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Regions and Countries Regional Cooperation Greater Mekong Subregion Publications Proceedings of Ministerial, Forum, and Working Group Meetings Sixth Meeting of the Subregional Electric Power Forum (EPF-6)
Sixth Meeting of the Subregional Electric Power Forum (EPF-6)IntroductionThe Sixth Meeting of the Subregional Electric Power Forum (EPF-6) was held in Phnom Penh, Cambodia, on 28-29 October 1999. The Meeting was hosted and organized by the Ministry of Industry, Mines and Energy (MIME) of the Kingdom of Cambodia, with the assistance of the Asian Development Bank (ADB). His Excellency Sar Kheng, Deputy Prime Minister and Co-Minister of the Interior of the Kingdom of Cambodia, delivered the opening remarks on behalf of the Government of Cambodia, while Mr. Someth Suos, Resident Representative, Cambodia Resident Mission of ADB, delivered the welcome remarks on behalf of the Bank. Khalid Rahman, Manager of ADB’s Energy Division-West (IWEN) gave a brief opening statement on the GMS Power Sector. Mr. Toru Tatara, Head of the GMS Unit of the Bank, delivered opening statement on the overall GMS program thrusts. The Meeting was chaired by H.E. Ith Praing. Participants included delegations from Cambodia, People’s Republic of China (PRC), Lao People’s Democratic Republic (Lao PDR), Myanmar, Thailand, Viet Nam, as well as ADB staff. Representatives from the World Bank, Mekong River Commission, ESCAP, Japan Overseas Development Corporation, MITI, and Hongkong, China attended as observers. The list of participants is in Appendix 1 Opening SessionIn his opening remarks, H.E. Sar Kheng, reiterated that full participation of Cambodia in the GMS Program is given a very high priority. Cooperation in all sectoral groups under the GMS program will be an integral part of the Government’s economic development program. He thanked ADB for playing a leading role in developing the GMS program’s objectives and emphasis. He also thanked the World Bank for supporting the GMS Subregional Electricity Trade Development. On Cambodia’s Power Sector Strategy, while investment projects and electricity trade are important, he stressed that Electricity Sector Reform is equally important, which forms part of Cambodia’s major program of structural reform. Legislation to create an independent power sector regulatory agency, the Electricity Authority of Cambodia, which is now with the President of the National Assembly for review, provides for the Government’s role in policy and planning of the overall sector development, and vesting the EAC of Cambodia with responsibility for regulation, including licensing of suppliers and reviewing tariffs. He reiterated Cambodia’s move towards a virtuous triangle of growth –foreign aid – and reform, in which GMS cooperation will contribute to sustainable growth and social development. He wished good progress on the objectives of the meeting. Mr. Someth Suos, noting that some of the major projects under the GMS program are in energy, added that subregional cooperation in energy will be expanded to power interconnection and trade which will further enhance economic benefits for the subregion. He then provided a glimpse of the Bank’s operations in Cambodia, noting that the Bank financed 11 loans totaling $354 million, including $28 million in power projects to upgrade power supply in three areas. The Bank also provided 57 TA grants totaling $45 million. He cited that the planned interconnections from neighboring countries will be one of the power supply solutions for Cambodia in the short run, while private investment in power is the most efficient undertaking. For the long run, hydropower is a good alternative given the presence of several potential sites. Mr. Khalid Rahman welcomed the GMS country delegates and all other participants to the Meeting. He briefly outlined the history of the EPF, which was established to have an advisory body to the Ministerial Conference, as well as provide an institutional framework for coordinating regional power sector development. He noted significant developments in the regional power situation, such as improved cooperation, but the Asian crisis, which slowed power demand, allowed that a more flexible approach be adopted in power development. He noted new paradigms in power sector restructuring and governance, to be tackled in the Discussion Series, "The Changing Role of Independent Power Producers". He also enjoined the Forum to exchange information with ASEAN and coordinate/ collaborate in areas of common interest. Mr. Tatara gave an overview of the GMS program and noted that it is now at the critical stage facing new issues and challenges, and more strategic focus is needed. In the next 2-3 years, he noted it is essential to sustain the momentum of the Program and prepare the groundwork for economic