The impact of the PPTA will be to promote the economic growth of the country and region by helping Lao PDR to develop its hydroelectric power resource in an environmentally and socially sustainable manner. It will also promote power trade in the GMS.
The outcome of the TA will be to formulate the proposed project?s financing program, using the MFF and preparing two loans that are structured and scheduled to suit the commercial operation schedule of the four hydropower developers. PPTA consultants will also prepare the legal documents for the subsequent operation of the common transmission facility provided through the proposed project and assist the Government in negotiating agreements with EGAT based on these documents
The PPTA will review the technical design of the Na Bong substation and the transmission line to assess their ability to transmit power reliably from all four hydropower plants by considering each power plant?s operating characteristics. PPTA consultants will undertake due diligence on the (i) cost estimates of the transmission line being built by the Nam Ngum 2 developer, including equipment and materials, and determine the cost of the section from Na Bong to the Thailand border; (ii) the implementation schedule for timely completion of the transmission line and substation to evacuate power from the associated hydropower projects; (iii) operation and maintenance (O&M) arrangements of EdL and EGAT for the transmission line and substation; and (iv) technical specifications of the substation and its compatibility with the EGAT and EdL power transmission systems. The PPTA will also review the bidding documents prepared by EGAT for the procurement of the substation on turnkey basis and assist EdL in the procurement process, including bid evaluation, in accordance with ADB?s Procurement Guidelines (2007, as amended from time to time).
|Project Rationale and Linkage to Country/Regional Strategy
The Country Strategy and Program for Lao PDR has recognized the importance of developing its hydropower for export to generate foreign currency income through royalties, taxes, and dividends to the Government, which will in turn contribute to the country?s broader social and economic development. In addition, the Regional Country Strategy Program (2007?2009) for the Greater Mekong Subregion (GMS) focuses on (i) strengthening physical infrastructure for cross-border connectivity, and (ii) integrating national markets for promoting economic efficiency and private sector development. The GMS?s power market is moving toward effective regional cooperation, and Lao PDR is one of the pioneering countries in bilateral power trade in accordance with the GMS?s Inter-Governmental Agreement on Regional Power Trade. The governments of Lao PDR and Thailand signed a framework agreement to trade power that provides power sale arrangements of up to 5,000 MW by 2015.
The proposed project will consist of two components: (i) acquisition by Electricite du Laos (EdL) from the Nam Ngum 2 project developer of the 27 kilometer (km)-long 500 kilovolt (kV) transmission line from Na Bong substation to the Thailand border, and (ii) construction of the 500/230 kV Na Bong substation. The transmission line and substation will be used as a common transmission facility to evacuate power from the Nam Ngum 2, Nam Ngum 3, Nam Theun 1, and Nam Ngiep 1 hydropower projects, which have a total capacity of over 1,800 MW. The facility will be owned by EdL and will be operated and maintained by a proposed EGAT?EdL joint venture. Each hydropower project will construct a dedicated power transmission line to the Na Bong substation. The 500 kV transmission line is being financed and constructed by the Nam Ngum 2 developer by 2010 at 230 kV to evacuate power from the Nam Ngum 2 project to Thailand.
By mid-2012, the Na Bong substation is required to evacuate power from the Nam Ngum 3 and Nam Theun 1 hydropower projects. The transmission line from Na Bong to the Thailand border will be connected to the substation, and its operating voltage will be upgraded to 500 kV. The Nam Ngiep 1 hydropower project, scheduled to begin commercial operation in January 2014, will also be connected to the substation. As the substation and transmission line will be used as a common transmission facility to serve four hydropower projects, the Nam Ngum 2 project?s concession agreement provided an option to the Government of buying back the transmission line at cost. The Government intends to finance the substation?s construction and the transmission line?s acquisition through the proposed project.