710MW peak power, the system's supply is now enough but stressed that in the future, however, shortages should be expected.

Thailand

Mr. Prutichai, presented an overview of Thailand's existing generation system. By Sept. 1999, EGAT operated 163 generating units with total installed capacity of 19,081.9MW. There are five operational areas and types of network, namely, the Northern region, the Northeastern region, Central, Metropolitan area, and the Southern region. Each region is presently interconnected through 500 kV, 230 kV, and 69 kV transmission lines.

On load forecasting in Thailand, there was revised load forecast based on three possibilities of economic recovery- the rapid economic recovery, the moderate economic recovery, and the slow economic recovery. In the moderate recovery case, peak generation will grow to 14,499MW in 1999 and to 30,587 in 2011. Energy generation will rise to 93,178GWh in 1999 to 194,930GWh in 2011.

The list of projects under the moderate recovery case was presented. It was noted that there are five projects under construction, including the Lam Takhong Pumped Stage project, the Ratchaburi Combined Cycle Power plant, Ratchaburi Thermal Power plant, etc. On private sector participation, EGAT has considered three forms of private participation, namely: subsidiary company; small power producer; and independent power producer. The need for capacity addition will fall into these three categories and power purchases from neighboring countries. EGAT will no longer carry on plant construction after its privatization is completed.

The Lao delegate asked about the Thai power pool system. Mr. Chavalit replied that a study is now being completed by a Consultant and will be finished by December 1999. It will cover the structure of the Thai power market for the power pool system. Mr. Rahman noted that suppliers with Power Purchase Agreement can get funding from financial institutions easier than to sell in the power pool system.

Viet Nam

In his presentation, Mr. Vo Truc Dien, Expert, Ministry of Planning and Investment, Ministry of Industry, discussed the Viet Nam Development General Scheme, which provides: power production in 2000: 30 billion kWh; commercial power in 2000: 24.54 billion kWh; average annual growth rate: 17 per cent per annum. In 1999, due to the crisis, power consumption growth rate fell to only 10.8%. Therefore, power consumption in 2000 will be only 87.16% of the plan.

Mr. Dien enumerated power plants to be put into operation in 1996-2000, consisting of EVN plants, and 5 BOT plants. All BOT plants were delayed and will start operations only after 2000. In one case, power purchase contract is under negotiation due to a price issue. There are 4 independent power plants all completed, but demand in the industrial parks is low and investors' asking prices are high relative to EVN's wish.

On power transmission networks, there are five 500 KV projects and a number of 110 KV and 220 KV lines and substations, but volume of implementation achieved is only 60-70% of planned volume sale. On investment capital required, for 1996-1999, implemented capital was estimated at 28,297 billion VND, and in 2000 about 13,600 billion VND. Vietnam gets assistance from WB, ADB and OECF to finance construction of power resources and transmission networks.

On the query from Myanmar on how much EVN wants to pay for power (due to reported refusal of EVN to buy power from a private supplier), Mr. Dien replied that the supplier is asking for more than 5 cents per kWh, but EVN sells at only 5.2 cents per kWh, which will cause it to incur losses. Pricing is now under negotiation with private suppliers.

Draft Policy Statement on Regional Power Trade

Mr. Jeffrey Wilson, Consultant for ADB, noted that based on informal discussions with the experts group the night before, he summarized a number of issues which he would like to tackle for the day's session.

For the first issue, he asked for comments on whether the statement should cover the energy sector as a whole or only the power (electricity) sub-sector. It was suggested that it would help to move by sub-sector. The Myanmar representative explained that the consensus of the group is to limit the statement to electric power. In summing up, Mr. Wilson reiterated the consensus that the development of the energy market is better done sector by sector, and that the policy statement should be limited to power meanwhile. The World Bank representative meanwhile observed that on the creation of a regulatory system, it would be unrealistic to expand to the sub-regional level. It will be more workable to keep the national regulatory systems, but to simply ensure that the various systems are coordinated

Mr. Wilson then posed before the group, the related questions on whether the roles of EPF and EGP should be re-defined, to account for the separation of technical and non-technical matters. In this regard, he posed the question on whether to have a separate Technical Committee or use the EGP. Mr. Charpentier cautioned on creation of new bodies, since we now have a structure (EGP/ EPF) that is working quite well. Also, regulatory aspects are closely inter-related with technical issues that arise at this time. Mr. Rahman concurred with the view that the EGP/ EPF structure is working well.

