Cooperation and Investment in Energy Sector

Electricity requirements in the region-. are increasing rapidly it has been predicted that 23,958 MW of new generation will be needed between now and year 2000. Lao PDR. is rich in energy resources: Hydropower, coal, oil and gas. The uneven distribution of the energy resources among the countries, particularly the hydropower resources : Countries with higher power demand have limited resources while those with limited requirements are well endowed with the hydropower resources.

Lao PDR has a hydropower potential of about 15,000 MW within its territory. Up to now, slightly over 1% of the total potential has been developed with 70 to 75% of the production exported to Thailand.

With the huge resources located close to the biggest power demand country in the subregion (Thailand) and the low domestic demand, the hydropower sector will continue to be one of the main foreign exchange earning of Lao PDR.

Without other financial sources than The public investment funds and the external soft loan the hydropower development would provably continue with the similar slow rate as experienced in the eighties. This would lead to a loss of opportunity for foreign exchange earning badly needed for development of other sectors.

On the basis of the above and in line with the new economic policy, the Government has begun, since the beginning of the nineties, to seek participation of foreign investors for projects beyond the financial capacity of the public and soft loan investment.

Within the short timeframe, experiences have proven that such policy is correct and several projects with the aggregate generation capacity about 10 times higher than the existing capacity are being implemented in 1994 and expected to be completed by the 2000 as shown 'm the attached figure.

The funds for these projects are from both the private sector (BOT schemes) for large schemes and soft loan for small/medium schemes. Agreements between the Government and the developers have been signed for most of the BOT schemes of the 1994-2000 peroid.

All the a above-mentioned BOT schemes have a provision for equity sharing by the government ranging from 25% to 60%.

Information given in following tables and figures are aimed to show the potential and the relative advantages of the hydropower resources in Lao PDR. It also indicates the, long-term forecast of power and electric energy demands of the countries in the Greater Mekong Subregion.