1. The Eleventh Meeting of the Subregional Electric Power Forum (EPF-11) was held in Bangkok, Thailand on 3 December 2004. The Meeting was co-organized by the Energy Policy and Planning Office (EPPO), Ministry of Energy (MOE) of the Kingdom of Thailand, and the Asian Development Bank (ADB).
4. The meeting was co-chaired by Mr. Kajornsak Hotrabhavanand, Deputy Governor, Policy and Planning, Electricity Generating Authority of Thailand (EGAT) and Mr. Urooj Malik, Director, Infrastructure Division, ADB.
I. Opening Session
5. Mr. Kajornsak Hotrabhavanand welcomed delegates to the EPF meeting on behalf of the Government of Thailand. He said the EPF meeting is an important forum for exchange of information. He cited the progress of the previous EPF meeting, and looked forward to discussions on the future expansion of cooperation in the energy sector. He hoped for a fruitful meeting and wished everyone a wonderful time in Thailand.
6. Mr. Urooj Malik, Director, Infrastructure Division, Mekong Department, ADB, welcomed participants to the EPF-11 meeting and noted the double significance of this meeting, e.g., that it takes place under a fully functioning Inter-Governmental Agreement on Regional Power Trade (IGA) and Regional Power Trade Coordination Committee (RPTCC), and that it will consider possible expansion of cooperation in other energy sectors. He noted the near completion of the IGA ratification process by the GMS members and the progress in RPTCC discussions on the Regional Power Trade Operating Agreement (PTOA). He noted the desire of GMS members to agree on the PTOA at an early date, possibly initialing of some articles by GMS Heads of State during the Second GMS Summit in July 2005 in Kunming. He noted the progress of the study on energy sector cooperation, and mentioned the possibility of preparing a more in-depth energy sector strategy study. He said EPF members’ views would be obtained on the next steps for energy cooperation, especially in the following: (i) strategic directions in cooperation; (ii) criteria for prioritizing energy projects/ programs; and (iii) systematically bringing development partners on board. GMS representatives, he said, would present their respective countries’ priority areas for energy cooperation. He added that discussions on the development matrix would focus on regional screening and prioritization criteria, while development partners’ presentations would explore their expanded roles in the GMS Program. He concluded with the hope that the meeting deliberations would provide the critical next steps toward a strategic, comprehensive and results-oriented energy cooperation strategy for the GMS.
II. Study on Review and Update of GMS Energy Cooperation
Draft Report on Review and Update on Energy Sector Cooperation in the GMS
7. Mr. Thierry Lefevre, Center for Energy Environment Resource Development (CEERD) and ADB Consultant, first provided a summary of the study findings, and noted that the main achievement of GMS energy cooperation is to set up the institutional/ policy framework for interconnection and to build the grid interconnection infrastructure. He enumerated four (4) major factors that determine the need for and justify expanded cooperation, and showed trends in indicators and situations for each: (i) macroeconomic/ socio-economic trends; (ii) energy/ environment trends; (iii) need for more diversified energy sources; (iv) need for enhanced private sector participation; (v) need to promote clean energy sources; and (v) need to increase market integration. He noted the linkages between ASEAN and the GMS Program, and discussed the activities involved in expanding GMS energy cooperation, such as analysis of energy situation, and identification/ prioritization of cooperation strategies, with ADB and other partners’ support. He listed the existing initiatives under ASEAN energy cooperation and expounded on the scope for expanding GMS energy cooperation in the following areas: oil and gas; renewable energy; energy planning and policy; energy conservation and efficiency; and coal. He gave the role of ADB, other donors and the private sector in financing energy activities. He cited the main barriers in expanding energy cooperation and discussed the various actions toward setting up a more appropriate institutional and policy framework for expanded cooperation. He summarized his presentation by recalling the main achievements of GMS energy cooperation, the trends that will shape the future thrust of cooperation, and the importance of extending the scope of cooperation but recognizing the financing obstacles that must be overcome.
