Lao People's Democratic Republic: Greater Mekong Subregion Northern Power Transmission Project

Sovereign Project | 38628-022

Summary

The project will (i) construct 398 kilometers (km) of 115-kilovolt (kV) transmission lines with associated 115/22 kV substations, and erect about 1,100 km of new 22 kV medium- and low-voltage distribution lines to expand access to grid electricity to consumers in western Vientiane, Xaignabouli, and Phongsali provinces of the Lao PDR; (ii) provide nointerest credit to poor households in the project areas to help them connect to the distribution grid; and (iii) provide consulting services,including a project implementation consultant to Electricite du Laos (EDL) and advisory services to the Ministry of Energy and Mines (MEM).

The construction of the transmission and distribution facilities comprises three modules. The Asian Development Bank (ADB) will finance module 1, and Korea Eximbank will finance modules 2 and 3.

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Consulting Notices

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Procurement Documents


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Project Name Greater Mekong Subregion Northern Power Transmission Project
Project Number 38628-022
Country Lao People's Democratic Republic
Project Status Approved
Project Type / Modality of Assistance Grant
Loan
Source of Funding / Amount
Grant 0195-LAO: Greater Mekong Subregion Northern Power Transmission Project
Asian Development Fund US$ 20.00 million
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Governance and capacity development
Partnerships
Sector / Subsector Energy - Electricity transmission and distribution
Gender Equity and Mainstreaming Some gender elements
Description

The project will (i) construct 398 kilometers (km) of 115-kilovolt (kV) transmission lines with associated 115/22 kV substations, and erect about 1,100 km of new 22 kV medium- and low-voltage distribution lines to expand access to grid electricity to consumers in western Vientiane, Xaignabouli, and Phongsali provinces of the Lao PDR; (ii) provide nointerest credit to poor households in the project areas to help them connect to the distribution grid; and (iii) provide consulting services,including a project implementation consultant to Electricite du Laos (EDL) and advisory services to the Ministry of Energy and Mines (MEM).

The construction of the transmission and distribution facilities comprises three modules. The Asian Development Bank (ADB) will finance module 1, and Korea Eximbank will finance modules 2 and 3.

Module 1 consists of (i) approximately 98 kilometers single circuit on double circuit towers transmission line from Paklay to Nonhai; (ii) a 20 mega volt ampere (MVA) new substation in Paklay; (iii) the extension of an existing substation in Nonhai; and (iv) the extension of an existing substation in Xayabury;

Module 2 consists of (i) approximately 122.74 kilometers single circuit on double circuit towers transmission line from Paklay to Xayabury; (ii) approximately 74.6 kilometers single circuit on single circuit tower 115kV transmission line from Paklay to the Lao-Thai border near Kenthao for connection with the Thali substation located in the territory of Thailand; (iii) approximately 263 km 22 kV feeders from the Paklay substation, 156 km 22 kV feeders from the Nonhai substation, and 336 km 22 kV feeders from the Xayabury substation, all for related medium and low voltage distribution; and (iv) necessary connection from the Xayabury substation to 7,020 households, from the Nonhai substation to 7,553 households, and from the Xayabury substation to 1,541 households; and

Module 3 consists of (i) approximately 102.4 km single circuit on double circuit towers transmission line from Namo to Boun Neua; (ii) a 20 mega volt ampere new substation (transformer feeder) in Boun Neua; (iii) a new 115kV switching station in Namo; (iv) approximately 361 km 22 kV feeders from the Boun Neua substation for related medium and low voltage distribution; and (v) necessary connection from the Boun Neua substation to 2,645 households.

The consulting services will be financed by ADB.

Project Rationale and Linkage to Country/Regional Strategy

For the Lao PDR, poverty reduction and improvement of living standards are important development goals that are not achievable without the provision of basic essential services such as access to education, health care, clean water, and electricity. Of the total 960,000 households in the country, about 560,000 (58%) have access to electricity. In Xaignabouli province, only 50% of households are electrified, which is lower than the national average. Phongsali province has the lowest percentage of electrified households in the country - only 13%. Poverty is widespread where electricity is not made available to households. For example, in Phongsali province, 60% of households are considered poor, while in some districts of Xaignabouli province, the percentage of poor households is as high as 50%. Recognizing the importance of provision of electricity for poverty reduction and for raising living conditions, the government has set a target of electrifying 70% of total households by 2010, 80% by 2015, and 90% by 2020.

A strong transmission and distribution (T&D) network nationwide is necessary to ensure reliable electrical supply to the population and to achieve the electrification targets. Presently, the T&D network of EDL does not cover the entire country. For example, Phongsali province and parts of Xaignabouli are not covered by EDL's T&D system.

The ADB-financed Northern Area Rural Power Distribution Project is currently building the T&D system covering the area from Louangphrabang Phrabang to Oudomxai and onward to Louang-Namtha. At Louangphrabang it interconnects with the existing Nam Ngum 1 transmission system that covers Vientiane capital and central region of the Lao PDR. This project will construct the much needed T&D system in Xaignabouli and Phongsali provinces and in western Vientiane province. Together with previous ADB-financed projects, it will help gradually build up a nationwide T&D system to allow the government reach the rural electrification and poverty reduction goal.