recovery. The GMS Program strategy for 2000 to 2002 will have five key elements endorsed by the Ministers, namely: advance implementation of priority subregional projects; focus on software aspects of subregional cooperation; mobilize resources through public-private partnership; build national capabilities for management/ implementation of programs/ projects; and develop economic corridors that link infrastructure with other manufacturing, trade and tourism activities. The Chairman, H.E. Ith Praing, noted that there will be new and useful insights to be gained on the presentations on the power demand situation by Thailand and Viet Nam. He also anticipated interesting discussions on the each GMS country’s specific energy sector developments, particularly on the matter of changes in their regulatory/policy framework for power generation/transmission, and electricity trade. He looked forward to the comments on various topics that were tabled for the meeting, particularly on lessons from hydropower projects. He looked forward to the agreements that may be reached in terms of a policy and action plan for regional power trade. The Program and Agenda is in Appendix 2. Country PresentationsPower Demand Situation
in Thailand and Viet Nam
Mr. Sitthiporn Ratanopas, Deputy Governor of Policy and Planning, Electricity Generating Authority of Thailand (EGAT), gave a report describing the electricity demand situation in Thailand from before the crisis to the present situation. Indicative signs towards a recovery was also mentioned. The report also presented power consumption by each sector. The projected demand recommended for formulation of the Power Development Plan was also presented. Due to Thailand’s robust growth, peak and energy generation requirements of EGAT rose from 4,734 MW and 28,193 GWh in 1987 to 13,311 MW and 85,924 GWh in 1996. Average increase in demand was over 10% before the crisis. In 1998, peak and energy generation requirements were 2.25% and .64% less than 1997 levels. Power demand steadily dropped due to closedown or suspension of industrial production and commercial consumption such that peak and energy demand in fiscal 1999 was even lower than in 1998. However, there are signs of economic recovery, since Aug. and Sept. 1999 peak demands were higher than year ago levels. The same was observed for energy demand, fueling the view that the economy has hit bottom and is now recovering. In view of this, the Thailand Load Forecast Subcommittee is going to prepare the new load forecast to reflect the present situation, and the new load forecast is expected to be completed next year.
In his presentation, Mr. Vo Truc Dien, Expert, Ministry of Planning and Investment, noted that hydro power accounts for above 60% of the total electricity production but this creates difficulties during the dry season. Since 1995 power supply is adequate, and is expected up to 2000, even with large increase in consumption of electricity. Domestic power supply during 1990-1994 accounted for only 30% of power consumption. At that time, power for domestic use was cut during rush hours (6 to 9 pm). Since 1995, domestic use increased to 50% of total power consumption. Adequate supply to domestic use and extension of power to rural areas is a major reason for this increase. Power Demand, 2001-2005. With GDP growth expected at 6-8 percent per annum, will lead to power growth rate of 11.1% per annum, double the GDP growth rate. During this period, industrial use will account for 40% and domestic use above 40%. Estimated power plant capacity is 7,986 MW in 2000, of which hydro accounts for 50%. To meet 2005 power demand of 44.23-46.55 billion Kwh, additional 4456 MW EVN resources need to be constructed. Domestic and foreign BOT projects will be additional resources. Power resource development up to 2010, 2015 and 2020 are still under preparation and under discussion among different agencies. Mr. Rahman asked about the relationship between base and peak load. Mr. Dien replied that the base is 40% of peak load. He noted there is now subsidy only for 100 kWh per household. Mr. Malik of ADB asked about Viet Nam’s plan for gas-fired plants. Mr. Dien replied that Viet Nam plans to commission some gas plants soon. Review of Country Specific Developments in the Energy Sector
