The Experience of Lao PDR in HP Development--Challenges & Opportunities
Since its inception, the B&R Initiative has been well received and widely supported by more and more countries covered by it. The 7th IIICF has invited Viraphonh VIRAVONG, Vice Minister, Ministry of Energy & Mines to set out the latest infrastructure plans and capacity cooperation projects of their own countries to investors and contractors in terms of strategic planning, industry tie-in, investment policies, and other dimensions, thus effectively interfacing project owners with investors and contractors.
Laos is a poor country, landlocked among five neighboring countries - China, Myanmar, Thailand, Cambodia and Vietnam. With these five neighbors we share warm relations, a rich history, cultural values, and resources from the great river known to the world as the Mekong.
Fortunately, Laos has been blessed by nature with a miraculous bounty of mountains and rivers that are perfect for the production of hydropower. Allow me to present some examples from our experience that may interest you.
For more than 40 years, the Lao PDR has made steady progress in developing our vast hydropower potential for export, and providing domestic electricity throughout the country.
Domestic demand has grown at an average of 12% annually in the last 10 years. At the end of 2015, we achieved a 90% percent ratio in household electrification, and our total installed capacity stood at ~5,600 MW, of which 3/4 is for export; more than twenty projects are under construction. In all, we shall have ~11,000 MW by the end of 2020. Forty more projects are in different stages of development, and we shall be able to add another 11,000 Mw to the grid during 2020-2030.
Notable among them is the Xayaburi project, a mainstream run-of-river scheme in the Mekong river in northern Laos, which will have installed capacity of 1,285 MW and boast the most sophisticated sediment flushing and fish passage facilities ever designed for a tropical hydropower plant.
The Lao PDR will continue to develop mainstream projects on the Mekong River, and we will do this in keeping with international standards of sustainability, in the most practical manner.
Our commitment to sustainable hydropower development began in the 1970s with the Nam Ngum-I Dam, which has been expanded and improved over the many years.
Beginning with a traditional development financing model, we have moved to project financing by the private sector, with market-driven development of all potentials. Even with a private-sector model, we are striving for the highest levels of sustainability as best we can achieve. Toward this goal, we employ highly regarded international experts at every turn, ensuring that international standards and best practices will be met on every project.
Our success is evidenced by the fact that the hydropower and mining sector contributes a large portion of the Lao economy’s income, amounting to about 12% of GDP, or 67% of exports, in 2015. This is expected to continue into the next decade, increasing to about 20% of GDP or 77% of exports in 2020.
The Lao PDR will continue to use private investment to design and develop its hydropower potential – including Mekong mainstream projects – as soon as practicable – provided we are certain they are economically, environmentally and socially sustainable. There will be flexibility in the design to integrate experience.
Developers must come up with sound environmental and social management plans, while Government experts remain responsible for compliance and careful monitoring of construction and operation.
We look at the BOT approach as something of a “savings account” to secure our future. Over the life of the concession period, there will be reasonable royalties, taxes and dividends; but at the end of the concessions, the projects will be transferred to the Lao Government at no cost.
We cannot do our best without support from our five neighboring countries and development partners. The future as we see it, lies in regional cooperation and power integration. Laos is in the forefront of ASEAN countries with more than 30 interconnections, and we look to expand system-to-system transactions, exporting electricity as far away as Singapore.
If you look at the projected regional energy landscape in 2030, for Laos, Cambodia, Vietnam, Myanmar, Thailand and Yunnan Province, total power demand could surpass 230,000 MW. Laos could export as much as 100,000 GWH to help meet this demand.
Although we mostly talk about MW and GWH, and all the technical accomplishments, but we must keep in mind the real benefits we bring to real people. It is Lao Government policy to rely on hydropower development to earn export income that can be used to help alleviate poverty and raise the standard of living throughout our country. As you know, hydropower projects take years to develop but benefits begin flowing to the people even before actual generation begins.
We are frequently criticized by anti-Dams NGOs, yet they never praise us for building whole new communities, giving thousands of people new houses, new land to farm, clinics, schools, roads and bridges, training, and new economic opportunities. We are always surprised that these NGOs do not applaud the Lao PDR for pursuing a clean, renewable energy program without going hat-in-hand for grants. 100,000 Gwh of hydropower export from Laos would help to reduce 50-100 mil tons of CO2 emission yearly.
When the BBC presenter Sue Perkins visited Laos to film her documentary series, she was skeptical. But while inspecting a home in a resettled village at Xayaburi, she said it was the best house she had seen in any village along the Mekong. She turned the electric light on and said, “With a flick of a switch, lives are transformed.”
Yes, we are in the business of making electricity but we are also in the business of transforming lives. Let’s cooperate fully in the important work we are doing. What we have learned in the power trade is that more can be achieved through cooperation than competition.
Thank you for giving me this opportunity to share our experience. I respectfully challenge you to support the Lao PDR in its efforts to bring progress to our people through sustainable hydropower development.
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