Infrastructure & PPPs in Laos and Cambodia - Q3/2020 Update
LAOS AND CAMBODIA have, in the past, relied on concessional financing for infrastructure projects. In recent months, a variety of infrastructure financing models are being explored. These range from privately financed Build-Own-Transfer models to the currently more popular Public-Private-Partnerships, apart from the traditional concessional financing in the form of Official Development Aid from bilateral donors such as JICA and multilateral donors such as the ADB.
Read the key developments in Infrastructure and PPPs in the two countries in our latest insight.
MoU signed for southern Laos railway PPP
Thailand-based Chinnakorn Civil is conducting a feasibility study for the proposed 345km Southern Laos railway PPP. Laos' Ministry of Planning and Investment signed the MoU with Chinnakorn Civil in Laos' capital Vientiane.
The proposed railway line would connect Khammouane, Savannakhet, Salavanh and Champasack provinces in southern Laos. The estimated total investment value is around Bt20 billion ($640 million).
Consultant of Chinnakorn Civil, Suneth Konphanthavong, told local media the company would begin the study after Laos and Thailand reopen their borders.
Chinnakorn Civil expects to complete the study in 6-10 months.
China taps into Cambodia sewerage system
Cambodia’s Prime Minister Hun Sen has signed an agreement with China’s State Councillor and Minister of Foreign Affairs, Wang Yi, for the feasibility study of the municipal sewerage system development project in Preah Sihanouk province, Cambodia.
Project focuses include:
· achieve required water quality standards
· meet the water demands of the city
· decentralise water treatment facilities
The government wants to connect the entire population in the province to the drainage system by implementing the project in 3 phases. The estimated total cost for project phase 1 is around $143 million.
The project would increase the capacity of the existing sewage treatment plant, with a design capacity of around 6,900m³/day, to more than 20,000 m³/day.
Laos 1GW coal-fired heads for 'clean coal'
Laos’ second coal-fired power project, a 1GW thermal power plant in Sekong, is undergoing feasibility studies for a 'clean coal' approach. The Lao government signed a memorandum of understanding with Singapore-based Evolution Power Investment Corporation (EPIC) and Laos-based Khounmixay Corporation for the project.
The shareholders of the project include:
· EPIC – 33%
· Khounmixay Corporation – 33%
· Vietnam-based New Atlantic International Trading – 33%
The Lao government will also nominate a local entity to become an equity holder in the project. The selected entity could be an affiliate of the state-owned electric company Électricité du Laos, or state corporation Lao Holding State Enterprise.
The sponsors will establish the project company, Sekong Clean Thermal Power Plant, once the feasibility study is complete.
The total project cost is around $1.7-2 billion. The offtaker would be Vietnam's largest power company Vietnam Electricity (EVN). The sponsors are targeting a tariff rate at between $0.075-$0.085/kWh over a 25-year period.
The project is a mine-mouth coal power plant, meaning the plant is near to the coal mine and would use domestic coal as fuel supply.
The project development, including feasibility studies, environmental impact assessment and other relevant permits in Laos, would take around 2-3 years. The construction phase for the project is about 4 years. The estimated COD for the project would be 2027.
Planning for the project includes:
· at least one Ultra-Super Critical (USC) steam parameter, in which thermal efficiencies would achieve more than 42%
· conventional pulverised coal application, enabling the plant to co-fire with biomass fuel
· integrated gasification combined cycle (IGCC) technology, turning coal and other carbon-based fuels into pressurised gas
· high-efficiency low emissions (HELE) technologies to minimise green gas emissions
Vietnam and Laos companies together plan to build 580MW solar projects in Laos
Vietnam and Laos companies are planning to build solar power projects with a total capacity of 580MW in Champasak and Sekong provinces of Laos.
The companies are:
· Vietnam-based Wealth Power Group
· Laos-based National Consulting Group
· Power Company Limited Thepvongsa
The projects include:
· 720ha area, with capacity up to 500MW, in Laman district, Sekong province
· 93.1ha area, with capacity up to 80MW, in Khong and Pathoumphone districts, Champasak province
The total cost for both projects is around $332.3 million and $57.3 million, respectively.
