Laos signs power grid concession agreement, China takes full control for 25 years

A Lao government official told Radio Free Asia (RFA) that Laos and a company with mainly Chinese state funding signed a 25-year concession agreement that allows the company to build and manage Laos’ electricity network system, including exporting power to neighboring countries.

Lao Electricity Transmission Co. Ltd. was established on Sept. 1 last year, and the then-Laos Electricity Co. Ltd. and China Southern Power Grid (China Southern Power Grid) signed a shareholding agreement in which China Southern received a majority stake.

According to a Radio Free Asia report at the Time, the Lao government said the creation of a new company was necessary because of Laos Power Co.’s huge debt. But critics say the Laotian government has gone too far in ceding control of the power grid to foreign governments.

Laos has dozens of hydroelectric dams completed or under construction on the Mekong River and its tributaries. The country is fully committed to its controversial economic strategy of becoming the “battery of Southeast Asia” and selling electricity to neighboring countries. But with Electricity Transmission Lao Limited (EDLT) controlling Laos’ input into the power grid, some fear China will be able to profit from the country’s big gamble.

A Lao Ministry of Energy and Mines official told Radio Free Asia’s Lao Desk on March 12: “During the first 25 years of the concession, EDLT will invest $2 billion to build, manage and control Laos’ transmission grid, and after the 25-year period, the business will be transferred to the Lao government.”

The official said EDLT will only control the high-voltage power line network above 230 kilovolts, while Lao Electricity Company will retain control of power lines below 230 kilovolts.

The official said, “Given the current poor economic boom and the huge domestic debt, the Lao government does not have the capacity to manage and operate the power line network, so they decided to let the Chinese, who have the capital, technical capacity and manpower, take over.”

However, not everyone within the Lao Ministry of Energy and Minerals sees this deal as a win-win strategy.

An energy expert within the Lao Ministry of Energy and Minerals, who requested anonymity, said in a reply to Radio Free Asia that the deal puts Laos at a disadvantage.

The deal is bad,” the expert said. …… Usually in cooperation agreements, foreign companies transfer technology or knowledge to the host country. But that’s not the case with the Chinese.”

“When they installed the electrical system at the Lao National Convention Center in Vientiane, they didn’t provide us with any instructions. When the power system failed … Or when we wanted to make upgrades to the electrical structure, we had to call in Chinese technicians.”

The people of Laos are also uneasy about what it means for China to control their country’s power grid.

A resident of Savannakhet, a southern province of Laos, said, “Before this, I thought that since we were building a lot of dams, the price of electricity would go down. But that’s not going to happen. Because Chinese companies are taking over the distribution of electricity in our country.”

A Vientiane resident, on the other hand, is confused as to why Laos cannot manage its own network.

Why do we need China to do this,” the Vientiane resident said. If the government doesn’t have the money, they can borrow money to buy the grid lines and install them. They have money to build dams, so why don’t they use it to deploy the lines?”