Case studies

Laos/Thailand: Power transmission interconnection project (2011–2012)


Project Overview

Country: Laos
Client: Asian Development Bank (ADB)
Project value: USD 105 million
Service: Major projects advice, financial modelling

Interconnection of four hydro power plants in Laos in order to export electricity to Thailand, consisting of (i) the acquisition of an existing 230 kV electrical switchyard and 500 kV transmission line and (ii) the expansion of the existing 230 kV switchyard to a 500/230 kV substation, in order to enable export of power by up to four hydro power plants which operate under a PPP concession agreement with the Government of Laos.

Our transmission charge proposal ensured the financial viability of the project and the equitable sharing of the project cost amongst the project stakeholders and electricity generation facilities connecting to the transmission system in the future.

Services provided by TMP

  • Assessed the transmission or wheeling charge required to ensure cost recovery and the financial viability of the Special Purpose Vehicle (SPV) that will own and operate the transmission facility.
  • Identified project financial risks, conducted relevant sensitivity analyses and proposed risk mitigation steps.
  • Developed an equitable basis and mechanism for sharing of wheeling charges amongst the hydro power producers who will export power through the facility.
  • Developed project cost estimate and financing plan.
  • Conducted financial analysis of the project, including developing the financial model for the cost tables, project financial internal rate of return (FIRR), weighted average cost of capital (WACC), and sensitivity analysis.
  • Evaluated the financial management of the project’s executing agency, Electricite du Laos (EDL), and drafted a financial management assessment report on EDL.
  • Developed an Excel financial model for the historical and projected financial performance analysis of EDL and drafted a financial analysis report.
  • Rebuilt the original lender’s financial model from scratch to develop the base case financial position of the SPV (which is currently operating a hydropower plant in Laos), in order to be able to maintain it in a no-gain-no-loss position when the other hydropower plants connect to the system at a future date. The existing hydropower company (NN2 HPC) agreed that our model closely replicated their original lender’s financial model.

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