8. Mr. Tianhua Luo (ADB) provided a background of the study, which he stressed, would be implemented in phases. The preceding presentation served to define first the overall framework for expanding cooperation in energy. He asked for the members’ views on some issues which could guide in future expansion of cooperation, such as: (i) whether membership of the forum would be expanded to include representatives from other sub-sectors; (ii) what projects have strong potential for cooperation; (iii) what are the roles of governments in cooperation; and (iv) the type of support that could be provided by prospective development partners. He asked for the members’ views on their targets and specific outputs that they would like to achieve in terms of institutional arrangements, policy agreements, and priority projects for development.
Country Presentations: Priority Areas for GMS and Cooperation
9. Cambodia. Mr. Heng Kunleang, Chief of Planning Office, Ministry of Industry, Mines and Energy (MIME), provided an overview of the power sector in terms of access to electricity, energy consumption, electrification rate and generation fuel. He described the current structure of the electricity sector, detailing the roles and responsibilities of the major power entities. He showed the breakdown of power generation by source/ fuel type, and explained the current cross-border trade with neighboring countries. He provided the components of Cambodia’s power sector strategy and described the country’s power development plan in terms of candidate projects for transmission, generation and provincial/ rural electrification. He showed the projected growth in energy production (in GWh) and listed the hydropower plants to be developed by region. He explained the transmission lines to supply power to key areas, based on the transmission master plan.
10. PRC. Mr. Qin Zhijun, Chief of Electricity Division, Bureau of Energy, National Development and Reform Commission (NDRC) first provided an overview of PRC’s energy sector, focusing on production volume, production mix, consumption mix, and comparison of PRC’s consumption mix with that of the world. He then discussed PRC’s energy development policy in the following areas: (i) optimizing energy mix; (ii) improving energy efficiency; (iii) environment protection; (iv) safeguarding energy security; and (v) developing energy in the Western region. He explained the basis for PRC’s international energy cooperation consisting of: (i) implementing the strategy of opening up; (ii) expanding cooperation on the principles of independence, equality, mutual respect and non-interference; (iii) setting-up bilateral mechanism of cooperation with US, Canada and others; (iv) membership in APEC energy working group; and (v) encouraging foreign enterprises to invest in the industry and participating competitively in the energy market.
11. Lao PDR. Mr. Daovong Phonekeo, Manager, System Planning Office, Electricite du Laos (EdL) provided an overview of the following priority areas for cooperation: (i) electric power interconnection; (ii) generation for cross-border supply; (iii) power exchange and power trade; (iv) operation and maintenance (O&M) sharing; and (v) capacity building/ training. For electric power interconnection, he described Lao PDR’s connections (at various voltage levels) with PRC, Thailand and Viet Nam. He enumerated the planned interconnections, which included Nam Theun 2- Roi Et- Hatinh and Jinghong- Luang Namtha- Bangkok. He then noted both the existing and committed generation projects of Lao PDR for cross-border supply. On power trade and power exchange, he noted of plans for large-scale power trade with Thailand and EdL plans for power trade with the northern part of Cambodia. On O&M sharing, he cited use of EGAT services for annual inspection and overhaul of hydropower turbines and plants. He then explained the various training and joint studies undertaken with PRC, Thailand, and Viet Nam.
12. Comments. Mr. Malik noted that as a first step, the agenda for future energy forums should be determined and used as basis for deciding on the composition of participants to said meetings. He then provided comments on the preceding country presentations. For Cambodia he noted that the priority is in bringing down the cost of power by accessing supply from neighboring countries. He said one way is to invite offers from IPPs on a transparent and competitive basis. Also, it would be useful for Cambodia to discuss joint development of offshore oil and gas reserves with Thailand in the overlapping area. For PRC, he noted the scope for greater sharing of improved safety standards in coal mining. He said that being the world’s second largest energy consumer, it would be important for PRC to consider carefully the environmental sustainability of its energy development program. Similarly for Lao PDR, which has immense hydropower potentials, the main concern would be to adopt best practices to ensure social and environmentally sustainable hydropower development.