Mr. Tun Lean, Director of Energy Development Department of MIME, presented development’s in Cambodia’s electricity sector. MIME, in cooperation with EDC, prepared the Cambodian Power Sector Strategy (1999-2016) which covers all aspects of sector’s development: Generation and Transmission Master Plan, Rural Electrification, Electricity Trade, Regulatory Framework, and Commercialization/ Private Participation. He noted growth of demand for electricity in Cambodia which corresponded to GDP growth rate. On capacity expansion and development of a national grid, he cited the 230 kV line from Sihanoukville to Phnom Penh and interconnection with Viet Nam (high voltage line by 2003). Extension of power generation supply will be partly through contracts with IPPs. On pricing, he presented differences between Phnom Penh (15 cents per kWh) and provincial towns (25-35 cents per kWh). There will be a provincial town rehabilitation project involving development of generation plants and distribution lines in various provincial towns. Private sector will be encouraged to supply power at competitive prices, guidelines will be developed, and tax/ investment incentives will be devised for private producers. There will be a regulatory framework to be established, including protection of rights of consumers and producers, and promotion of private ownership in provision of electric service. On Mr. Rahman’s query on the strategy for power generation, the Cambodian representative clarified that except for major plants, the rest will be imported as these are very competitively priced. There are now plans to restructure tariffs and reduce imbalance between provincial towns and Phnom Penh, to attract more customers. This can be done through reduction of system losses.
Mr. Wei Guangyao presented briefly the energy production in China -raw coal was 125.0 million tons, raw oil was 161 million tons, and gas was 22.3 billion cubic meters. China is planning to import LNG to South and East of China. He also presented the establishment of the comprehensive power industry system in PRC. He cited that total installed capacity has reached 277,000MW and 1,157TWh in electricity generation. The Three Gorges Project will trigger cross region grid connection. The Power Development Plan aims to reach total installed capacity of 436,000MW and 540,000MW y the year 2010 and 2015, respectively. He noted the various principles for setting PRC’s Power Development Master Plan and Industry Vision for next 15 years as follows:
Current developments in the power industry in PRC were presented: First, the electricity gap has been met through sustained power generation development; second, there is a comprehensive power industrial system which includes cross-region network connection; third, there is a diversified investment structure with power plant investors of various origins with the state as network manager; fourth, tariff reform is ongoing; fifth, foreign investment now takes up 10% of investment; sixth, enterprises in power are subject to constant market reforms; and seventh, a legal framework, the Electricity Law, is being formulated to legalize and lay firm foundation to power development. Mr. Wei then presented the reforms in China’s power industry. There are four steps in the reform of the industry, namely: a) establish the State Power Corporation with Ministry of Electric Power from end of 1996 to March 1998; b) to undertake pioneer experiment in generation side market in six provinces from March 1998 to 2000; c) to spread the experiment of generation market to the whole country from 2001 to 2010; and d) to separate the selling of electricity from transmission and distribution to establish the electricity market from year 2010.
Houmphone Bulyaphol, Director of the Department of Electricity of the Ministry of Industry and Handicrafts, presented overview of the current status of the power sector in Lao PDR, and explained the policy and regulatory environment of the sector with focus on cooperation and investment. Once the Nam Ngum units were brought on line, Laos production exceeded local demand and for 30 years the excess was exported to Thailand. Lao PDR however, also imports power from Thailand and Viet Nam to serve areas in the central and northern parts. Further opportunities for cross border exchanges are being planned involving China, Cambodia, as well as Thailand and Viet Nam. Government policy calls for development of two types of power projects to meet market requirements such as small to medium projects to meet domestic demand and medium to large projects for export requirements. The Asian crisis has affected the energy sector in the following ways: reduced internal growth projections; received pressure from consumers for tariff reductions; caused under-capacity in some parts of the region, which led to pessimistic prospects held by lenders and multilaterals. On the MOU for power export with Thailand, the schedule has changed and the new terms of PPA negotiation are required. Government policy is to set up a national grid company to operate future HV transmission network. Planning of domestic transmission systems is integrated with that of neighbors’, allowing for possibility of regional power exchanges in the future. As for power pools in some countries, this will disadvantage Lao PDR’s merchant IPPs who need revenue streams to meet lender/multilateral agencies’ requirements.
