Thailand to pursue power purchase plan

The Nation 21 April 2011



Thailand is pushing forward with its plan to purchase electricity from the Xayaburi hydropower plant in Laos in the hope that the resolution among Mekong River countries on Tuesday to delay the project would not lead to its eventual demise.

Energy Minister Wannarat Charnnukul said yesterday that the ministry would proceed with signing the power purchase agreement (PPA) with the project's developer, Xayaburi Power.

Energy permanent secretary Norkun Sitthiphong, as chairman of the Electricity Generating Authority of Thailand, will summon Egat executives for a briefing today.

On Tuesday, the Mekong River Commission's Joint Committee (JC), consisting of representatives from Thailand, Cambodia and Vietnam, discussed the project at a special session and recommended that Laos wait for more consultation, given the concerns over the environmental impact to the community.

An Energy Ministry source said the JC had no authority to cancel the project outright.

"If this resolution delays construction by eight or nine months, Thailand won't be affected. However, if it is delayed for more than a year, renegotiating the price is necessary. Or we might also have to revise the Power Development Plan 2010," the source said.

The National Energy Policy Committee on December 30 approved the PPA to buy 1.23 gigawatts from the 1.29GW project at Bt2.479 per unit. Ch Karnchang, a major shareholder of Xayaburi Power, earlier expected to sign the PPA and the Bt80-billion financing package by next month.

The project, which was expected to require an investment of Bt1.15 trillion, was originally scheduled to commence commercial operations in January 2019.

Yesterday, Nuttachat Charuchin-da, senior executive vice president of PTT, which bought a 25-per-cent stake in Xayaburi early this year, said the company was anxiously waiting for Laos' decision.

He was optimistic that the project would not cause any damage to the environment, because of the thorough impact assessment. However, if the project became bogged down, it would not derail PTT's plan to invest in power projects in Southeast Asia.

"We're still committed to proceed with the plan to generate 6GW in a decade, from 700 megawatts now. Besides Laos, we're looking for opportunities in Vietnam and the Philippines. The former country is facing a supply shortage, while the latter lacks reserves," he said.

Supply from Xayaburi is part of Thailand's PDP 2010. Until 2030, Thailand plans to buy a total of 7GW from Laos. PPAs have so far been signed with three projects with combined capacity of 2.31GW - Nam Ngum 2 (615MW), Nam Theun Hin Bun (220MW) and Hongsa Lignite (1.47GW).

Thailand has also signed memoranda of understanding for power purchases with Xayaburi Power (1.29GW), Nam Ngum 3 (440MW) and Xe Pian Xe Nam Noi (390MW).

If Xayaburi is stalled indefinitely, Thailand will have to find a replacement.

The project's fate remains uncertain because of conflicting views among representatives, according to Vithet Srinetr, an environment coordinator of the Mekong River Commission.

At the meeting on Tuesday, Laos, as the project owner, said it was unnecessary to delay the project thanks to the thorough consideration over the past 10 years, which covered the impacts on five key areas - fisheries, residues, water quality, dam safety and water transport.

The Laotian representative insisted that his government had launched measures to ease the impacts and that Xayaburi was crucial for the country's economic development.

Vietnam proposed a 10-year delay for more environmental-impact studies. While pushing for more environmental studies, Cambodia did not specify a time frame. Thailand noted that it would welcome Laos' decision.

The issue will be discussed further at the commission's minister-level meeting in October.