13. Myanmar. U Htin Aung, Deputy Director, Energy Planning Department, Ministry of Energy, briefed on Myanmar’s strategic location vis-à-vis important regional groupings such as BIMSTEC and ACMECS. He discussed current developments in the petroleum sector, citing the main attractions for investors, and the impressive outcomes from some projects participated in by Asian countries. He noted the plan to implement the natural gas development programme once sufficient gas reserves are confirmed. He also briefed on current developments in the country’s coal sector, as well as in the renewable sector. He briefed on the Clean Development Mechanism (CDM) opportunities in the country. He concluded by stressing the huge potential of energy cooperation with GMS members given Myanmar’s vast resources, in terms of both non-renewable and renewable energy sources that are relatively untapped. He added that Myanmar’s commercial natural gas reserves could help supply energy requirements of its neighbors, and that cooperation would help develop renewable energy utilization.
14. Thailand. Mr. Chavalit Pichalai, Director, Energy System Analysis Bureau, EPPO, MOE, discussed Thailand’s energy situation in terms of primary energy supply, final energy consumption, net energy import and power consumption by fuel type. He then explained the priority areas for cooperation of Thailand, e.g., energy efficiency (EE), renewable and alternative energy (RAE), energy security (ES), and regional energy center (REC). For energy efficiency he showed the short, medium and long-term objectives, as well as the EE targets. For renewable and alternative energy, he showed the targets for primary energy supply, as well as for ethanol and biodisel use in the transport sector. For energy security he noted the aim to increase energy reserves for use from 30 to 50 years. He explained Thailand’s goal of changing from energy buyer to energy trader and REC. He then explained the energy challenges for the GMS such as maximizing the use of renewable energy sources and improving efficiency of energy use. He then explained the suggested priority areas for GMS and cooperation: renewables and biofuel development; promotion of energy trading and logistics; rural electrification; and energy efficiency.
15. Viet Nam. Mr. Cao Quoc Hung, Director General, Ministry of Industry, provided an overview of the power demand and supply in Viet Nam. He showed the projections for power demand and supply for 2010 and 2020 under the Fifth Master Plan for Power Sector Development (revised 2003). He explained the expansion plan for generation, transmission and distribution and showed the power plants (hydropower, coal, and gas) to be operated by 2006-08 and 2010. He noted the transmission and distribution network development up to 2010. He explained the tariff policy and practices and discussed the program for reform of the sector and its legal framework. He then gave an overview of energy policy and energy development strategy goals, as well as on current international cooperation initiatives. He explained the following priority areas for GMS cooperation: interconnection; regulation; renewable energy; rural electrification; database sharing; and planning/ policy making- tools and experience. Specifically, this included consulting service for market design and preparation of regulations for market operation, and consulting service for preparation of FS for three interconnection projects: Ha Giang (VIE) to Malutang (PRC); Ha Tinh (VIE) and Nam Theun 2 (LAO); and Soc Son (VIE) and Kaiyan (PRC), including the substation.
16. Comments. Mr. Malik observed that for Myanmar, its strategic location (between South Asia and Southeast Asia) provides immense opportunities for cooperation with various regional groupings. Its natural resource base remains largely untapped due to limited private sector resources and limited operation of multilateral finance institutions. Thailand’s presentation strongly focused on promoting energy efficiency and renewable energy, and promoting exchange of technology and building capacity. He appreciated Thailand’s mention of joint development areas with Cambodia and Malaysia. He noted Viet Nam’s decision to avail of non-concessional loans from ADB, which will be cofinanced by AFD, indicative of increased cooperation between ADB and other development partners in GMS energy development. He said Viet Nam has decided to develop hydropower and gas resources for both internal and cross-border use. He noted that Viet Nam currently needs foreign direct investment (FDI) and thus should put in place a more enabling environment for investors. He said inviting the private sector to future energy meetings could help bring them on board energy projects.
