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Laos Grants 25-Year Concession to Chinese Company to Manage Power Grid

FILE - In this photo taken on Oct. 22, 2010, Laotian worker Phoumgeumh Chanthasone stands watch inside the power station of the Nam Theun 2 dam project near Mahaxaitai, Laos.
FILE - In this photo taken on Oct. 22, 2010, Laotian worker Phoumgeumh Chanthasone stands watch inside the power station of the Nam Theun 2 dam project near Mahaxaitai, Laos.

Laos and a majority Chinese-owned company have signed a 25-year concession agreement that allows the company to build and manage its power grid, including electricity exports to neighboring countries, a government official in the country told RFA.

The company, Électricité du Laos Transmission Company Ltd. was launched Sept. 1 when Électricité du Laos and China Southern Power Grid Company signed a shareholding agreement, which gave China Southern a majority of shares.

RFA reported at that time that the government said the new corporate entity was necessary due to the domestic firm’s massive debt, but critics said it ceded too much control of Laos’ power grid to a foreign government.

With dozens of hydropower dams either built or under construction on the Mekong River and its tributaries, Laos has gone all in on its controversial economic strategy to become the “Battery of Southeast Asia” in hopes of selling electricity to neighboring countries. But with EDLT controlling everything it adds to the grid, some are worried China will be able to profit off of Laos’ gamble.

“EDLT will invest U.S. $2 billion to build, manage and control the Lao power grid for a 25-year concession period. After 25 years, the business will be transferred to the Lao government,” an official of the Lao Ministry of Energy and Mines told RFA’s Lao Service on March 12.

The official said that EDLT would take control of only the high-voltage power line network, in the range higher than 230 kilovolts, while Électricité du Laos retains control of powerlines under 230 kilovolts.

“Given the current economic downturn and the enormous debt, the Lao government does not have the ability to manage and operate a network of powerlines, so they decided to allow the Chinese, who have the finances, technological aptitude and manpower to take over,” said the official.

The concession deal is not seen as a win-win by all within the ministry, however.

An energy expert from the ministry, who requested anonymity to speak freely, told RFA that it put Laos at a disadvantage.

“The deal is bad … Normally in a cooperative agreement, the foreign company transfers technology or knowledge to the host. But not the Chinese,” said the expert.

“When they installed a powerline system in the Lao National Convention Center in Vientiane, they did not provide us with any instructions. When the electrical system breaks down … or when we want to make improvements to the building, we have to call in Chinese technicians.

Lao residents are also dismayed at what Chinese control of the power grid could mean.

“Before, I thought that since we were building many dams, electricity prices would go down. That will not happen because the Chinese company is taking over power distribution in our country,” a resident of the southern province of Savannakhet told RFA.

A resident of Vientiane asked why Laos cannot manage its own network.

“Why do we need China to do that? If the government doesn’t have money, they can borrow money to buy the power lines and install them. They have money to build dams, so why not to install power lines?” the Vientiane resident said.

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    Radio Free Asia

    Radio Free Asia operates under a Congressional mandate to deliver uncensored, domestic news and information to China, Tibet, North Korea, Vietnam, Cambodia, Laos, and Burma, among other places in Asia with poor media environments and few, if any, free speech protections.