Greater Mekong Subregion

Dr. Ty Norin, Deputy Managing Director of Electricite du Cambodge (EDC) presented a profile of Cambodia's power system comprising 21 small isolated power systems. He noted the features of the country's long term development plan, which involves connecting all provincial towns and major generation centers in a grid, support for diversity of energy resources, and support for regional interconnections. Aspects of Cambodia's Power Development Plan for 2001 to 2005, and for 2006 to 2010, were discussed. The current power sector organization consists of EDC, small operators under Ministry of Industry, Mines and Energy (MIME), and IPPs. Several challenges facing the power sector revolve around lack of a legal/ regulatory framework and lack of technical, commercial and financial competency in sector management. Power sector reform objectives and plan were thus designed to address these challenges.

Developments on the interconnection plans between Cambodia and Thailand were discussed. Mr. Prutichai and Mr. Chavalit (Thailand) asked about the progress of interconnection projects in the Cambodian side. Dr. Ty Norin stated that MIME will start the negotiation of the PPA and transmission investment soon, after getting the approval from the government.

People's Republic of China

Mr. Wu Tianrong, Senior Engineer, International Cooperation Department, State Power Corporation of PRC, gave a four part presentation on development and reform on the electric power industry in China. The first part is on the status of PRC's power industry, which indicated that PRC currently has 7 inter-provincial networks and 5 independent provincial power grids, with installed generation capacity of 299 GW in 1999. Power demand growth is 5-6% annually requiring 390 GW generation capacity by 2005. The second is on PRC's power grid interconnection strategy, which is to strengthen power transmission channel from west to east and nationwide power grid interconnection to match the western development strategy of PRC. The third is on the reform of PRC's power industry, which essentially involves breaking up monopoly (cutting links between generation, transmission, distribution), introducing competition, decreasing tariff, improving service and raising efficiency. The fourth part gives an update on the progress of the Yunnan Jinghong Hydropower Project.

Mr. Yang Xingwang Deputy Director, Planning and Development Department of Yunnan Electric Power Group Co., Inc. cited the emphasis of government to develop generation in the West Side rather than coastal areas. He showed slides indicating 500 kV lines and hydropower plants planned to serve Yunnan and then transport energy from west to east regions, and power grid plans by 2005 and 2015. Mr. Somboune Manolom (Lao PDR) inquired about tariff, and Mr. Yang noted that these are high in the east side of PRC, but efforts are to lower these given the rich power resources in the west. Mr. Somboune also inquired about principles to guide PRC in negotiations with EGAT, and Mr. Yang said while market principles will operate, the mechanics still need to be decided.

Mr. Enrique Crousillat (WB) asked about ownership of power facilities in PRC. Mr. Wu said PRC will form separate generation companies, but the State Company will own the transmission line. Mr. Prutichai clarified that governments will own the transmission lines where these are located. Mr. Jong-Inn Kim (ADB) asked about interconnection plans with Viet Nam; Mr. Wu replied more study is needed for this. Mr. Vu Van Thai clarified that the interconnection plan is between Viet Nam and Yunnan and not with Guangxi. Truls Holtedahl (Norconsult) asked about the tariffs consumers should expect, and Mr. Yang replied generation and transmission costs have yet to be determined, but the west side has low cost power sources.

Thailand

Mr. Prutichai Chonglertvanichkul presented the generation and transmission development plan of Thailand. He noted the changes in the Thai economy affecting power consumption and requiring the updating of the status of the power system. He then described the power system of EGAT consisting of 22,268.5 MW of generating capacity, 26,350 circuit km of transmission lines, and 193 substations. He then presented the Power Development Plan (PDP99-02) which provides a framework for future power development up to 2011, based on the moderate economic recovery (MER) case. Future fuel options include hydropower, domestic/ imported natural gas, imported LNG, oil, lignite, coal, etc. On transmission system development, he noted that this covers the expansion of 500, 230, and 115 kV lines and substations to maintain quality and security.

Mr. Chavalit Pichalai, Director of Power Division, National Energy Policy Office (NEPO), described the power sector reform in Thailand. He explained the objectives of reform in the Thai power sector, which includes increased competition for efficiency and reduced government investment burden, among others. He then presented the implementation of the deregulation process, which began in 1992 and includes a number of restructuring efforts under the current plan. This includes the privatization of power plants, power pooling, retail competition, small power producer (SPP) program, independent power producers (IPPs), power purchase from neighboring countries, etc. He finally enumerated the key issues and challenges faced by reform of the Electricity Supply Industry (ESI), which includes the partition of EGAT, upgrading, billing and customer information systems, and recovery of stranded cost.

Mr. Crousillat (WB) asked whether the high forecast load growth, meant that full economic recovery is underway in Thailand. Mr. Prutichai replied that high power demand is from industry only and Mr. Chavalit added that Thailand uses the moderate recovery case. On Mr. Crousillat's query on how the power pool system will treat long term PPAs, Mr. Chavalit noted a compromise in such cases such as the two options for power purchase from China. Mr. Rahman (ADB) asked how PPA contracts with Lao PDR and PRC, will operate under the Thai power pool. Mr. Prutichai explained that future long term PPAs will account for power pool rules. For existing PPAs, Mr. Chavalit mentioned the need for renegotiating the terms of PPAs. Mr. Charpentier (WB) asked about the ratio of short term price to agreed PPA price; Mr. Prutichai replied this has not been studied yet.

