VIENTIANE, April 12 (Xinhua) -- The development of Laos' power transmission grid will receive boost from private investment after the Lao Ministry of Energy and Mines and the International Finance Corporation (IFC) signed a cooperation agreement.
The agreement was inked on Thursday by Lao Deputy Minister of Energy and Mines Thongphat Inthavong, and IFC manager for Infrastructure and Natural Resources, East Asia and the Pacific Lubomir Varbanov, local daily Vientiane Times reported on Friday.
The memorandum of understanding (MoU) aims to strengthen and extend the country's energy sector by mobilizing private investment in transmission infrastructure. This will also help to improve the domestic grid to enhance electricity service provision as well as promote power exports, contributing to the country's economic growth and shared prosperity.
To reduce the burden on limited public finances, which could be deployed into other critical sectors of Lao economy, the IFC will assist Lao ministry to assess a range of transmission projects, identify a suitable pilot project, and help structure and attract private sector investment in the project.
As part of the MoU, the IFC, in partnership with state-run Electricite du Laos (EDL), will conduct a pre-feasibility study on a 500 kV transmission line to export power from Laos to Vietnam. It will also help the Lao ministry identify and assess other suitable lines for private investment.
It is hoped that if this project is successfully implemented, it could be a model for other essential transmission projects needed to upgrade and extend the country's power system.
Speaking at the MoU signing ceremony, Thongphat said, "To use our country's abundant energy supply, we need to develop good quality transmission infrastructure."
He said the ministry was keen to partner with the private sector to deliver this, especially when the government is focusing on exporting electricity to boost economic growth.
Varbanov said the project is expected to help the government attract private sector investment in transmission infrastructure, enabling EDL to save its budget for other development purposes.
The IFC has successfully partnered with many countries around the world and the same could be done in Laos with the project to begin in a couple of months after the MoU signing, Varbanov added.