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

Sovereign Project | 38628-022

ADB is helping Lao People's Democratic Republic build nearly 400 kilometers of 115-kilovolt transmission lines, substations, and distribution lines in the provinces of Xaignabouli and Phongsali, and in western Vientiane. The project will fund a no-interest credit facility to enable poor households to connect to the grid. It will also help enable electricity trading with Thailand.

Project Details

  • Project Officer
    Inthavong, Vanthong
    Southeast Asia Department
    Request for information
  • Country/Economy
    Lao People's Democratic Republic
  • Modality
    • Grant
    • Loan
  • Sector
    • Energy
Project Name Greater Mekong Subregion Northern Power Transmission Project
Project Number 38628-022
Country / Economy Lao People's Democratic Republic
Project Status Closed
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
Loan: Greater Mekong Subregion Northern Power Transmission Project
Export-Import Bank of Korea US$ 37.88 million
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Gender Equity and Mainstreaming
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 Ongoing with high rate of progress. The project will achieve the target at the closing date.
Implementation Progress
Description of Project Outputs

New 115 kV transmission lines constructed and operating

New substations constructed and existing substations expanded and operating

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

Draft strategy framework on energy efficiency and conservation program

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

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)

Output 1: Overall physical progress of this output is behind schedule, but EDL and contractors confirmed that works will be completed by 31 December 2018.

- For ADB financed portion - (i) construction of 115kV TL from Nonhai to Paklay substations (TL1) is completed, including the Mekong River Crossing TL; (ii) construction of 115/22kV substation at Paklay, and improvement of 115/22 kV substation at Sayyabouli districts are completed and commissioning stage has commenced; (iii) improvement of 115/22kV TL bay and associated switchyard extension at Sayyabouli and Nonhai substations are about 98% complete; and (iii) construction of 22/0.4kV feeder lines in Phongsali, Sayyabouli, and Vientiane provinces is ongoing which scheduled to complete by 31 December 2018.

- For KEXIM financed portion - (ii) construction of 115kV TL connecting Boun Tai to Boun Neua districts (TL2) is about 75% complete and scheduled to complete by 30 May 2018; (ii) construction of 115kV TL from Sayyabouli to Paklay districts (TL3) is about 80% completed and planned to complete by 30 July 2018; (iii) construction of 115kV LT from Paklay District to Lao/Thai border at Thali (TL4) is about 5% complete and under procedure to revise technical specifications from single circuit to double circuits; and (iv) construction of 115/22kV substation in Boun Neua district is about 94% complete.

Output 2: The cumulative number of households that received the power to the poor (P2P) no-interest credit loan is 8,614 households which exceeds the target (6,000 households) by 42%. Remaining P2P's budget will be allocated to Phongsali Province.

Output 3: A Lao language of national policy on energy efficiency and conservation (EE&C) is complete. Activities to be completed by 31 December 2018 are: (i) English language of the EE&C policy; (ii) Prime Minister's Decree on EE&C legal frameworks (Lao language); and (iii) printing and disseminating the national EE&C policy.

Output 4: The energy interconnection framework, including power development plans, between EDL and the Electricity Generating Authority of Thailand (EGAT) are being developed. EDL and EGAT management meet regularly to exchange experiences. The expansion of Thali substation (Thailand) is planned to complete in December 2018. After this, the international transmission line connecting between Thali and Paklay substations will be energized.

Geographical Location Nation-wide, Ban Boun-Nua, Khoueng Phongsali, Muang Boun-Nua, Muang Kenthao, Muang Kenthao, Muang Khamkeut, Muang Paklay, Muang Pek, Muang Xaignabouli, Nam O, Sainyabuli, Vientiane Province, Xaignabouli
Safeguard Categories
Environment B
Involuntary Resettlement
Indigenous Peoples
Summary of Environmental and Social Aspects
Environmental Aspects The Initial Environmental Examination (IEE) and Environmental Management Plan (EMP) were approved and disclosed in ADB website in April 2014, before construction works have been started. Overall, ADB is satisfied with EA implementation of the environmental aspects. To maintain good project implementation momentum, ADB review mission in January 2018 provided some recommendations to EDL, the implementing agency of the project, i.e. improvement of worker health and safety ; contractors' preparation and submission of contractor environmental management plans; EDL submission of the semi-annual environmental monitoring reports; and public consultation and GRM at construction sites.
Involuntary Resettlement Although, 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. Overall, ADB is satisfied with EA implementation of the resettlement plans. However, during ADB review mission in January 2018, it was noted that, few safeguards documents were not product and/or file properly, due to the project did not have consultants to support on this mater. A safeguards mission will be conducted in Q2 2018 to conduct detailed due diligence, to ensure EA compliance with ADB SPS requirement.
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 - $3,847,053/ QCBS / FTP including contract variations of $629,188.

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 - $12,550,225/ ICB / without Prequalification

Module 2 and 3 - $32,900,000 including EdL's additional contribution of $2,161,000

Responsible ADB Officer Inthavong, Vanthong
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Lao Resident Mission
Executing Agencies
Electricite du Laos
Samsenethai Road, P.O. Box 309
Vientiane
Lao People's Democratic Republic
Ministry of Energy and Mines
Nongbone 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 26 Jan 2010
Last Review Mission -
Last PDS Update 28 Mar 2018

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 Dec 2019 22 Dec 2020
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 20.00 Cumulative Contract Awards
ADB 20.00 04 Feb 2022 19.98 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 04 Feb 2022 19.98 0.00 100%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating Satisfactory Satisfactory Satisfactory Satisfactory - Satisfactory

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.



Related Publications


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Tenders

Tender Title Type Status Posting Date Deadline
International Social Safeguards/Resettlement Monitoring Specialist Individual - Consulting Closed 01 Jun 2018 07 Jun 2018
Individual Project External Environment Monitoring Expert Individual - Consulting Closed 10 Oct 2017 24 Oct 2017
Individual Project Transmission Expert Individual - Consulting Closed 10 Oct 2017 24 Oct 2017
Substation Expert Individual - Consulting Closed 10 Oct 2017 24 Oct 2017
Project Manager Individual - Consulting Closed 18 Aug 2017 24 Aug 2017

Contracts Awarded

Contract Title Approval Number Contract Date Contractor | Address Executing Agency Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
PROJECT MANAGER Grant 0195 10 Sep 2017 NGUYEN THANH HAI | ME TRI THUONG ME TRI ARD NO. 109 BT2A S OUTH TU LIEM DISTRICT HANOI VIETNAM VIET NAM SOC REP OF Electricite du Laos 144,000.00