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.