Lao PDR Expanding Electricity Access, Boosting Power Exports

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is helping Lao People’s Democratic Republic (Lao PDR) roll out new power lines in underserved areas which will help improve living standards and increase opportunities to export excess power to neighboring Thailand.

ADB is providing a $20 million grant for the first module of the Greater Mekong Subregion Northern Power Transmission Project. The project will build nearly 400 kilometers of 115-kilovolt (kV) transmission lines, substations, and distribution lines in the provinces of Xaignabouli and Phongsali, and in western Vientiane. ADB will also fund a no-interest credit facility to enable poor households to connect to the new facilities.

The targeted provinces are among the poorest in the country. Along with providing grid-connected electricity to about 18,800 households for the first time, the project will also improve supply in areas which are currently relying on expensive imports or personal generators. The project will also provide a cross-border interconnection, enabling electricity trading between state energy firm Electricite du Laos (EDL) and Electricity Generating Authority of Thailand.

“During the rainy season, hydropower is normally abundantly available and Lao PDR has excess capacity to export electricity to Thailand. During the dry season when there are shortages, it can import electricity from Thailand through a more cost-effective 115 kV transmission line,” said Duy-Thanh Bui, Energy Specialist in ADB’s Southeast Asia Department.

The new facilities will link up with those being built by a separate ADB-financed power project, helping to unify the country’s fragmented transmission and distribution system. The project will also assist the government in meeting its target of electrifying 70% of all households by 2010 and 90% by 2020.

ADB is the largest provider of development assistance for the power sector in Lao PDR, with over $323 million in loans and grants, and $17 million in technical assistance since the 1970’s. It has also worked closely with the World Bank and other partners to support the sector.

ADB’s grant from its concessional Asian Development Fund covers almost 31% of the total project cost of $65.3 million. The Government of Republic of Korea’s exports and imports financing agency, Korea Eximbank, will provide cofinance of $37.88 million for two further project modules, while EDL will supply $7.44 million.

EDL is the executing agency for the project, which is due for completion in June 2013.