Both projects would supply 10% of electricity output to the domestic market, while exporting the remaining to neighbouring countries, including Vietnam and Myanmar.
Chinese and Lao firms sign shareholders’ pact for grid joint venture
Lao state-owned Electricite du Laos (EDL) and China Southern Power Grid (CSG) have signed the shareholders’ agreement of Electricite du Laos Transmission Company Limited (EDLT) in Lao capital Vientiane to jointly establish the EDLT.
EDLT, a key project in the industrialisation process in Laos, will help provide self-sufficient and stable power supply to support the country’s development as well as reinforce infrastructure connectivity with neighbouring countries.
As per the shareholders’ agreement, the EDLT will operate under the regulation of the Lao government, taking advantage of CSG’s financial strength and mature experience in power grid construction, operation and management to move forward the construction of the national backbone power grids in Laos.
China-Laos cross-border rail tunnel completed
The construction work on the cross-border tunnel on the China-Laos railway has been completed, laying a solid foundation for the full operation of the whole line.
Called the “friendship tunnel”, the tunnel project spans 9.59 km, with 7.17 km in Xishuangbanna in Yunnan province of China and 2.42 km on the Lao section.
So far, 80 tunnels have been completed on the Yuxi-Mohan section of the Chinese part of the railway.
The electrified passenger and cargo railway project, construction work on which began in December 2016, is scheduled to be completed and opened to traffic by end 2021.
Cambodia approves 30MW solar
The Council for the Development of Cambodia (CDC) has approved the Thailand-based B.Grimm to build the 30MW solar project in Banteay Meanchey province, Cambodia.
Ray Power Supply, a subsidiary of B.Grimm, has signed a power purchase agreement with state-owned electricity company Electricite du Cambodge (EDC). The tariff price for the PPA is $0.076/kWh for 20 years.
The project, a 40ha ground-mounted solar project, is situated close to Thailand’s border.
The estimated total cost for the project is around $39.8 million.
B.Grimm Solar Power 1, a subsidiary of B.Grimm, acquired 100% stakes of Ray Power Supply in November 2019 from Pramote Laocharoenwong for $300,000. The acquisition gave rights to B.Grimm to develop the project pursuant to the PPA with EDC under a 20-year term.
Japan provides support for Cambodia deep-sea port expansion
Japan intends to support the development of the Sihanoukville Autonomous Port expansion, Cambodia's only deep-water port in southwest of Cambodia. The port is among the critical projects for increasing the linkability of the Southern Economic Corridor in the Mekong Subregion countries, including Cambodia, Myanmar, Thailand and Vietnam.
Japan International Cooperation Agency (JICA) would continue funding various projects for the development of the Sihanoukville port, according to local press.
JICA’s funding includes:
· New Container Terminal Development Project – ¥23.502 billion ($222 million)
· Electronic Data Interchange (EDI) for Port Modernisation – ¥1.34 billion
Port Authority of Sihanoukville (PAS) and JICA in June 2019 signed a memorandum of cooperation on strategic partnerships to promote port development and logistics improvement in Cambodia.
The new container project is a civil works package and the implementing agency is the PAS. PAS is planning for port capacity of up to around 450,000 twenty-foot equivalent units and fully commence operations by October 2023. The EDI project, with a 30-month implementation period, would include equipment procurement and consulting services. The Ministry of Public Works and Transport is the implementing agency.
Positive results for Phnom Penh Logistics PPP
The result of the pre-feasibility study for the Phnom Penh Logistics Complex in Cambodia is positive as per Ministry of Public Works and Transport (MPWT). The project, a 98ha DBFOT project in Dangkor district, is now awaiting approval from the Ministry of Economy and Finance.
If approved, MPWT would proceed to conduct a feasibility study using funding from ADB.
ADB in June 2019 selected advisers for the project. They are:
· Germany-based Roland Berger
· Cambodia-based Advancing Engineering Consultants
· Cambodia-based HBS Law
The project – estimated to cost around $52 million – is expected to:
· address Phnom Penh’s dry port capacity constraints after 2020
· adopt best international logistics practices
· develop environmentally friendly freight movements
· increase efficiencies through multi-modal transport connections
· position Phnom Penh as a regional hub in ASEAN
· provide a long-term regional logistics solution to inbound and outbound freight
· reduce truck-related traffic congestion
World Bank approves $100million for Cambodia’s road improvement project
The World Bank has approved a $100 million credit for Cambodia’s road connectivity improvement project.