Viet Nam

Mr. Nguyen Anh Tuan, Head of the Electricity System Division, Electricity of Viet Nam (EVN), provided the current status of the electric power system, covering power generation, power consumption, and transmission and distribution facilities. He gave the power demand forecast based on socio-economic forecasts. Energy resource potential of Viet Nam consists of various resources such as coal, oil and gas, hydropower, and renewable energy. Power sector development policies highlighted were the provision of higher quality power services to all customers, diversification of power sources, development of multi-purpose hydro projects, synchronized development of generation, transmission, and distribution network and research on application of nuclear power. The Power Development Program for 2001-2020 was presented, which includes the power generation assumptions, the transmission and distribution network, and interconnection plans with neighboring countries.

Mr. Rahman (ADB) asked when the Electricity Law is expected to be in place. Mr. Vu Van Thai (Viet Nam) replied that the National Assembly is expected to approve the law by 2002. On the MOU signed between Lao PDR and Viet Nam, Mr. V. Thai noted that the Master Plan for interconnection has been completed, and Mr. Somboune said the Lao side has already reviewed this prior to finalization. Mr. Crousillat asked about what the Electricity Law provides for regulation and private investment. Mr. V. Thai said regulation is the main issue, but the set-up has not been decided yet. He added that according to the draft of the Electricity Law, private sector is encouraged to participate in the development of power sector.

Lao PDR

Mr. Daovong Phonekeo, Manager, System Planning Office, EdL, noted the pivotal role the power sector plays in the country's development, and government's target is to supply power to 90% of the population by 2020. Thus electrification is high priority, undertaken by means of either grid extension and off-grid development. He described the current generation capacity of Lao PDR, transmission/ distribution facilities and ongoing projects. The Long Term Power Development Plan (PDP) to 2015 detailed the generation plants and EHV interconnection plans. Finally, trends in domestic power consumption, as well as peak load forecast, were shown.

In closing the morning session, Mr. Prutichai concluded that in general, GMS countries are now experiencing rising demand and are undertaking power sector reforms. These augur well for power trading in the future. He said the next sessions will take up the power situation in neighboring countries (i.e., Malaysia) with their potentials for interconnection with the GMS power grid.

Long Term Power Generation and Transmission Plan of Malaysia

Mr. Tengku Mahmood, General Manager, System Planning and Development, Tenaga Nasional Berhad (TNB), Malaysia, introduced TNB as the largest electric utility in Malaysia and whose core activities are in generation, transmission, and distribution of power. He noted that forecasting studies of growth of energy demand are carried out annually by TNB and reviewed quarterly. He presented forecast GDP growth figures, and the corresponding forecast of load demand, including peak demand. He provided the plant capacity mix of TNB, which is largely gas turbine (open and combined cycle), thermal, and hydro.

Mr. Mahmood then presented the generation fuel options for the long-term electricity supply planning in Peninsular Malaysia. He noted the marked increase in use of natural gas (82% of generation fuel mix) for gas turbines and combined cycle plants, and the decline of oil. Coal and hydro sources remain commercially available alternatives. The nuclear option was deferred by Government, subject to further review. Power demand is expected to rise significantly, and new generation capacity by 2005 will be about 8,716 MW. IPPs will supply 40% of installed capacity by 2005. TNB's strategy will focus on demand side management (DSM) as well as improvements in operation, including conversion to combined cycle turbines and computerization of plant maintenance management.

On transmission development, Mr. Mahmood noted that this follows closely the development of proposed new generation sites and forecast segregated load growth in Peninsular Malaysia. Another aspect is the installation of breaker switch reactors to provide reactive compensation. A high voltage interconnection with Thailand at 132/115 kV was commissioned in February 1981 to link TNB with Southern EGAT. TNB is also connected with Singapore via 230 kV line. There is a proposed EGAT-TNB HVDC link of 300 MW targeted by August 2001. Proposed link between Peninsular Malaysia and Sarawak has been deferred due to economic slowdown.

Mr. Prutichai asked about the possibility of 500 kV link between Malaysia and Thailand. Mr. Mahmood explained that the commercial element is now considered in the ASEAN grid link, so this is possible. Mr. Somboune asked about tariff rates in Malaysia, and Mr. Mahmood replied Malaysia has one of lowest tariffs in the region, but this is due to subsidy by government. He thus expects that with the move to market pricing, tariffs may rise in the short term. Mr. Rahman asked whether TNB gets government subsidy since it has low tariffs. Mr. Mahmood replied this would be a problem in the future as TNB is required to raise commercial financing for its expansion.

