China Gezhouba Group Co signed a project development agreement with the Lao government on Friday to build a hydropower station in Saravane Province, the Xinhua News Agency reported over the weekend.
This is the first hydro plant investment project in Laos by the China Gezhouba Group, which built the Gezhouba Dam with a total installed capacity of 2,715 megawatts along the Yangtze River in China.
Experts said the project in Laos, though small by Chinese standards, will boost that country's energy agenda greatly.
The project, named Xelanong 2, is located on one of the tributaries of the -Mekong River. It will have an installed capacity of 35 megawatts and be capable of generating 140,700 megawatt-hours of electricity a year, according to a statement sent to the Global Times by the company on Sunday. The construction is expected to take 41 months and the total investment is around $71.86 million.
The hydropower station, with a dam height of 55 meters, will be operated under the build-operate-transfer (BOT) model, according to the statement.
Lin Boqiang, director of the Center for Energy Economics Research at Xiamen University, told the Global Times on Sunday that while the scale of the plant is small compared with facilities in China, it can be significant for Laos and will surely help boost power supply in the country.
"There is market demand and expertise in technology and operation is ripe, but there are potential risks in terms of relocation and environmental issues," Lin said.
The agreement comes as the two countries push forward construction of the -China-Laos railway.
According to a joint statement released during a visit by Laotian President Bounnhang Vorachit to Beijing in May, China will encourage its companies and financial institutions to participate in its energy development strategy in Laos.
The Lao government has prioritized the development of its energy sector by accelerating the pace of construction of small and medium-sized hydro plants. It aims to provide electricity to 98 percent of its population by 2020, according to a statement posted in May on the website of China's embassy in Laos.
Specifically, it aims to have 19 power projects with total installed capacity of 3.5 million kilowatts in operation by that date, generating annually 30 million megawatt-hours of electricity.
"The BOT model is an incentive for the Lao side to make sure the project is a -success, as the project will be transferred to its hands after a concession period," Lin said.