17. Mr. Wang Jun observed the limited time for the country presentations; this allowed presentors only to focus on the current energy sector situation. He reiterated PRC’s emphasis on energy cooperation with its GMS neighbors, and mentioned the three (3) projects that will be carried out (PRC-Thailand Interconnection, PRC-VIE Interconnection, and Human Resource Training for Implementing Rural Electrification). He enjoined the EPF members to look at details of these projects in the materials earlier circulated.
III. GMS Development Matrix: Energy Sector Programs
Presentation on Regional Power Interconnection and Power Trade, Other Energy Cooperation Projects in the GMS Flagship Programs
18. Mr. Tito Tranquilino, Consultant, ADB, provided a brief on the origins, rationale and contents of the GMS development matrix. He enumerated its various uses, mainly as regional planning tool and as source of financing possibilities. He explained the role envisioned for GMS sector working groups in updating the matrix, including project additions and deletions. He cited the proposed criteria for inclusion of projects in the DM. He enumerated the 11 GMS flagship programs for which matrices were prepared. He noted that four (4) of these contain energy projects, and expounded on each of these flagship programs. He said that the flagship program on regional power interconnection contains the power transmission projects and power trade initiatives, and listed its major components. He added that the rest of the flagship programs with energy components were the economic corridor flagships: (i) the North-South Economic Corridor (NSEC); (ii) the East-West Economic Corridor (EWEC); and (iii) the Southern Economic Corridor (SEC). Mr. Tranquilino provided the goal, route and energy components for each of these flagships, citing the presence not only of power grid development in the three (3) corridors, but also of renewable energy cooperation (North-South), and oil and gas pipeline initiatives (EWEC and Southern). He requested the EPF members’ guidance on updating and refining the matrix, and in the treatment of energy projects in the matrix.
19. Comments. Mr. Dao Trong Tu (MRCS) noted the need to enhance cooperation regarding hydropower development among GMS countries, considering its wide-ranging economic, social and environmental impacts. Mr. Nopporn Prapaitrakul (GMS Power Public Co. Ltd.) suggested that ADB and World Bank consider assistance for measuring the upstream and downstream impacts of hydropower development, such as on fisheries. Mr. Pintz expressed concern over how the implementation of a number of projects would affect the implementation capacity of the GMS members. He expressed the need for careful prioritization of projects in order to properly phase their implementation. Mr. Malik said that future energy forums could discuss, in separate sessions, the issue of hydropower development impacts, as well as the building of human and institutional capacities for project implementation. Mr. Larsen (WB) noted that models could be used to predict the impacts of hydropower development.
20. Mr. Malik was pleased to note that PRC and Myanmar are now attending MRC meetings as observers, reflecting the increasing openness of GMS members with regard to transboundary impacts of their development activities. He added that the cumulative impact risk assessment (CIRA) for the Nam Theun 2 (NT2) project showed its impacts to be minimal but go as far downstream as Cambodia. He expressed the crucial importance of the GMS energy forum in addressing such impacts, considering the huge stakes involved for all GMS members. The GMS energy forum could also serve as a medium for exchange of information and sharing of best practices for management of externalities. Mr. Houmphone asked about Cambodia’s response to the CIRA findings on Nam Theun 2. Mr. Malik clarified that Cambodia accepted the findings of the CIRA that showed insignificant downstream impact of NT2.
IV. Presentations by Development Partners
21. MRC Secretariat (MRCS). Mr. Dao Trong Tu, Director, Operations Division, first provided a background of the MRC’s Water Resource Management Program consisting of the Flood Management and Mitigation, Hydrology and Hydropower components. He gave the objectives of the hydropower component, and the demand forecast in Mekong Basin countries. He enumerated the existing hydropower projects in the Mekong (over 30 MW) and the ongoing and potential hydropower projects (over 100 MW) for the period 2005-2020. He proceeded to discuss the MRC Hydropower Development Strategy (2001) and detailed its objectives and activities. He then discussed the proposal for Revised Hydropower Component (2005) approved at the 9th Council Meeting in Ho Chi Minh City (November 2002), and detailed its objectives and planned activities. He sought the support of GMS countries and donors for the preparation of the revised hydropower strategy of MRC, and called for cooperation among GMS countries for development of hydropower in a sustainable manner.