Mr. Chavalit concurred that the present structure is working well, considering it has a higher level EPF which can tackle policy matters. Mr. Wilson summarized then the consensus that at this point, there may be no need for a new body. Mr. Kim of ADB added however, that we should consider the possibility of evolving the two bodies in the future through a formal structure. The WB representative agreed that the future direction may be discussed in their presentation on the regional protocol on power trade.

The question of funding the EGP was discussed. The Thai representative expressed preference for continued ADB support. The WB representative noted however, that the WB can provide grants to support the evolution of the group, but it should be demonstrated that this support has led progress. Mr. Tatara remarked that for continued support, the GMS countries should enhance their sense of ownership of the program and thus demonstrate this through cost sharing, notwithstanding differences in financial capacity within GMS.

The PRC delegate remarked that in some cases, there is at present very limited power interconnection, whereas in some cases, there are major links. The delegate from Myanmar noted that interconnection will proceed in GMS with or without support of ADB and WB, but the role of funding from the latter is really to harmonize such development. Mr. Wilson at this point said that the issue on cost sharing and increasing ownership is to make the programs more self sustaining over time.

Mr. Wilson then requested the participants to comment on the proposed best practice features for private sector participation and their inclusion as Guidelines of the policy statement. He noted that their implementation over time is seen as a necessary ingredient for the health of the electricity sector and development of power trade. The Thai delegate noted that public- private partnership arrangements be included in this area. The presentation, it was agreed, will continue after the World Bank presentation on regional protocol on power trade, which will provide a better perspective of the function of the policy statement on regional trade.

Continuing discussions after lunch, after the WB presentation on regional protocol on power trade, Mr. Wilson sought comments from the floor. The MRC representative noted that the EGP/EPF are ad hoc committees, and they could therefore tackle almost anything whether technical or policy related. Cost sharing is an issue raised everywhere, and GMS countries can absorb some costs so long as directions are taken reflective of their domestic priorities. Comments from the various delegations on the policy statement were obtained. From Viet Nam, the view is that the matter of policy statement should be decided by a higher, perhaps Ministerial level. Myanmar and Thailand delegates suggested there is a need to have something formal and in writing to present to authorities.

On the question of how far we should go, Mr. Wilson reiterated the objectives listed in the policy statement, notably to: promote the efficient development of the electric power sector in GMS; promote economic ties and economic cooperation, including in the energy sector; promote opportunities for extended cooperation between members in the field of energy; facilitate implementation of priority electric power projects; address technical, economic, financial and institutional issues relevant to GMS electric power development; and promote electric power trade, where economic, to further these objectives.

Mr. Wilson then reviewed for the body, the listed principles which shall guide the member countries under the policy statement, namely: that each member recognizes international trading in electric power and energy to be an integral part of its policies to strengthen its electricity sector; that each member recognizes the desirability of foreign direct investment on reasonable terms in its electric power sector to speed economic development in the GMS; that each member should recognize certain best practice principles for private participation in the electric power sector; and that each member recognizes the importance of technical harmonization of power transmission parameters and practices with eventual interconnection in mind. He removed reference to energy based trade, based on the consensus to limit the statement to electricity trade.

Following further discussion, revised text was agreed as indicated in Appendix 3.

Regional Protocol on Power Trade

Mr. Enrique Crousillat of the World Bank noted that since the GMS is now moving forward on the design for a regional market for electricity trade, one of the first tasks of the Experts Group on Power Trade (EGP) is the formulation of multilateral agreements to promote and administer regional power trade. He said that the structure and content of the Agreements depend largely upon the market design envisioned by the GMS countries.

Introducing the various regional agreements that will be needed to promote electricity trade in the region, he noted that there are two types of agreements- the Inter-Governmental Memorandum of Understanding, and the Market Operating Agreement.

The first concerns the formal establishment of the market, through a protocol or treaty which are more formal agreements, or MOU which is less formal, depending on the norms and level of commitment by the governments. It states the objectives of the trade, level of government commitment, establishes the relations between the Agreement and national regulation, and establishes institutional framework for internal governance. It also establishes the procedure for meeting and decision making at the policy and minister level.

