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Asian Development Bank approves loan for Nam Ndum 3 hydro project

VIENTIANE, Laos, 11/3/11 (Pennwell) – The Asian Development Bank has announced a US $465 million loan to the Nam Ngum 3 hydropower project in the Lao People’s Democratic Republic.

When completed in 2017, the 440 MW hydro plant will benefit not only energy-hungry Thailand, but also the Lao PDR, where it is hoped earnings from the Nam Ngum 3 project will help stimulate the impoverished country.

It is expected that 2,072 GWh exported annually to Thailand will generate nearly $770 million in revenue - $200 million of which have been earmarked specifically for social services and environmental protection programs.

“Earnings from clean energy exports are vital to poverty reduction efforts,” said Christopher Thieme, director of ADB’s Private Sector Operations Department. “One in every three people survive on less than $1.25 a day.”

The Nam Ngum 3 project will also be of significant environmental benefit to Thailand, where approximately half of all current greenhouse gas emissions come from natural gas-burning power plants.

“By using hydropower instead of fossil fuels, Thailand will avoid an average one million tons of carbon dioxide emissions every year – the equivalent of taking 175,000 vehicles off the road,” said Anthony Jude, Director in ADB’s Southeast Asia Department.

The Nam Ngum 3 project will comprise a 220-meter-high dam that will create a 27.5 square kilometer reservoir.

The plant, estimated to cost around $1 billion, will be built and operated for 27 years by the Nam Ngum 3 Power Company (NN3PC), which is owned by three private sector companies: Thailand’s GMS Lao Company Ltd. and Ratchaburi Electricity Generating Holding PCL, together with Axia Power Holdings, a wholly owned subsidiary of Japan’s Marubeni Corporation. The Government of Lao PDR will also hold a stake through the Lao Holding State Enterprises (LHSE).

ADB will lend up to $350 million to NN3PC. Under a risk participation agreement, commercial financial firms will assume the risk on up to $150 million of that. Thai banks and other international financial institutions will also provide loans to the project. ADB is also lending approximately $115 million to the Lao PDR government to finance LHSE’s equity stake in NN3PC. 

The plant will be located upstream of two existing hydropower plants, and downstream from another plant that is currently under construction. The Nam Ngum 4 A and B plants are also planned upstream of Nam Ngum 3.

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