22. AFD. Mr. Alexis Bonnel, Head, Infrastructure Division, Infrastructure and Urban Development Department, presented on regional regulation in the power sector, emerging lessons and possible contributions from AFD. He first briefed on AFD, and the reasons behind its geographic expansion to include the GMS. He said AFD can provide financing for both projects and soft components, and has adopted a sector selective approach, which includes the power sector in the GMS where AFD would like to develop a long-term partnership. He then discussed the emerging lessons from building of regional regulation, highlighting the broadening of its functions, and its use as an independent resource for national regulation. He discussed the lessons from European power integration that may apply to GMS power cooperation. He expounded on AFD’s recent experience in contributing to the development of regional regulatory mechanisms in the West African Power Pool (WAPP), dealing with such aspects as the functions of the Regional Regulatory Board (RRB), its recurrent and on-request activities, including in support of national regulatory mechanisms, and implementation timetable. He cited the initial regulatory activities that may be needed to build legitimacy for GMS power trade, such as providing harmonized guidelines for cross-border exchanges and benchmarking sector operators. Lastly, he explained the possible contributions from AFD in terms of project financing and specific support to the development of regional regulation through the EPF/ RPTCC, based on request from involved GMS parties. Lastly, he mentioned the possibility of additional grant financing through the French Global Environment Facility (French GEF) on issues related to energy efficiency and sustainable energy.
23. JBIC. Mr. Koji Yamada, Representative, JBIC Bangkok Office, presented the Japanese strategy for development assistance for the GMS power sector, which focuses on infrastructure development (promote power interconnection and power market establishment) and institutional improvement. He noted JBIC’s assistance for Lao PDR, the 115 kV transmission line project, to supply electricity for the EWEC and lead to industry development and poverty reduction in Southern Central Lao PDR. He showed the possible future connection plan of the project with transmission line from Nam Theun 2. He explained the major issues of the power sector in Lao PDR and JBIC’s assistance strategy. He then discussed JBIC’s assistance for Viet Nam’s power sector through various thermal/ hydro plants and transmission line. He cited the Phu My Thermal Power Project as a good example of JBIC’s assistance since JBIC provided both of the ODA loan and international finance for the project according to the characteristic of each component. He added that JBIC’s Viet Nam assistance strategy deals with infrastructure development (in which private finance is not suitable), institutional improvement including the promotion of environmental consideration. He noted that for Cambodia, the power sector is one priority area for assistance, especially in terms of power supply development, support for lowering electricity tariffs, and collaboration with other donors and utilization of JBIC’s past experience.
24. SIDA. Mr. Goran Haag, Program Manager, Department for Infrastructure and Economic Cooperation, briefed on Sweden’s policy for global development, which aims to: (i) help create conditions that enable the poor to improve their lives; (ii) contribute to a just and sustainable global development. He discussed the examples of SIDA’s regional energy cooperation initiatives so far, which includes among others, research on renewable energy (with Asian Institute of Technology) and support to the study on regional power trade through the World Bank. He elaborated on possible contributions of Sweden in GMS energy cooperation. For RPTCC/ PTOA, support could be in environmental/ social/ sustainability aspects, and regulatory/ institutional/ commercial aspects, capacity building and training. He said Sweden could provide technical assistance to develop investment projects as well as credit finance. For GMS Energy, support could be in developing renewable energy resources, and rural electrification access, among others.
