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Regions and Countries Regional Cooperation Greater Mekong Subregion Publications Proceedings of Ministerial, Forum, and Working Group Meetings Fifth Meeting of the Subregional Electric Power Forum
Fifth Meeting of the Subregional Electric Power ForumIntroductionThe Fifth Meeting of the Subregional Electric Power Forum (EPF-5) was held in Bangkok, Thailand on 11-12 December 1998. The Meeting was hosted and organized by the National Energy Policy Office (NEPO) of the Government of Thailand, with the assistance of the Asian Development Bank (ADB). Mr. Piyasvasti Amranand, Secretary General, NEPO presented a brief report to H.E. Savit Bhotiwihok, Minister to the Prime Minister's Office of the Government of Thailand. H.E. Mr. Savit Bhotiwihok, delivered the opening and keynote address on behalf of the Government of Thailand, while Mr. James Rockett, Manager of ADB's Energy Division - West delivered the welcoming remarks on behalf of the Bank. The Meeting was chaired by Mr. James Rockett and co-chaired by Mr. Koomchoak Biyaem, Assistant Governor, Policy and Planning, Electricity Generating Authority of Thailand (EGAT). The objectives of the Meeting were (a) to provide an assessment of the energy sector in the context of the economic crisis; (b) to review the progress of implementation of priority subregional projects in the energy sector; (c) to discuss the energy sector components in the GMS Indicative Work Program for 1998-2000; and (d) to consider the preparation of a policy statement on regional power trade. The Meeting agenda is in Appendix 1. Participants included delegations from Cambodia, People's Republic of China (PRC), Lao People's Democratic Republic (Lao PDR), Thailand, and Viet Nam. Myanmar sent communication that it will not be able to send a delegation to the meeting. ADB staff and consultants also attended. Representatives from the Governments of Indonesia, Italy, Malaysia, Singapore, Sweden, and Thailand attended as observers. Representatives from the International Finance Corporation, Mekong River Commission Secretariat, and the World Bank were also present. A representative of the GMS Working Group on Environment also attended. Representatives of private sector firms participated as well. The list of participants is in Appendix 2. A session on the integrated area approach to hydropower development was held on the second day of the Meeting. A Bank staff and representatives from E7 and Tennessee Valley Authority attended as resource persons. Highlights of the session are in Appendix 3. Opening SessionMr. Piyasvasti Amranand presented a brief report to H.E. Savit Bhotiwihok. He extended a warm welcome to the delegation, observers and guests at the meeting. He also expressed his appreciation to the ADB for its profound understanding of the needs of the GMS countries and support to energy sector development. He encouraged the participants to think constructively and promote participation for the mutual benefit of the GMS countries. H.E. Mr. Savit Bhotiwihok welcomed the GMS country delegates and the participants to the Meeting. He expressed appreciation for ADB’s strong and continuous support to energy development in the GMS. He also hoped that the GMS countries would strengthen their friendship to reach the common goal of prosperity. In his opening remarks, H.E. Mr. Savit Bhotiwihok expressed optimism despite the economic crisis given the improvement in recent economic indicators. He emphasized four points to face economic challenges: (a) the need to recognize the importance of current subregional economic conditions and their impacts and payoffs in project implementation; (b) overcome the shortage of funding, and re-think and initiate new forms of financing from domestic and foreign agencies (both public and private), and bilateral and multilateral sources; (c) energy cooperation among the GMS countries is crucial; and (d) development of an international electric market in the GMS by providing equitable access, improved quality, and reduced emissions of greenhouse gases and other pollutants. H.E. Mr. Savit Bhotiwihok informed the meeting that the Government of Thailand has signed a memorandum of understanding for power trade with Lao PDR by 2006 at 3,000 MW, Myanmar by 2010 at 1,500 MW, and PRC by 2017 at 3,000 MW. Thailand and PRC have agreed to support trade and the construction of a transmission grid network. Thailand and Lao PDR have agreed that one party will support the construction of a transmission line to a third country passing through either country. In addition, H.E. Mr. Savit reported that the Government of Thailand fully supports power exchange along the borders of the GMS, which would allow electrification of remote areas, hence improve living conditions in these areas. Lastly, H.E. Mr. Savit enjoined the participants to create a new momentum for GMS cooperation to bring about prosperity and success to the people of the GMS countries. In his opening remarks, Mr. James Rockett was privileged to welcome the delegates, observers from bilateral and multilateral agencies, private sector representatives and resource persons. He briefly presented the program for the two-day meeting. He acknowledged the efficient arrangements made by NEPO and invited the participants to make the meeting a fruitful and enjoyable one. The Energy Sector in the Context of the Economic CrisisA. Review of Energy Demand and Supply in the GMS Mr. James Rockett, Manager, Energy Division - West, ADB made a presentation on the impact of the Asian economic