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

Energy / Electricity transmission and distribution

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.

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.

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.

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.

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

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