The 260-MW Don Sahong hydroelectric project is anticipated to begin construction before the end of this year after a number of agreements related to the project have been signed to guide the project's go ahead.
Don Sahong project in Khong District, Champassak province.
The Lao Ministry of Energy and Mine's Policy and Planning Department Director General Dr Daovong Phonekeo told Vientiane Times on Monday that “I think that the construction of the project is expected to commence in November.”
“Our National Assembly has approved the project's go ahead and the concession agreement between the government and developer have been inked but the purchasing agreement related to the project has yet to be signed.”
Dr Daovong said electricity generated by the project in the Hou Sahong Channel of the Mekong River in southern Laos would be sold to Laos' state-owned Electricité Du Laos (EDL) under a power purchase agreement which will soon be signed.
The construction of the run-of-river project will come at the cost of about US$500million and the concession period has been set at 25 years.
Mega First announced to its shareholders at the stock market in Malaysia last week that it has secured a power plant project in Laos following the signing of the concession agreement.
The project, signed on a build, operate and transfer basis, is capable of generating about 2,000 GWh of electricity per year. It is expected to start commercial operation in early 2020.
According to online Malaysian business media The Edge Markets, Public Investment Bank Bhd (PIVB) expects the hydropower project to generate an annual revenue of US$120 million or nearly double its current annual revenue once commercial operation begins.
In March, Mega First signed an agreement with state-owned utility Electricite du Laos (EDL) to regulate its participation in developing the hydropower project.
Under the agreement, EDL will hold 20 percent in the Laos-incorporated Don Sahong Power Company Ltd (DSPC) while Ground Roses and Silver Acreage will hold 79 per cent and one percent respectively.
The Don Sahong Hydropower Project is a run-of-river hydropower project located at the Hou Sahong channel of the Mekong River in Khong District, Champassak province.
The feasibility study for the project began in 2006. The government began sharing information with neighbouring countries when it gave notification to the MRC in September 2013.
In 2014, the government agreed to elevate the dialogue to a formal six-month Prior Consultation process as stipulated in the Mekong Agreement signed by the member countries. The six-month prior consultation process ended on January 25, 2015.
The Lao PDR is committed to keeping alive the spirit of the 1995 Mekong Agreement, which aims to promote comprehensive cooperation for sustainable development in the region.
Mega First has spent some RM57 million (over US$13.3 million) to date to conduct a feasibility study on the project as well as construct basic infrastructure such as access roads and a bridge to the site.