crisis on the GMS energy sector development. He discussed the pre-crisis and crisis scenarios in terms of GDP growth in the region before proceeding to the discussion of the impact of the crisis on the energy sector. Given the energy resources of the GMS, a call for international cooperation was encouraged to fully realize the energy potential in the subregion. After a brief review of the pre-crisis agreements and intentions on energy trade, Mr. Rockett reported on the suitable response to the crisis and outlined the elements of GMS cooperation strategy in energy trade. He highlighted the immediate focus of this undertaking and reported the best practice features that could be adopted to create a stable framework for power sector development. In conclusion, Mr. Rockett underscored the following: (a) the endorsement of the value of international power exchange and joint development of the energy sector; (b) the need for open communication between all parties in reassessing the power market and timing of project implementation in the light of new economic realities; and (c) recognition that the inevitable resumption of growth in electrical demand would be rapid and that there are many urgent tasks to be attended to in the meantime. B. Country Specific Developments The GMS countries each presented a paper that describes the current status and future directions in the energy sector. Highlights of the country presentations are outlined below. Cambodia Mr. Tun Lean, Deputy Director, Energy Department and Chief of Energy Policy and Planning of the Ministry of Industry, Mines and Energy, reported that the July 1997 internal conflict compounded the adverse effects on the economy of the regional financial crisis. The specific impact on electricity demand, however, is difficult to assess. Electricity demand in Phnom Penh was originally forecasted to grow at 52% in 1997 and 32% in 1998. But actual growth was limited to 20% both in 1997 and in the first half of 1998. The overall impact is, therefore, a delay in the generation expansion program by 1-2 years. From 60MW in 1998, it is estimated that demand will increase to 484MW in 2016 in Phnom Penh. For the country as a whole, electricity demand is anticipated to increase from 97MW to 746MW in the same period. An important policy milestone was the completion of the Master Plan in June 1998. This recommended a least cost preferred strategy for meeting electricity demand forecasts between 1998 and 2016. The strategy includes: the development of a national grid including interconnections with Thailand and Viet Nam; and the expansion of generation capacity through the establishment of a gas turbine facility at Sihanoukville and hydropower plants located on the western side of Cambodia. A power sector strategy for Cambodia is currently being crafted and is to be presented for Government approval in the first quarter of 1999. A draft Electricity Law has been prepared together with an implementing sub-degree. These are planned to be enacted by the end of February 1999. People's Republic of China Mr. Cheng Niangao, Deputy Director General, Department of Planning and Investment, State Power Corporation of China, reported that by the end of 1997, total installed generation capacity in the PRC reached 254,000MW and total power generation amounted to 1,135TWh, making it the second largest power producer in the world. Even with this volume of production, the PRC’s power market is far from being saturated. Per capita generation capacity is only 0.21kW and per capita power generation is 917kWh annually. About 60 million people remain without access to electricity. Total installed generation capacity is expected to reach 290GW in 2000 and 500GW in 2010. To meet these expectations, PRC needs to strengthen its power industry in, among others, the following areas: (a) closing down of about 14,000MW of medium- and low-pressure condensed units with sizes of 50MW and below by the year 2000; (b) increasing investment in transmission and distribution networks; (c) greater effort in developing hydropower potential; (d) increasing the required unit size of new coal-fired plants to at least 300MW; and (e) equipping coal-fired power plants located in "double control" (control over sulfur dioxides and sulfur rain) areas with desulfurization facilities. Lao People’s Democratic Republic In his presentation, Mr. Somboune Manolom, Deputy Director General, Department of Electricity, informed that Lao PDR has a hydropower potential of about 26,500MW, excluding mainstream Mekong. Of this potential, about 68% is technically exploitable, most of which is found in the major Mekong sub-basins. Less than 2% of the country’s hydropower potential has been developed over the last 30 years. But this rate of development is targeted to increase in order to generate and export electricity to the other economies in the subregion. Annual energy consumption is about 443GWh, or about 95kWh per capita. Peak demand is about 114MW, and is growing at about 8-10% annually. Future growth is forecast to remain at similar levels for some years to come. With its small national demand and large untapped hydropower reserves, Lao PDR has a large potential role as an exporter of energy to the subregion. With strengthening bilateral ties in the region and the recent acceptance of Lao PDR and Viet Nam into ASEAN, cross border cooperation in the power sector is increasing. Thailand Mr. Koomchoak Biyaem, Assistant Governor, Policy and Planning, EGAT, presented the power development plan of Thailand. He gave an overview and a current