Towards the Development of a Regional Power Market in the GMS

Mr. Enrique Crousillat (World Bank), presented the progress made towards the development of a regional power market, including actions taken under each of the policy, technical, institutional, and commercial/ financial issues. On policy issues, recent action involves drafting of regional inter-governmental MOU with WB support at the February 2000 workshop, with second round of discussions in next few days. Also, PPAs being negotiated consider flexibility provisions for adaptation to future regional power pool. On technical issues, Thailand, Cambodia, and Viet Nam are planning interconnection investments. On institutional issues, Cambodia is considering establishment of an independent regulator. On commercial/ financial issues, the generation tariffs and PPAs, which should be based on a two-part tariff and should be transparent (as basis for network expansion/ operation), will be addressed in the workshop in the next few days. The objective, overall framework and administrative aspects of the Inter-Governmental Memorandum of Understanding (IGMOU) were introduced.

Mr. Jean Pierre Charpentier (World Bank) presented the wrap up on the TA program provided to EGP, consisting of a three-year action plan with five key activities. Component 1 is on transfer of knowledge and promotion of regional agreements for common technical, institutional and commercial standards, addressed by three workshops on coordination of technical issues, institutional/ regulatory and commercial issues, and project financing. Component 2 is on development of the Indicative Master Plan. Component 3 is on preparation of two draft policy papers, the Policy Statement and Regional MOU. Component 4 focuses on regulatory and institutional framework needed both at national/ regional levels. Component 5 involves technical visits worldwide to learn from well-established pools. The activities and outputs of the first workshop (on technical issues) were reviewed, and a preview of the forthcoming workshop was presented.

Mr. Kim (ADB) asked about the target year for the regional power market. Mr. Charpentier explained that a regional market now exists, but a more active one may be 4-5 years down the line. Mr. Prutichai noted that the regional market will come on its own under competitive conditions. Mr. Crousillat sees GMS moving in the right course, but with Thailand moving ahead, it is important for the others to be involved in a regional agreement this early so as to maintain leverage. Mr. Somboune raised the need to study further, the mechanics of transmission system operations and other legal/ regulatory/ risk sharing issues. Mr. Charpentier responded that subsequent activities aim to address these issues. On the need for PPAs to satisfy financiers, Mr. Crousillat called for creative approaches to attract financing.

E7 representative Yvon Hotte gave a brief presentation on the document just published by E7, the Guideline for the Pooling of Resources and Interconnection of Power Systems. This consists of eight modules covering feasibility, market analysis, resource development, optimal distribution of surpluses, technical aspects of interconnections, financing, market operational structures, and actual operations. He hoped the EGP would find the document useful.

Regional Indicative Master Plan on Power Interconnection in the GMS

The Team Leader, Mr. Harald Lillefjaere presented the Inception Report prepared by Norconsult International AS. The delegates were earlier furnished copies of the Report. Mr. Lillefjaere introduced his colleague, Mr. Truls Holtedahl, who is power economist on the Project. He cited the potential benefits of interconnection, such as increased supply reliability and lower costs. He then went through the background for the Project and the objective and scope of work for the Consultant. The Work Plan, showing the duration of the different tasks to be undertaken, was described in detail covering the 15-month period up to completion of the Final report. A Personnel and Milestone Schedule was thereafter presented showing the planned manpower input and the duration of the field activities.

Mr. Lillefjaere further described the organizational chart and explained the role of the Advisory Panel and the interaction envisaged with the Steering Committee representing the ADB, WB and GMS countries. Since success of the Project depends on good contact with the GMS countries and relevant organizations, this was given special attention and a detailed travel plan was presented. He rounded off the presentation by going through the methodology related to the main tasks to be undertaken and the issues to be given special consideration during the study.

Mr. Charpentier suggested that the WB questionnaire and wrap up of the WB workshop be reviewed, which will yield useful data needed by consultant. Mr. Somboune suggested a middle ground between the two extreme scenarios for power generation. On Mr. Hotte's query on whether the optimal option will be recommended, Mr. Lillefjaere said that at least the chosen option would be low cost. Mr. Prutichai suggested the option be made practical. Mr. Crousillat asked whether uncertainties will be considered in the decision process, and Mr. Lillefjaere said there will be efforts to arrive at the best scenarios for the subregion. Mr. Crousillat added that from the lender's viewpoint, the study will be more useful if it accounts for the uncertainties affecting viability. Mr. Chavalit said the study should advise on routes where transmission lines could not be built. Mr. Kim suggested the consultant's schedule consider the holidays and activities in the countries to be visited to maximize working days.

Members agreed that the next EGP meeting will be in May or June 2001 in Yunnan, and the EGP/EPF and third workshop (WB) in November or December 2001 in Viet Nam.

Mr. Truls Holtedahl went through the proposed methodology for the load forecast. A questionnaire was handed over to the delegates from the GMS countries. He highlighted the special issues involved and the importance that good forecasts play in the outcome of the study. Questionnaires related to generation, transmission and institutional issues were also handed over to the delegates, though he acknowledged some information is available from earlier questionnaire. These are expected to be filled out and returned to Norconsult.

Mr. Hotte asked whether there will be a number of scenarios in forecasts, and Mr. Holtedahl replied that one scenario will be prepared.

Consideration and Adoption of Report of EGP-4

The Experts Group members reviewed and approved the summary of proceedings of the EGP-4 meeting.

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