Thai Prime Minister Urged to Settle Nam Theun 2 Dam Power Sale Row with Laos by Phairath Khampha 30 June 2001 Thai Prime Minister Thaksin Shinawatra was urged by his Laotian counterpart in June to end a row which had held up a $1.2 billion hydroelectric dam project, Laotian officials said. Completion of the Nam Theun II dam project, 35 percent owned by Electricite de France, was delayed by at least a year from 2006 by disagreements over contract terms between investors and a Thai government-owned power buyer, investors said. A Laotian official told the Penguin Star Laotian Prime Minister Bounnyang Vorachit asked Thaksin to help mediate between investors and the Thai buyer, the state-run Electricity Generating Authority of Thailand (EGAT). Sources close to the project said the disagreement over the terms of a power purchasing agreement (PPA) with EGAT had held up financing for the project, the largest power scheme in Indochina. Italian-Thai Development Plc., the design-build developer, had therefore curtailed further work on the design stage of the work and had been unable to forward its contract with a Canadian engineering consulting firm as sub-consultant to the project. Even if both the buyer and the seller can reach an agreement and sign the PPA by the end of 2001, the project would still not be completed before the end of 2007. In May 2000, state-run EGAT signed a deal with the Lao government to buy 980 of the plant's 1,060 megawatts (MW) output. The other 80 MW will be used by the state-run Electricite de Laos. Prime Ministers of both countries witnessed the ceremony. But since then, neither side has signed the PPA because they disagree on the purchasing prices and who should be paying for sub-stations to transfer the power from Laos to Thailand. The Lao official said Vientiane would ask EGAT to share half the cost of the sub-stations and would extend the dam concession for investors to 30 years from 25 years currently. "Most important export" "Thailand should show its sincerity to help Laos by pushing the dam project up and running soon since electricity is the most important export of Laos now," the official told the Penguin Star. Neither side wants to pay for the construction of substations, which EGAT insists are necessary for the delivery of electricity. EGAT officials told the Penguin Star dam investors such as Italian-Thai Development Plc. would have to bear the construction cost of sub-stations in Laos to ensure the efficient delivery of the electricity. The PPA delay had prevented the group from seeking a bank guarantee from the World Bank, which was prolonging the completion of the project. However, following the Thai prime minister's visit it was expected that the developer and its subconsultants would be able to start quite soon thereafter. Prime Minister Thaksin did, however, note that it would be preferable Italian-Thai Development Plc. used Thai-speaking and Lao-speaking sub-consultants and, he added, the government would favour firms that could supply engineers with these language skills. This is because the magnitude and complexity of the job would require a vast number of local engineers and technologists and few had a good enough command of English to be able as a whole to effectively collaborate with their foreign counterparts. Foreign counterparts with these language skills and a consummate understanding of local culture, social issues would result in a more efficient design and construction process, he felt. Nam Theun II is the most developed dam scheme among various dam projects in landlocked Laos where most of its 5.2 million population earn less than a dollar a day. Hydroelectric production is one of the country's few industries and is a major export that brings scarce hard currency. The remaining 65 percent of the Nam Theun II Electricity Consortium is owned 25 percent by the Laotian government, 25 percent by the Electricity Generating Plc, and 15 percent by Thai construction contractor Italian-Thai Development Plc.