Hydropower in Laos
The original Theun-Hinboun project was launched to support Lao economic growth by enhancing foreign exchange earnings through export of electricity. In the late 1980s the government identified the country's hydropower potential as a major natural resource that could help generate the revenue and energy needed to kick-start Laos's economic development.
The power potential of the Nam Theun River had been recognized for a long time. In 1991, the government started studies to identify a suitable project to provide both export power and local supply for central Laos. A feasibility study began in 1992, initially for a public sector project. It became apparent that extra funding was required and foreign investors joined in 1993.
Domestic electricity generation and consumption was at that time very low: Thailand was the natural immediate market for most of the power developed in Laos. In June 1993 Laos and Thailand signed a memorandum of understanding, under which Laos would export electric power to Thailand. The Theun-Hinboun project was pinpointed as the most suitable project to spearhead this initial development.
Theun-Hinboun: a Pioneering Project
The Theun-Hinboun Power Company was established in 1994 through a shareholder agreement between the Lao government, Thailand's MDX Lao Public Company and Nordic Hydropower AB. The formation of THPC was significant for Laos at the time, as a symbol of new economic policy and cooperation with neighbouring countries and private investors. Theun-Hinboun marked the first major venture under new foreign investment policies and the first time the government had formally joined with the private sector to build a power plant.
The government nominated Electricité du Laos (EDL) as holder of its 60% interest in the project, with the other two shareholders each taking a 20% stake. THPC then signed a license agreement with the government, before negotiating power purchase agreements with its clients EGAT and EDL. MDX later became GMS Lao, while Nordic Hydropower is a wholly-owned subsidiary of Norway's Statkraft. In 2012 EDL transferred its shares in THPC to its publicly-listed subsidiary, EDL-Gen.
Project implementation started in November 1994, with construction completed below budget. Commercial operations began on schedule in 31 March 1998.
THPC has expanded upon the success of its early work by more than doubling its generating capacity. An extension project begun in 2008 was completed in 2012 within budget and on schedule, providing more revenue for Lao national development and more power for domestic growth, especially important during the dry season.