World Bank Proposed GMS Power Trade Assistance
25. Mr. Morten Larsen, Energy Consultant, World Bank Office (Lao PDR) provided the context for the proposed GMS power trade strategy. He explained that GMS power trade holds significant economic and environmental benefits, and the past achievements and developments in the subregion present a unique opportunity to begin the new phase of power trade development. He showed a chart summarizing the WB’s proposed assistance strategy and detailed the activities/ projects for both the institutional and infrastructure components of the strategy. He gave the time frame for the institutional and infrastructure components for both near term (4-5 years) and medium term (next 4-5 years). He discussed the needed next steps, which included: (i) getting GMS governments’ endorsement “Good Practice Guidelines for Bilateral Trade” prior to implementation; (ii) screening/ discussion of potential projects by GMS members; and (iii) including prioritized projects in the DM and flagship programs.
Consideration and Adoption of Proceedings
26. The EPF members reviewed the draft minutes and after incorporation of suggested changes, the body therefore approved the minutes of the EPF-11 meeting.
27. Based on discussions on the past hosting of energy meetings by GMS members, it was suggested that Cambodia host the next energy meeting, which will be the first Energy Sector Forum (ESF-1) meeting, toward the end of 2005.
28. The next RPTCC meeting (RPTCC-3) will be held in Lao PDR in April 2005, as Lao PDR will be the next chair of RPTCC. The Lao PDR delegation agreed to host the RPTCC-3 meeting.
V. Closing Session
Closing Remarks
29. Mr. Kajornsak thanked the delegates for their valuable contributions to the meeting, which will be reported to the 13th Ministerial Conference in Vientiane in mid-December. He said that the EPF delegates’ views and inputs to the PTOA and the RPTCC work plan would help advance the power trade program and added that with transparent rules in power trade, GMS power system reliability and efficiency will increase. He said the possible expansion of EPF to the energy forum would be beneficial, as it will serve as channel for addressing changing energy situations in the GMS. Given the high oil prices, new cooperation especially in renewable energy would be timely and help cushion against impacts of high oil prices and enhance sustainable development. He expressed his thanks to Mr. Malik and Mr. Wang Jun for deftly steering the discussions and the exchange of views. He hoped the spirit of close cooperation among GMS colleagues, and the generous support of WB, ADB and JBIC would result to meaningful contribution to development. He wished all delegates a safe and pleasant journey back home.
30. Mr. Malik thanked everyone for the useful and constructive discussions. He said that at the outset, the aim was to have a results-oriented meeting. He was pleased that the meeting achieved a number of key outcomes, which will help GMS members, position themselves more politically and strategically in the near future. For the RPTCC, he noted the detailed discussion of the consultant’s report, focusing on the PTOA. He noted the agreement on specific timelines on the refinements on the PTOA, and the signing by all GMS members by July next year, of an agreement on basic principles for initiating the implementation of stage 1. He noted the agreement on the work plan for the RPTCC and the creation of the Technical Secretariat (TS), under which it was also agreed to create working groups on systems development and operational planning to kick-start the studies, identify target participants for training and other activities envisioned in the work plan. He noted other institutional mechanisms such as the RRB and RTC that may be created at the appropriate time. For the EPF, Mr. Malik noted the agreement to expand cooperation to include other energy subsectors in a gradual manner. He said there were discussions on the need to harness the vast potential to develop energy resources in a sustainable manner. He cited the discussions on the development matrix, and the meeting’s endorsement of the criteria to be used for prioritizing energy projects and programs. He said the meeting agreed to use the DM to ensure that appropriate analytical studies are identified at an early date for ensuring sustainability and adequately manage externalities in energy sector operations. In this context he noted the agreement to develop the concept paper for an energy sector strategy study and to share this with GMS members for review and consideration. He added that the meeting reinforced the critical need for expanded partnerships with selected development partners who are actively financing programs or who are keenly interested in getting engaged in GMS energy work. The meeting also discussed the possibility of greater involvement of the private sector in future energy meetings, depending on the agenda for discussion. He thanked the co-chair, Mr. Kajornsak, Mr. Hotte, Mr. Wang Jun, the consultants, the GMS representatives and development partners, the ADB Secretariat and the Thailand Government for the success of the meeting.
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