U Zaw Win, Director-General of the Department of Electric Power of Myanmar, presented Myanmar’s organization for the effective promotion of the power sector. A new Department of Electric Power was formed which acts as policy making and planning body and as Secretariat to the Ministry of Electric Power. Myanmar Electric Power Enterprise remains as a state owned utility responsible for power generation, transmission, and distribution. The area of power supply has two parts, namely: supply from national grid system; and supply outside the grid system. The former covers the Southern and Central parts and comprises 95% of the total generation of the country. Peak generation on the Grid was 330MW in 1988 and 660MW in 1996- presently it is 710MW. To give correct market signals, tariffs were adjusted upwards and this is expected to enhance the commercialization of the power industry. In 1994, the highest rate of kyats 0.5 was increased to kyats 3.0 and early this year, this was further increased to kyats 25.0. The Ministry of Energy is developing off-shore gas utilization project, concentrating on pipe line portion in cooperation with Ministry of Electric Power on the power plant. Before the larger hydro projects come on stream, GTCC will be implemented using offshore gas. U Zaw Win explained the program of hydro power projects and explained in some detail about the following projects and the possibilities of foreign participation as IPP or BOT arrangement: Paunglang (280MW); Mone (75MW); Thapanzeik (30MW), already under construction; Yeywa (600MW) and Shweli (200MW) about to start construction; as well as Tasang (3,600MW) under study by GMS Co. Working committees of technical experts of Thailand and Myanmar were formed to study in detail the connection of the two countries’ transmission systems. Due to current situation in Thailand, however, Myanmar could import power from the former in the meantime instead of exporting. Private participation in the power sector began in 1994, when MEPE started discussions with several private parties, but the low tariffs in local currency and small amount of consumers in foreign currency served as drawbacks in commercialization. This is being corrected with the raising of tariff.
In the presentation of Mr. Sitthiporn Ratanopas, he noted that to satisfy Thailand’s future electricity needs, the Government attaches importance to environmental and social acceptability of achieving cheap and reliable electricity. Thailand has 13 sources for electricity supply to meet demand, such as: hydro; domestic natural gas; imported natural gas; imported LNG; and oil, among others. Of Thailand’s total system energy generated in fiscal 1999 (90,328 GWh), hydro accounted for only 4% of total; the rest were supplied by natural gas (36%), oil (18%), lignite (17%) and purchased power (25%). Based on recent load forecast, the peak demand will increase from 13,700MW in 1999 to 30,600MW in 2011. To meet this, EGAT prepared a long-term power development plan which is revised occasionally as occasion warrants. Added capacities will come from EGAT’s power projects, power purchase from domestic power producers (IPP and SPP), and neighbors (Lao PDR and Malaysia).
