Grant to Boost Power Trade in Mekong Region

MANILA, PHILIPPINES - ADB will help develop a competitive and efficient subregional power trade market in the Greater Mekong Subregion (GMS) through a EURO 1 million technical assistance (TA) grant provided by the Agence Francaise de Developpement (AFD).

The GMS countries - Cambodia, the People's Republic of China, Lao People's Democratic Republic, Myanmar, Thailand, and Viet Nam - are characterized by uneven electricity demand along with mismatched availability of resources for economic power production.

"Power trading in the GMS presents excellent opportunities to promote the efficient use of energy resources," says Tianhua Luo, an ADB Energy Sector Specialist. "Regional power trading will also stimulate investments and economic cooperation in the subregion."

In 1992, the six member countries of the GMS embarked on a program of economic cooperation that aims to promote development through closer economic linkages. In the energy sector, cooperation has so far focused on the building of physical and institutional infrastructure for promoting regional power trading.

"The GMS countries recognize that it is essential to optimize regional power trade activities and implement the prioritized work in a timely manner through adequate institutional arrangements, work programs, and resources," adds Rajat Nag, Director General of ADB's Mekong Department.

The TA will address this by developing institutions and building capacity to promote regional trade cooperation. Given the complex and long-term nature of the development of a GMS power market, the TA will focus on four priority components.

It will develop a systematic and integrated action plan on regional power trade development, create institutions to implement tasks associated with regional power trade in the initial stages, and boost capacity in GMS member countries.

The TA will also develop a platform or database for information exchange and a mechanism for communications among GMS power agencies to facilitate regional power trade.

The total estimated cost of the TA is US$1.3 million. The grant from AFD, to be administered by ADB, will cover about $1.2 million of this, and the balance will be shouldered by the participating GMS member countries through the provision of office facilities, information and reports, etc. The TA will be carries out over about two years to December 2007.