status of EGAT’s operations in terms of its role in electricity generation, installed capacity, generation requirements, service area, power sources and energy requirements. He also presented EGAT’s power development plan (PDP) focusing on its objectives, resource allocation/power generation policy and targets under a 13-year plan. These targets include: (a) an installed capacity of 39,673MW by the end of year 2011; (b) encouraging the private sector to participate in power generation as IPPs with total capacity of 5,800MW; and (c) purchasing power from neighboring countries such as Lao PDR, Malaysia, Myanmar and South China. The list of projects for PDP 99-01 under a moderate economic recovery load was also discussed including a comparison with those projects under PDP 97-02. Also presented under the latest PDP were forecasts of EGAT’s generating capacity, energy generation, and reserve margin. Mr. Koomchoak also discussed Thailand’s plan to privatize state enterprises to increase competition and efficiency in the industry. He informed the meeting of EGAT’s proposed privatization plan using a 3-step approach. Relatedly, the procedure of IPP and SPP processing in Thailand was also reported including regulations, issues affecting IPPs, proposal evaluation, and proposals under consideration. These investments are being encouraged to increase private participation and promote the use of primary energy. Mr. Koomchoak also reported on the development of power interconnection in the ASEAN focusing on the agreements reached by the heads of power utilities in a 1996 meeting, and the proposed cooperation projects. Mr. Enrique Crousillat, Senior Energy Specialist, World Bank, requested clarification of: (a) the impact of the economic crisis on financing of IPP projects; and (b) the status of agreement on power purchase between Thailand and Lao PDR. Mr. Koomchoak replied that meetings with all IPPs confirmed that IPPs prefer to delay the projects rather than cancel any of them despite the economic situations. They assured that they could supply power as per agreements. He further confirmed that a committee meeting was held, and Thailand and Lao PDR agreed that the Nam Theun 2 is the top priority and the Thai Committee requested to delay other projects to 2006-2008. Mr. Somboune added that the sequencing of projects presented by the Thai delegation needs further discussions between two committees and the ranking of Lao IPP projects would be made by the Government of Lao PDR for submission to the Thai committee. Viet Nam Mr. Tran Minh Huan, Director of International Cooperation Department, Ministry of Industry reported that the hydropower potential on the Mekong River basins within Viet Nam territory falls mainly on the Sesan and Srepok Rivers. The hydropower potential of the Srepok River has not yet been studied in detail, but feasibility studies for some projects are ongoing. An analysis of energy balance indicates that after 2010, Viet Nam’s primary energy sources will not be sufficient to meet its requirements. In this context, the Governments of Viet Nam and Lao PDR have signed a power purchase agreement specifying Viet Nam’s electricity purchase from Lao PDR beginning 2003 to reach a volume of about 10 billion kWh/year by the year 2010. Based on Lao PDR’s request, Viet Nam has constructed 35kV transmission lines to facilitate the sale of electricity to Lao districts near Viet Nam. In addition, talks are ongoing for the purchase of electricity by Cambodia through the transmission system at Ho Chi Minh City – Tay Ninh – Phnom Penh. If Cambodia pushes through with the construction of the Sambor Hydropower Project, the 500kV transmission line between Ho Chi Minh City – Phnom Penh – Bangkok could be made possible. Since 1997, 3 IPPs have been licensed and started producing electricity. Several BOT power project developers have also been appointed. Other small-sized projects are being considered on a BOT basis. Meanwhile, the Electricity Corporation of Viet Nam is preparing to equitize some power companies. Status of Implementation of Priority Subregional ProjectsA. Se Kong - Se San and Nam Theun River Basins Study Dr. Robert A. Gibson, Team Leader, reported on the progress of the study. He gave a brief overview of the project and its objectives. He reported that the study was carried out in three phases, namely the Inception Phase, the Interim Phase and the Final Phase. The Inception Phase, completed in 1997 covered a review of existing data and reports, and the planning of the study. It led to the production of a report and culminated in a workshop in Phnom Penh. The interim phase led to the ranking of 37 schemes taking into account the technical and socio-environmental aspects of all the proposed schemes. It culminated in a workshop in Vientiane, Lao PDR in March 1998. The Interim Study, the workshop and the Steering Committee selected six out of 13 schemes through a screening and ranking process, which the Consultants developed. Mr. Gibson explained the screening and ranking process adopted in the study. The final phase studied in detail the six top schemes included in the recommended development plan. Their engineering designs, cost estimates, and social and environmental impacts were upgraded and refined during the Final Phase. Environmental and socio-economic impacts and watershed issues were incorporated into the technical and economic analyses. Site geological and topographic surveys were carried out. Terms of reference for subsequent pre-feasibility or feasibility studies have been written. While the schemes