Consumers in Phongsali province currently rely on limited electricity imports from the People's Republic of China or from individual privately owned diesel generation sets. Similarly, consumers in Xaignabouli province rely on electricity imports from Thailand. Electricity imports in these two provinces are supplied at 22 kV and are more expensive ($0.08 per kilowatt-hour [kWh]) than EDL's supply (about $0.05 per kWh). But more importantly, many households still do not have access to electricity. Currently, a 22 kV transmission line provides imported electricity from Thailand to southern Xaignabouli province. Once the project's 115 kV cross-border interconnection line is built, it will replace the current 22 kV transmission line used for power import. This 115 kV cross-border interconnection will have a much higher load-carrying capacity and lower voltage drop; hence, it will deliver a higher quality electricity supply. The 115 kV interconnection can be utilized for both import and export of electricity. Such a two-way power trade will be possible and beneficial to the Lao PDR and Thailand by making use of the seasonal variations of hydro energy.

During the wet season (August - October), hydropower is normally abundantly available in the Lao PDR, and EDL has excess capacity. With the project, excess power can be exported to Thailand, offsetting electricity generated from fossil fuel there. On the other hand, during the dry season (April - May) when EDL experiences power shortages, it can import electricity from Thailand through the 115 kV transmission line from the Thali substation to supply Xaignabouli province, thereby ensuring a reliable supply of electricity to consumers. In addition, the interconnection allows the two systems to back each other up during line maintenance and power outages.

The cross-border interconnection under the project has received strong support from both governments and from EDL and EGAT. On 13 May 2009, the governor of EGAT and the managing director general of EDL signed a memorandum of understanding in Bangkok officially announcing the agreement for the proposed interconnection. The interconnection line,

to be built under the project and the ongoing Northern Greater Mekong Subregion (GMS) Transport Network Improvement Project to improve the roads from the Lao PDR - Thailand border along Xaignabouli province and northward to Louangphrabang, will accelerate economic cooperation activities and cross-border trade between northeast Thailand and

Xaignabouli province. According to the National Economic Development Board of Thailand, this corridor is one of the priority areas for Thailand's official development assistance to the Lao PDR because of the strong interest of Thailand's private sector in commercial agriculture development. Availability of a reliable supply of electricity is essential for business in the project area.

Thus, the project supports the government's rural electrification program by building a nationwide unified T&D system for EDL, particularly in Phongsali and Xaignabouli provinces, with cross-border interconnection between the EDL and EGAT systems. Of the 18,800 new households in the two provinces to be provided access to electricity, more than 6,000

are poor households and will receive financial support for connections to the grid. Reliable supply of electricity will not only improve living conditions of the population but also boost economic activities in the project area. In the long term, as more hydropower capacity is added to EDL's system, and power demands on both side of the border grow, this

interconnection will bring further benefits to consumers in the Lao PDR and Thailand.

Impact Achieving the government goals of rural electrification in 2020
Project Outcome
Description of Outcome Increased access to electricity for households in the northern provinces of the Lao PDR.
Progress Toward Outcome

For ADB-financed portion: Design drawings and installation method statement for Paklay substaions construction and extension of Xayabury and Nonhai substations are being prepared by the contractor (KEC).

For KEXIM portion, delays in the final completion of the TBER and FBER for KEXIM funded portion of the project have led to a delay in the contractor's appointment and contract effective date. Finally, the financial bid evaluation report was approved and EDL was given greenlight to negotiate with the first rank bidder. The negotiation is being undertanken and it's expected that contract will be signed in Q2, 2015.

Implementation Progress
Description of Project Outputs

1. New 115 kV transmission lines constructed and operating

2. New substations constructed and existing substations expanded and operating

4. Provision of connections to poor households through no-interest credit of KN700,000 per household.

5. Draft strategy framework on energy efficiency and conservation program

6. Increased access to two-way power trade between EDL and EGAT

3. 22 kV feeder lines and low voltage distribution networks in Phongsali, Xaignabouli, and Vientiane rovinces built and ready for use.

Status of Implementation Progress (Outputs, Activities, and Issues)

1. Under ADB portion: (i) primary engineering works have continued with the cumulative submission of 221 technical documents for the PMU for review and approval and 159 out of 221 documents have been approved or approved with comments; (ii) Stubs and Earthing materials, conductors, and tower materials received at the project storage yard; (iii) construction activities pre-requisite to erection of towers and civil construction of substation is completed; (iv) Soil investigations and land leveling work have been completed at Paklay substation; (v) installation method statements are under preparation by the contractor (KEC), and (vi) contract variation regarding changing of operator's house at Paklay substation has been approved by ADB; and For KEXIM portion: delays in the final completion of the TBER and FBER for KEXIM funded portion of the project have led to a delay in the contractor s appointment and contract effective date. Finally, the financial bid evaluation report was approved and EDL was given greenlight to negotiate with the first rank bidder. The negotiation is being undertaken and it's expected that contract will be signed in Q2, 2015.

