NGO’s write to the ADB to call for the suspension of the proposed Greater Mekong Subregion Power Interconnection Project Phase 1 regional technical assistance grant. The grant would design a transmission line from Nam Theun 2 to Vietnam during peak load periods and from the proposed Nam Theun 1 Hydropower Project in Laos to Vietnam and Thailand.
Mr. Tadao Chino
Asian Development Bank
PO Box 789
0980 Metro Manila
Dear Mr. Chino,
We are writing with regards to the ADB’s proposed Greater Mekong Subregion Power Interconnection Project Phase 1 regional technical assistance grant (RETA:REG 36044-01), which is slated for approval by the end of the year. This RETA involves preparation of a feasibility study on a proposed transmission line between the Nam Theun 2 Hydropower Project in Laos and Ha Tinh in Vietnam.
We are concerned that this RETA is going forward before the transmission line and its associated hydropower projects have been given adequate consideration. According to the ADB-sponsored Indicative Master Plan on Power Interconnection in GMS Countries, this transmission line would be used to transmit power from Nam Theun 2 to Vietnam during peak load periods and from the proposed Nam Theun 1 Hydropower Project in Laos to Vietnam and Thailand.
This RETA is intimately tied to the development of Nam Theun 2. However, at this stage, it is not certain that Nam Theun 2 will be built, neither is there any indication that the Nam Theun 2 Power Company (NTPC) intends to sell power from the project to Electricity of Vietnam. While a power purchase agreement was signed between NTPC and the Electricity Generating Authority of Thailand on November 8, financing for the project is by no means certain. The project hinges on a political risk guarantee from the World Bank, and the Bank itself has admitted that there are still many conditions that the Lao government will need to fulfill before the Bank will commit itself to the project. It will be at least 12-18 months before the World Bank makes a decision on this issue. Given these continuing uncertainties regarding the project’s future, it is risky and imprudent for the ADB to approve a TA for a transmission line for a hydropower project whose fate has yet to be decided.
The fate of Nam Theun 1 is fraught with greater uncertainties. We are not aware of any clear commitments from the Thai or Vietnamese governments to purchase power from this project. Furthermore, developers have not been identified to invest in and construct Nam Theun 1. Consequently, if the ADB approves this RETA and finances construction of the Nam Theun 2 – Ha Tinh transmission line, the Bank will risk investing resources in costly power interconnections to transmit power from projects which may never be developed.
Some concerns about the GMS Power Interconnection and Trade initiative are outlined in the attached briefing paper, which was published in June and is based on information from the ADB’s “Regional Power Interconnection and Power Trade Arrangements Summary” dated September 12, 2002.
In conclusion, the uncertainties regarding Nam Theun 1 and 2 should give ample cause for the ADB to suspend approval of the GMS Power Interconnection Project Phase 1 TA. We urge you to suspend this TA, pending further investigation of the viability and risks associated with these projects in comparison with other development options.
Southeast Asia Campaigner
IFI reform campaign
Les Amis de la Terre
FIVAS – Association for International
Water and Forest Studies
International Policy Analyst
cc: ADB Executive Directors
Read the ADB’s response.