President Cho In-kook of Koran Western Power Co.(Photos: KOWEPO)

Laos agreed to expand collaboration in the hydroelectric power sector with Korea during President Park Geun-hye’s recent visit to the country, and it has already yielded its first fruit: Korea will be charged with the construction and operation of a hydroelectric power plant, a $1.6 billion (about 1.77 trillion won) deal.

Korea Western Power Co. (KOWEPO) and Thai energy company, CEWA signed an MOU on the implementation of a large-scale hydroelectric power project in Laos on Sept. 11, KOWEPO said. 

The agreement calls for KOWEPO to invest $1.6 billion in building a hydroelectric power plant with a capacity of 700 megawatts (MW) in an area 21 km south of Pakse, Champasak Province, operating it for 28 years thereafter and selling the generated power. 

The projected hydroelectric power plant is considered a major project. It’s larger in terms of power generation and project costs than the Xe Namnoy project, currently under construction, which KOWEPO and SK E&C jointly won. The latter is a $1 billion (about 1.1 trillion won) plant with a capacity of 410MW. 

KOWEPO managed to agree on a joint development with CEWA after five years of negotiations, outbidding European and Japanese companies. The two companies plan to jointly manage all procedures of the project, ranging from obtaining licenses and permits, financing to Engineering, Procurement, and Construction (EPC) and the selecting of contractors.

An environmental impact evaluation on the latest project is now under way, with the goal of dedicating the plant in the first half of 2025. Under the deal, the upcoming plant is required to supply a given amount of electricity to Laos, and the remainder will be exported to Thailand. 

KOWEPO President Cho In-kook said, “(The latest project), on top of the Xe Namnoy hydroelectric plant, now under construction, will contribute to the development of the Laos power industry.” KOWEPO will proactively conform to the Government 3.0 Initiative by collaborating with Korean power and electric SMEs in exports, Cho added. 

Laos is the most active country trying to tap new power infrastructure among Mekong River basin states. 

According to the Korea Energy Economics Institute (KEEI), Laos is grappling with frequent blackouts with a power supply rate of 40 percent. The Southeast Asian country is assessed as an optimal place for developing multi-purpose dams since the country has an abundant rainfall, measuring 1,800 mm on average annually, and 70 percent of its territory is covered with mountains. 

Laos now operates 14 hydroelectric power plants, and 10 more are under construction. The government plans to build an additional 61 power plants, which will cost a combined $40 billion (about 44.8 trillion won).

In late 2015, K-water won the Sepon III hydropower plant project in Selabam Province, and the project is to be launched this year.  In 2013, KOWEPO and SK E&C landed the Xe Namnoy project. 

“Mekong River countries see their energy production and consumption growth rates surpass the global average due to their economic and social development, and hydroelectric power is a major energy source for these countries,” said Yang Eui-seok, a senior KEEI researcher.

A bird-eye view shows the Xe-Pian Dam, now being built by Korea Western Power Co. and SK E&C under the XeNamnoy project in Laos.