Mr. Vu Van Thai, Deputy Director of the Ministry of Industry, presented that subregional energy cooperation is a priority of Viet Nam. He cited agreements with Lao PDR on conduct of interconnection studies and with Cambodia regarding supply of power from Viet Nam. He noted that Viet Nam’s Electricity Law has been completed, for consideration by the Government before approval by the VN National Assembly. The Ministry of Industry drafted and submitted a new decree on management of electricity activities and use. The decree on Electricity pricing and decree on Electricity Regulation has been drafted by a Consultant with ADB assistance, and for consideration by the Ministry of Industry for submission to Government. Steering Committee on National Energy Policy has drafted "Energy Strategy and Policy" for submission to the Prime Minister for approval. Creation of Electricity of Viet Nam in 1995 was a big step in separating business from state management functions. Four other financially independent distribution companies have been established to give autonomy and decentralization to electricity distribution. In load dispatching, regional centers belonging to regional power companies were transferred to National Load Dispatching Center. In the long term, issues such as equitisation of distribution and generation separate from EVN are under consideration. In the short term, Government will improve management of EVN units to make them on par with international utilities. On IPPs, several have been completed, mostly diesel with small capacity to supply to export or industrial processing zones. Due to slow development of the zones, IPPs produce at low capacity because they could not sell to EVN due to high price. Power tariffs are uniform across the country. In 1999, the Government issued circulars on pricing to rural households, and new power tariffs to increase self financing of EVN and promote foreign investment. Discussions on PresentationsOn the query of the Lao PDR delegate on Thailand’s load factor, Mr. Sitthiporn said this is expected to be reduced thus increasing reserve margin. On Lao PDR’s query on the impact of power pool on power purchase agreements (PPAs), Mr. Sitthiporn replied this is now under careful study by a Consultant. Mr. Rahman provided a recap of the presentations. He noted that substantial progress has been made in improving regulatory and legal frameworks in the GMS countries. The Asian crisis which caused substantial reductions in power demand, especially from Thailand, brought about the need for us to re-visit the Regional Master plan. The presentations on IPPs will also help bring into sharper focus the issues raised regarding power pools and their effects on PPAs. Large Dams and Recommended PracticesMr. Alastair North, Executive Director, AITA-NET Limited, presented some aspects of the ADB Regional Technical Assistance Project "Study of Large Dams and Recommended Practices" which is now on inception report stage. The Study’s general objective is to formulate recommendations of best practice in the assessment of costs and benefits of new large dams and maintenance of existing ones. More specific objectives include: analysis of predicted and unforeseen problems with large dams; synthesis of recommendations for avoidance of such problems; develop holistic methods for dam benefit cost analysis, including indicators for measuring complex socio-economic and environmental issues; examination/ reformulation of global recommendations on planning and utilization of large dams. The study completed its Phase 1 Inception work and is moving on to Phase 2. In Phase 1, literature review was undertaken to identify dams for case study with issues examined in them. Quantitative data was used to prepare long short list (140 dams). Then the data was used to reduce list to 20, then 12 , and finally just 7 dams. In selecting dams, a discussion- consensus approach with some voting or artificial scoring system was adopted. Selection criteria included: technical aspects (height and installed capacity); ecological aspect; protection of environment; catchment area; socio-economic impact (number of displaced people); compensation and socio-economic benefits; EIA carried out; post evaluation review; forecasted financial cost of project; and availability of information. These criteria were assigned weights, after which dams were selected based on scores from these weights. Afterwards, qualitative aspects were inserted covering social impacts, mainly on displaced persons and how they are impoverished through landlessness, joblessness, marginalization, homelessness, food insecurity, etc. Literature review was also done to indicate key issues to be investigated. There is now increasing consideration of social factors in the design and implementation of large dam projects. The main social impacts of large dams however, can be divided according to river basin zone where project is located, i.e., catchment, reservoir, downstream river, irrigation areas, and resettlement. Main environmental issues, meanwhile, include physical/ chemical effects (erosion, groundwater infiltration, temperature, etc.), ecosystem effects, direct impacts (air pollution, loss of wildlife, disrupted fisheries, etc. and indirect impacts (uncontrolled immigration due to access roads). Relevance of the study to GMS stems from selection of large dams in the subregion which scored high in quantitative criteria. Some dams in the subregion were pinpointed as dams where significant lessons can be learned using suggested framework. The subregion can in fact use the method for identification of issues and formulation of framework