Sinohydro in US$2b deal to build dams in Laos
Toh Han Shih
In one of the biggest overseas hydroelectric deals involving a Chinese firm, Sinohydro signed a US$2 billion framework agreement with the Laotian government this week, the state firm's website said.
In October 2009, Sinohydro signed a US$2 billion agreement to build Coca-Codo-Sinclaire dam in Ecuador, then the biggest overseas hydroelectric project undertaken by a Chinese company.
Under the deal signed in Vientiane, Sinohydro will build seven plants along the 475-kilometre Nam Ou River, one of the longest tributaries of the Mekong River. 'This is the first time a Chinese company has gained the development rights to an entire river in Laos,' it said.
The seven dams will have a total installed capacity of 1,156 megawatts and generate 5 billion kilowatt-hours per year, Sinohydro said. The electricity will be sold to Laos' state electricity company.
'[The hydroelectric plants] will not only supply electricity to Laos but improve transport conditions along the Nam Ou River, spurring the development of tourism and industry, and driving the region's economic growth,' Sinohydro said.
Pavin Chachavalpongpun of the Institute of Southeast Asian Studies in Singapore said: 'Surely, this is a sign of China's ever-growing ... influence over Laos. This is a win-win relationship; China is able to pull Laos into its orbit, whereas Laos is able to use China to counterbalance Vietnam and Thailand.'
'[China] has gained many advantages in pursuing the Nam Ou project, not only for political reasons, but business reasons, too. Sinohydro will sell electricity to Laos, Thailand and [Myanmar], so this has a powerful impact not only in Laos, but also the entire mainland Southeast Asia.'
Last year, China replaced Thailand as the biggest investor in Laos, with a total of US$2.9 billion since 2000, when Laos opened up to foreign investment, the Vientiane Times reported. Thailand invested US$2.6 billion and Vietnam US$2.2 billion.
This month, construction began on a high-speed railway from China through Laos, to be built and financed by Chinese state firms.
The total amount of electricity that will be generated by the seven dams each year, in kilowatt-hours, is: 5b