are in the Se Kong, Se San and Nam Theun river basins, the study has allowed for other schemes that are also planned but are not in these three basins. The other seven of the 13 schemes were still included in the development plan but did not undergo any detailed study. The draft final report was issued a few weeks ago for review. Mr. Rockett requested clarification on whether there were changes in the weightings of the individual ranking criteria. Mr. Gibson reported that additional criteria were added after the conclusion of the workshop given the different parameters that are within the ranking system. He further reported that while weightings could have changed, the ranking results conducted by different groups of people were generally the same and no contrasting results came out. In response to the question of a Thai delegate on the impact of the economic crisis on the study, Mr. Gibson reported that the main impact of the crisis was that it will delay the implementation of future projects. B. Nam Ngum - Udon Thani 500kV Transmission Line Mr. Günter Brauer, Deputy Team Leader of the Nam Ngum - Udon Thani 500kV Transmission Line project, presented a progress report on the study. The proposed project, with a total cost of about US$75 million, is the first 500kV interconnection between Lao PDR and Thailand, and part of the future Lao National Grid. The purpose of this transmission project is to evacuate the power output from Nam Ngum 2 and 3 hydroelectric projects, in total some of 1,075MW, to the Lao/Thai border. The project comprises, on the Lao side, a 230/500kV substation located in Ban Nabong, northeast of Vientiane, with a transformer capacity of 1,200MVA, a 27km long 500kV double circuit line and half of the Mekong River crossing project to be shared with EGAT. The ADB and the Ministry of Industry and Handicraft of Lao PDR have commissioned Fichtner, Stuttgart/Germany to perform consultancy services for a detailed study for developing a 500kV transmission interconnection between Lao PDR and Thailand. This service comprises a feasibility study and a study on private sector participation. A staged implementation with an initial operation at a service voltage of 230kV is recommended if Nam Ngum 2 and 3 hydroelectric projects will be commissioned one by one over a period of some years. The first project phase will comprise the 500kV transmission line and the Mekong River crossing only. In the second phase, the 230/500kV substation will be implemented. The investigations have concluded that the project is technically feasible and economically viable. The environmental and social impacts of the project are kept to a minimum as the crossing of sensitive areas and settlements could be avoided. The project implementation schedules for the two project phases have to be coordinated with the hydropower projects and the requirements of the EGAT. The design and construction periods for phase 1 is 32 months and 36 months for phase 2. The following models are being proposed for private sector participation: (a) formation of a joint venture company, or alternatively implementation and financing by the first IPP company; and (b) formation of a special purpose company, or alternatively, built-operate-transfer lease model. The draft final report on the technical feasibility study has been completed and work on the privatization aspect of the project is underway. The sequencing of the power plants and their final commissioning years are yet to be decided. There are ongoing discussions on this matter. C. Jinghong Hydropower Project Mr. Pan Fu, Deputy Chief, Planning Department of PRC’s Yunnan Electric Power Group Co. Ltd., presented a status of the project based on the feasibility report submitted by Kunming Investigation, Design and Research Institute in January 1998. He mentioned that the final report of the feasibility study is underway. Mr. Pan identified the main features of the proposed project and indicated that the Governments of PRC and Thailand have signed a purchase power agreement that would export 3,000MW of electricity from PRC by the year 2017. In response to the question of an observer from the Mekong River Commission if there was any environmental assessment (EIA) study specifically on the impact to fisheries, Mr. Robert Kay, representative of GMS Power reported that the full EIA, including the impact to fisheries, has been completed and that sedimentation studies are ongoing. Energy Sector Components in the GMS Indicative Work ProgramMr. Bellana M. Karunaratne, Senior Project Engineer, Energy Division - West, ADB, discussed the energy sector components of the GMS Indicative Work Program for 1998-2000, which was presented and adopted during the 8th Ministerial Conference on Subregional Cooperation held on 2 October 1998 in Manila. He noted that, although the recent economic crisis has slowed down the demand for energy in the subregion and has changed the relative priorities of various power projects, it also has provided an opportunity to fine-tune the Work Program. He mentioned that the economic crisis has provided us with a chance to pause, take stock of the situation, and reformulate and reprogram the plans if necessary. We should consolidate the gains from past achievements, sustain the momentum of the GMS cooperation efforts, and prepare the groundwork for a quick start when the economy gradually recovers. Energy sector projects of a subregional nature, that are currently ongoing or under consideration by ADB include: (a) Nam Leuk Hydropower Project (ADB financing: $52 million) scheduled