for multi-criteria decision making. Mr. Rahman inquired as to why countries should consider the lessons from the study. Mr. North replied that the study can provide a better framework for decision making. Mr. Nguyen Duc Lien of the Mekong River Commission informed that the World Commission on Dams is doing similar study, therefore coordination is required. Mr. North said the study’s data/ research methodology will adhere closely to that of WCD. Lessons Learned from Nam Leuk Hydropower ProjectMr. Pierre Cochet, Project Director, Sogreah Consultants, assisted by Marc Turgeon, Resident Engineer (Sogreah) presented the lessons learned from the construction of the Nam Leuk Project in Central Laos. The Project consists of 45.5 m high rock fill dam with a clay core equipped with compacted concrete spillway, and with total volume of 1.2 million cu.m. The project also includes construction of approximately 44 km of roads to the different site works as well as 40 km of existing road upgrading. There were however delays in the completion of access roads (due to weather, complex terrain) which delayed mobilization at Contractor’s site. Even at the design stage, environmental and social issues have been major concerns here, and an Environmental Management Plan (EMP) was implemented to ensure sound construction methods. Some of the subjects addressed during the construction are as follows: evaluation of biomass within the reservoir; clearing of the reservoir; protection of biodiversity; environmental management of camp sites; control of immigrants within the national park; follow up fisheries subsistence; follow up water quality; etc. The objectives of the environmental program were enumerated, and these are: integration of environmental matters from the early stages of design, including feasibility design; adaptation of the schedule of environmental studies to the project implementation schedule; strong will of a reference as environmentally sustainable project; strong will of having a complete information given to the local people in Vientiane and on the site; and consideration of environmental issue by anticipation in order to impose the dynamics of project construction. Among the conclusions of the presentation are:
Regional Cooperation in Building Power Utilities CapabilityMr. Mark Lauby, Executive Director, Asia EPRI International provided a background on the proposal for building power utilities capability. Earlier, two central needs were identified by Thai power organizations- to upgrade quality of regional engineers, and foster implementation of clean and energy efficient technologies. In 1999, as a follow up discussion with utilities through the GMS, EPRI prepared a proposal on the subject. The mission of the proposal is to provide an integrated platform for increasing capabilities of power industry engineers and technicians in GMS, with the objective of accelerating electrification, regional interconnection, and promote implementation of clean and efficient energy technologies. He stressed the need for human resources development in power, since a balanced distribution of technical knowledge in the region is one of the more important elements of power system growth in GMS. Training and development of educational resources in GMS is also needed for better implementation of appropriate technologies. Training should be expanded on coordinated, collaborative basis, with increased collaboration between universities and industry. He then presented EPRI’s track record as provider of environmental, generation, transmission, delivery and end use R&D to US power utilities. He offered a two-pronged training approach, namely: training provided in course-based offerings, where subjects are determined cooperatively with GMS countries, or courses offered locally using regional training resources; and training offered project by project, transferring practical skills to utilities and empower them. Training delivery mechanisms mentioned are: classroom and seminar training; field visits; OJT; internet supported student-teacher interaction; video conferencing; and computer based tutorials and simulators. The training advantages/ benefits are: increased ability to manage environmentally focused, efficient, cost effective power systems; adoption of O&M standards for the industry leading to reduced costs, more compatible national power systems, more reliable grid interconnections; increased industry-university collaboration; improve national standards for technical training; etc. Recommended next steps are: establishing Steering Committee representing GMS and EPRI experts; secure support at highest levels in GMS energy organizations; identify courses to be offered and appropriate delivery mechanisms; develop proposal to help GMS meet training challenges of expanding and interconnecting power systems; benchmark/ develop appropriate engineering/ operating manuals for coordinating power system activity; and develop/ deliver training to support coordination of power system activity. Consideration of the Report of EGP-3The EPF-6 approved the Summary of Proceedings and Recommendations made by EGP-3, including the Policy Statement on Power Trade. The Summary of Proceedings is attached as Appendix 3. Consideration and Adoption of the Summary of Proceedings of EPF-6The EPF-6 also adopted the Summary of Proceedings and Recommendations. Venue of EPF-7The venue of the Seventh Meeting of the Subregional Electric Power Forum will be further consulted with the member countries, probably during the Fourth Meeting of the Experts Group on Power Interconnection and Trade.
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