Nam Theun II Hydropower Project

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In 2002 the Nam Theun 2 Power Company Ltd (NTPC) began the development of the Nam Theun II power project, a 1,075 MW hydro dam on the Nam Theun River. The project consisted of four 250 MW and two 43 MW units. The project was located in Khammouane province, 250km east of Vientiane. The dam was to be constructed under a 25-year build, own, operate and transfer contract. Up to 95% of the power from the project was to be exported to Thailand, under a 25-year year power purchase agreement between NTPC and the Electricity Generating Authority of Thailand Plc (EGAT). The remaining 5% was to be used for domestic consumption. Government revenues from taxes, royalties and dividends (expected to be around 5% of total government revenue) were intended to be spent on development programs in Laos. NTPC was a joint venture between Electricite de France International (EDFI, 35%,), Lao Holding State Enterprise (25%, Laos), EGAT (25%) and Italian-Thai Development Co. (15%). Financial closure was reached in April 2005. The total project financing was US$ 1,580 million of equity, loans and guarantees. Of this, US$ 1,250 is to be used to construct to power project, with US$180 million set aside for environmental and social protection. Finance included US$450 million of equity from shareholders, along with US$130 million of bonds and guarantees. A three tranche US$126 million political risk guarantee loan and a three tranche US$200 million export credit agency loan were provided by nine international commercial banks (ANZ Investment Bank, Bank of Tokyo-Mitsubishi, BNP Paribas, Calyon, Fortis, ING, KBC Bank, SG CIB and Standard Chartered Bank). Direct loans came from the Asian Development Bank (US$50 million), Nordic Investment Bank (US$34 million), Proparco (US$30 million), Agence Francaise de Developpement (US$30 million) and Export Import Bank of Thailand (US$30 million). Finally, loans of Thai Baht 20 billion (US$ 500 million) came from seven Thai banks (Bangkok Bank, Bank of Ayudhya, Kasikornbank, Krung Thai Bank, Siam Commercial Bank, Thai Military Bank and Siam City Bank). The Nam Theun 2 project received considerable development bank assistance in the form of grants, loans and guarantees. These include a US$20 million grant from the International Development Association along with a US$50 million partial risk guarantee and up to US$200 million in political risk guarantee from the World Bank, a US$20 million public sector loan to the Government of Laos and a US$50 million political risk guarantee from the Asian Development Bank (in addition to the US$50 million private sector loan above), a US$55 million loan from the European Investment Bank and a 5 million Euro (US$ 6.5 million) grant from Agence Francais de Developpement. Construction began in June 2005, and was expected to be completed by the end of 2009. The primary construction contractor was EDFI. Nam Theun 2 was the fourth hydropower project in Laos to sell most of its power to EGAT. As of December 2009, the operation of Nam Theun-2 hydropower project had been delayed, which was originally to start in December 2009 and was rescheduled to March 2010. The project became operational in July 2010. (Note that some "loans" in development bank support field are actually grants)