2. the construction of Boun Nua substation, and the extension of the existing substations at Namo, Nonhai and Xayabury are not commenced yet.

3. 22 kV feeder lines and low voltage distribution networks in Phongsali, Xaignabouli, and Vientiane provinces were built by EdL to connection with existing network and ready to use;

4. There were 6,481 poor HHs provided with no-interest credit. Provincial committees for power to the poor have been established, 6,481 poor households were connected to the network.

5. First draft of National strategy for energy efficiency and conservation (EE&C) was finalized in July 2014 and submitted to the government for comments/approval; the study tour to Thailand was organized in November 2013 and three consultation workshops were organized in Q1, 2014. Four contracts for individual consultant for phase 2 EE&C for capacity building and legal framework were singed on 7 July 2014 and work was commenced on 15 July 2014. The consultant contracts completion date were extended from 31 December 2014 to June 30 2015, to complete the planned activities under contracts without cost implication; and

6. Access to two way power trade between EdL and EGAT is not increased yet due to the civil work contract under KEXIM portion for construction of 115kV transmission line from Paklay substation to Thailand is not wareded yet.

Geographical Location Northern and Northeastern provinces
Safeguard Categories
Environment B
Involuntary Resettlement
Indigenous Peoples
Summary of Environmental and Social Aspects
Environmental Aspects The final draft IEE is being finalized by the EA including the draft project environmental management plan (PEMP) covering preconstruction, construction, and operation stages for Modules 1, 2 and 3. The specific CEMP were prepared and embedded to civil works contracts for implementation by the contractors and the final IEE report was disclosed on 1 April in ADB website. IEE monitoring reports was submitted to ADB in 10 February 2015 and ADB provided comments on 16 February 2015.
Involuntary Resettlement The project does not involve any relocation, and has very limited land acquisition since the transmission line route is designed to minimize land acquisition and eliminate the need for physical resettlement and relocation of dwellings and other assets. A resettlement framework was prepared and provides policies and entitlements for the substations and medium- (22 kV) and low-voltage (400 V) power distribution facilities and was used as a basis for the preparation of the resettlement plan. The draft resettlement plan has been finalized by EA which was discussed during a stakeholder workshop held in March 2007 and includes measures for stakeholder participation and full disclosure of all information relating to the project. In addition, a project information booklet prepared by EDL was distributed to affected people in July 2009 as part of the resettlement plan disclosure. The final resettlement action plan was disclosed in ADB website in July 2014. RAP monitoring reports was submitted to ADB in 10 February 2015 and ADB provided comments on 16 February 2015.
Indigenous Peoples To ensure that ethnic minority households and those headed by women are not marginalized during the process of compensation, the ethnic minority and gender-specific actions are included in the final resettlement action plan.
Stakeholder Communication, Participation, and Consultation
During Project Design EA prepared and distributed to project affected people the project information booklet.
During Project Implementation Consultation was carried out in selecting of poor households who received/will be receiving non-interest credit and connected to electricity. Upon finalization of the resettlement action plan updates they will be explained to villagers. EA has established provincial grievance redress committees.
Business Opportunities
Consulting Services

Project Implementation consultant - Project engineering design, preconstruction activities, construction supervision, performance monitoring and evaluation for transmission, substations and distribution - $3.27 m / QCBS / FTP

A group of individual consultants for energy efficiency and conservation program to Ministry of Energy and Mines - $600,000 /Individual consultants

Procurement

Module 1 - Turnkey contract for engineering, procurement and construction of the 115 kV transmission lines and substation - $13.8 million / ICB / without Prequalification

Module 2 and 3 - $30.74 million / KEXIM

Responsible ADB Officer Phomma Chanthirath
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Lao Resident Mission
Executing Agencies
Electricite du LaosSamsenethai Road, P.O. Box 309
Vientiane
Lao People's Democratic Republic
Ministry of Energy and MinesNongbone Road
P.O. Box 4708
Vientiane, Lao PDR
Timetable
Concept Clearance 24 Feb 2011
Fact Finding 20 Apr 2009 to 24 Feb 2011
MRM 24 Feb 2011
Approval 27 Apr 2009
Last Review Mission -
Last PDS Update 30 Mar 2015

Grant 0195-LAO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
26 Jan 2010 24 Feb 2010 23 Nov 2010 30 Jun 2014 30 Jun 2016 -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 20.00 Cumulative Contract Awards
ADB 20.00 26 Jan 2010 16.77 0.00 84%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 26 Jan 2010 8.81 0.00 44%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - Satisfactory - - Satisfactory

Loan

Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 7.44 Cumulative Contract Awards
ADB 0.00 - 0.00 0.00 %
Counterpart 7.44 Cumulative Disbursements
Cofinancing 0.00 - 0.00 0.00 %

Evaluation Documents

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