for completion in 1999; (b) Nam Ngum - Udon Thani 500kV line for which a feasibility study is underway; (c) Nam Ngum 3 Hydropower Project under consideration by ADB for possible assistance; (d) Se Kong - Se San and Nam Theun River Basins Hydropower Development study which is nearing completion; (e) the proposed power sector study for the Lao PDR; and (f) activities to promote subregional power trade. Report of the Experts Group on Power Interconnection and TradeMr. Prutichai Chonglertvanichkul, Chairperson of the Experts Group and Assistant Director, System Planning Division - Transmission of the Electricity Generating Authority of Thailand, reported that pursuant to the fourth EPF Meeting held in Viet Nam in 1997, an Experts Group was established to facilitate and foster the GMS Integrated Network and Power Trade. The First Experts Group Meeting was held in Thailand in June 1998 with the conclusion of the agenda for the Second Experts Group Meeting. The Second Experts Group Meeting held on 9-10 December 1998 was conducted successfully and fulfilled the objectives of the meeting. The following topics were presented and discussed: (a) the Generation and Transmission System Master Plans; and (b) the Planning and Design Criteria for Generation and Transmission Systems (These two topics were very interesting to the members of the Experts Group and many questions were delivered.); (c) policy statement on regional power trade and regional protocol; and (d) adoption of work plan of the Experts Group for the years 1999-2001. Technical Assistance Plan for Regional Power TradeMr. Enrique Crousillat, Senior Economist of the World Bank, addressed emerging issues in regional power trade and donors’ support. He opened by presenting briefly the findings of the World Bank study "Power Trade Strategy for the Greater Mekong Sub-Region". This report concluded that numerous benefits were linked to interconnected networks in the GMS, including: lower costs, improved quality of supply and reduced emissions of greenhouse gases and other pollutants. However, it was stressed that there are important barriers for the development of trade. The proposed strategy aims at removing those barriers. Mr. Crousillat also addressed three emerging issues: (a) new trade opportunities stemming from the regional economic crisis, i.e. the excess of capacity in Thailand as opposed to supply constraints in neighboring countries; (b) the implications of Thailand’s proposed power pool on the process of developing a regional power market and on PPAs; and (c) opportunities associated with the environmental benefits of power trade, namely, financial incentives established by the Kyoto Protocol on Climate Change. Mr. Crousillat outlined the World Bank’s program to support the GMS efforts towards power systems integration and development of power trade, stressing the importance of the countries’ ownership in this process and the need to engage in a collaborative effort between donors. Finally, Mr. Jean-Pierre Charpentier, Senior Energy Specialist of the World Bank, highlighted the three key objectives of the forthcoming activities of the Experts Group up to 2001: development of a Regional Master Plan; study of a viable organizational structure and regulation for the future regional pool; and finally, development of Regional Protocols at both governments and utilities levels. To facilitate the achievement of these targets, several specialized workshops and technical visits are planned. It is expected that these activities will be sponsored not only by ADB and the World Bank but also by the whole donor community. However, it was agreed that the progress and results of these activities should remain under control and responsibility of the GMS Experts Group. Other MattersADB proposed, and Cambodia accepted to host the next meeting of the Subregional Electric Power Forum scheduled in the fourth quarter of 1999 back-to-back with the fourth meeting of the Experts Group on Power Interconnection and Trade. Closing SessionOn behalf of the Asian Development Bank, Mr. Bellana M. Karunaratne, Senior Project Engineer, Energy Division - West, expressed his sincere appreciation to the GMS country delegates for their active participation and valuable contributions. He also thanked representatives from the World Bank, Mekong River Commission, International Finance Corporation, Tennessee Valley Authority, E7 Secretariat, and other representatives from various countries and organizations. He also acknowledged the excellent arrangements made by the National Energy Policy Office of the Government of Thailand. He also gave special recognition to the Secretary General and his competent staff for their hard work in making this meeting and EGP-2 a great success. In his closing remarks, Dr. Piyasvasti Amranand, Secretary General of NEPO, expressed his appreciation for co-hosting the meeting with ADB. He believed that the contributions made by the delegates of the GMS countries would significantly enhance future cooperative efforts. He stated that the recently concluded Experts Group meeting has provided new directions for expanding power trade from bilateral power purchases to the establishment of a power pool and eventually to multilateral arrangements. He expressed confidence that cooperation among the GMS countries will be even more meaningful and fruitful in the coming years. Lastly, he acknowledged the ADB for its ongoing financial support and thanked the delegates and other guests for their participation in the meeting.
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