The project aims to enhance rural communities’ access to critical services through improvement of climate-resilient rural roads.
By improving selected sections of national and provincial roads, it will also reduce transportation costs and road disruption risks, helping to facilitate agriculture supply chains and tourism development.
Laos plans 684 MW hydro power plant on Mekong River
Laos plans to build a new 684 MW hydropower plant on the Mekong river. The Sanakham dam project will be built by Datang Sanakham Hydropower, an affiliate of Chinese state-owned power producer Datang International Power, at an estimated cost of $2.1 billion.
Laos has submitted plans to the Mekong River Commission (MRC), which will give an advisory opinion.
MRC members including Thailand, Cambodia and Vietnam will assess the project and review any cross-border impact.
The consultation process is expected to take six months, while construction work on the project may start by end-2020. The project is expected to be commissioned in 2028.
Laos wind farm nearing PPA
Thailand-based BCPG, a renewables-focused subsidiary of Bangchak Corporation, and Impact Electrons Siam (IES) are planning to jointly build a 600MW wind farm in southern Laos. The sponsors are expecting to sign a power purchase agreement (PPA) in 2020, it has emerged.
Impact Energy Asia Development is the project company. The shareholders are:
· BCPG – 45%
· Impact Electrons Siam (IES) – 55%
BCPG announced on in July-20 that it plans to invest $840 million into the project, having just joined the project in recent months. The estimated project cost is around $1.3 billion, according to IES.
The project would sell electricity to Vietnam Electricity (EVN) and the construction should begin after the signing of the PPA.
The project is expected to commence operations by 2023.
Cambodia to launch WtE PPP
The government of Cambodia is planning to build a waste-to-energy (WtE) plant as the waste management solution for the Dangkor landfill in Phnom Penh.
Cambodian Ambassador to the Republic of Korea held a meeting with the president and chairman of South Korea-based Global Green Growth Institute (GGGI) in which the Cambodian government expressed interest in GGGI's WtE project. With GGGI's approval, the Government of Cambodia would then submit a budget request to GGGI.
GGGI is a treaty-based organization based in South Korea, primarily focusing on renewable energy in developing countries.
In GGGI's Cambodia program, the WtE project would use refuse-derived-fuel (DFR) produced from municipal waste in the Dangkor landfill. The project would need a solution for mixed and hazardous waste.
GGGI should support the government in assessing technical and financial feasibility for the project. GGGI would also design procurement and contractual set up under a PPP model.
The project would be a build-own-operate-transfer (BOOT) contract. State-run energy supplier Electricite du Cambodge is preparing to put the project up for bid.
The electricity price for waste-burning plants would be around $0.14-0.15 per kWh.
GGGI is one of the funding sources for the project, with an estimated investment of $17 million.
Cambodia’s new airport to be completed in 2023
Cambodia’s largest airport, worth $880 million, is expected to be completed in three years’ time. The construction of the Siem Reap International Airport project began in March 2020 and is expected to take 36 months for completion.
The new airport is being developed by Angkor International Airport Investment (Cambodia) Company Limited.
It operates under the Chinese state-run Yunnan Investment Holdings Limited after the company signed a 55-year concession with the Cambodian government for the new airport in 2017.
After completion, the airport is expected to receive 7 million passengers annually, facilitating the aviation and tourism sectors in the country.
Cambodia approves a 700MW coal-fired power project
The Cambodian government has approved a 700 MW coal-fired power plant in Preah Sihanouk province. The $1.3 billion project is developed under a build-own-operate-transfer concession by the Cambodia International Investment Development Group and Huadian Sihanoukville Power Generation, an affiliate of the China Huadian Corporation.
The project is planned to be developed in two 350 MW phases. The first and second phases are scheduled for commissioning in 2023 and 2024 respectively.
Coal power accounts for about 21 per cent of Cambodia’s installed capacity, which was 2.1 GW in June 2020.
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