The Market Operating Agreement (MOA) establishes the regional market's internal governance, administration and general rules for operation. The MOA establishes the internal governance of the market at the operating level, the criteria for membership, jurisdiction and duties for each Committee/ Sub-Committee, and clarifies relations with existing trade agreements and operating committees.

It was noted that objectives of the trade and design of the market are significant factors in determining the approach and content of these provisions. He outlined key features of the draft GMS Inter-Governmental MOU, such as preamble, purpose of the MOU, principles and objectives, definitions, authorities responsible for implementation and institutional framework, government commitment, parties, settlement of disputes, ratification and entry into force, duration and termination, relation to other agreements, and review and amendment. For the draft GMS MOA, the key features are preamble, objectives and purpose, hierarchy of documents governing the GMS electricity market, management structure (with a Management Committee under which operate operations, planning, and environmental sub-committees), commencement and termination, members, relation with other agreements, and interconnected transmission facilities. The MOA also specifies the duties and responsibilities of the Management Committee and the various sub-committees.

Draft TOR for the Regional Indicative Masterplan

Mr. Bellana Karunaratne, Senior Project Engineer of ADB, informed the body that the GMS countries requested the Bank's assistance to formulate an indicative Masterplan for regional transmission development by updating the Mekong Integrated Transmission Study for power Interconnection and related studies. The Bank developed the TOR for said study, with the scope consisting of:

a) assessing electric power demand and reviewing generation/ transmission expansion plans in member countries;

b) updating power grid interconnections proposed earlier;

c) formulating an indicative transmission Masterplan to promote regional power trade, and

d) identifying the institutional and regulatory issues to be addressed to implement the Plan.

On the Master Plan section itself, the study will include the following activities:

a) assess technical/ economic feasibility of power transmission interconnections between member countries, accounting for private sector generation projects;

b) recommend least- cost grid interconnection required to support generation expansion plans;

c) prepare project profiles, capital cost estimates, and time schedules for proposed interconnections;

d) assess the availability of domestic financial resources

e) assess the availability of international financial resources to meet investment and develop a financing plan to implement recommended transmission interconnections; and

f) consolidate the above findings into an active indicative Master Plan covering 2000-2020

Mr. Karunaratne added that implementation of the Project will take 20 person months of international consulting. He then outlined the next steps for the project, namely: inception report; interim report; draft final report; inception meeting; mid-term workshop; final meeting; presentation to EGP; and presentation to EPF. Cost of the project is US$885,000, with $85,000 as the share of members in terms of facilities/ manpower.

Preparation of Workshop No. 1 on Coordination of Technical Issues

Mr. Jean-Pierre Charpentier of the World Bank distributed the questionnaire for the preparation of the forthcoming workshop on coordination issues, entitled "Development of a Regional Power Market in the Greater Mekong Subregion- Questionnaire to better understand coordination issues in transmission and telecommunication between national networks."

The information to be collected from the said questionnaire will be analyzed and used as background material for the discussions and recommendations that will be developed during the workshop No. 1 to be held in early 2000. Deadline for completion of the questionnaire is 10 December 1999.

He outlined minimum set of rules in network interconnection, namely equipment standards, frequency control, voltage control, etc. Objective of the questionnaire is to provide participants a common background of the power situation in the region, and to propose concrete recommendations for future Experts Group activities. The questionnaire is organized into four main parts, dealing with power system components, management of power system security, dispatch centers, and telecommunication centers. Addressee of the response, preferably by electronic means (diskette or e-mail) was provided.

Work Plan Timetable

Mr. Kim of ADB presented an updated work plan of the group in preparation for the presentation to the Ministerial Meeting and other activities. The proposed timetable is in Appendix 4.

Mr. Prutichai added that there was informal discussion with Mr. Guillermo R. Balce, the Executive Director of the ASEAN Centre for Energy (ACE) for providing fund for the technical visit of the Experts Group. He expressed that he received a Fax from Mr. Balce informing of the possibility to use fund from ASEAN-EU Energy Cooperation for this purpose but a brief project proposal was needed to submit to European Commission for approval. The Meeting showed no objection.

The next Meeting will be held in the mid of 2000 in Lao PDR.

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