Ministry of Energy and Mines

Department of Energy Business

ASEA ENERFY BUSINESS FORUM 2017 POWERTRENDS 2017

27-29 September 2017, SMX Convention Center Manila, Phinlippines

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Opportunity of Investment in Laos’ Energy Sector pensented by Dr. Xaypaseuth PHOMSOUPHA, Director General, Department of Energy Business, Ministry of Energy and Mines

 

Opportunity of Investment in Laos’ Energy Sector

Laos, landlocked and mountainous, is administratively divided into 18 provinces and governed by a unitary system with executive, legislative, and judiciary powers. Each of the powers has its seat at the central level. While the legislative branch has consolidated its law-making power only at the central level, the executive and judiciary powers set up their branches in the provincial governments. With a population of approximately 6.7, the country is situated among densely populated neighbors where demand for energy is considerable high. The country is not self-sufficient in energy of many types. While fuel oil is imported, electricity is exported to almost its neighboring countries. The country has exerted every effort to develop all sources of the energy; however, electricity generated from hydropower plants still prevails in the Lao energy context. 

The Lao government has introduced various reform programs to its public sector since 1986 to promote private investment in various sectors including energy. In 1988, the government started reforming by deregulating its power sector by recognizing different ownerships. Private involvement in the Lao electric-power sector can be found in different forms including sole private investment, public-private joint venture, and business by contract. In 1997, the Lao government proceeded to take a step further in its reforming program by decentralizing its decision-making power to the provincial governments. The provincial authorities are now granted the power to approve and monitor electricity generation projects having the installed capacity equal or less than 5 megawatts. Since 2010, the central government has transferred tax-raising powers to the provincial authorities to tax electricity businesses and their related activities operating in their respective jurisdictions.

After the 30-year reform program, Laos manages to raise its electrification ratio from a status of almost complete darkness before 1986 to 94% in mid-2017. Consuming 1,200MW, Laos currently operates approximately 6,700MW suppling the grids inside the country and neighbors. In meeting commitments to achieving full electrification and exporting electricity to its neighbors, the country is now constructing around 5,800MW. In addition, several projects with a combined installed capacity of 5-6,000MW are planned. Laos also attempted to offer private investors participation in developing infrastructure projects such as high voltage transmission facilities, which are difficult to be a cost recovery project taking into account a volume of the transmitted electricity. 

Opportunities of private participation in the power projects in the power development plan still exist. However given the available and foreseeable capacity in our system, no green field projects can be added up to the power the power development plan for the period up to 2025, unless amended due to circumstances surrounding the power demand in the sub-region. That means that the plan was fully accommodated with a number of IPP projects, the rights on which were granted to lead developers to undertake technical feasibility study. The lead developers are yet to form their investment partnership when the study has been proven feasible. As such, private participation in the planned projects could be made through bidding in various forms ranging from taking partnership in power companies in accordance with the current Law on Electricity to contracting works. Bids may be announced from time to time when the planned projects are ready to enter into their financing and construction phase. Investing in the local stock market, in which EdL-Gen is listed is open to all interested parties.        

About the Author

Dr. Xaypaseuth PHOMSOUPHA, Director General of Department of Energy Businesshas taken up several executive positions related to the Lao power sector since 1991. He has been directly responsible for drafting and negotiating legal documents for project financing of a number of IPP projects that currently supply domestic grids and export electricity to neighboring countries. Dr. Phomsoupha has led government negotiation teams to negotiate the concession agreements and other relevant project agreements to which the government of Laos is party. Dr. Phomsoupha graduated with a doctorate in public policy and public administration at Walden University, Minneapolis, USA. Prior to his doctoral degree, Dr. Phomsoupha obtained diplomas in financial and legal disciplines from City University Hong Kong, Georgetown University, USA, BA from the University of Economics in Prague, Czech Republic, and advanced Diploma leading to MA from the Australian National University in Canberra.