Thailand has agreed in principle to buy more electricity from Laos after the two Southeast Asian neighbors signed an agreement that expands energy cooperation between the two Mekong River neighbors.
The memorandum of understanding, signed by both countries’ respective ministers of energy March 4, promotes clean energy, and creates more opportunities to invest in Laos’ energy sector, an official of the Lao Ministry of Energy and Mines told RFA’s Lao Service Monday.
Laos has staked its future on power generation in a controversial bid to become “The Battery of Southeast Asia,” exporting electricity from more than 50 large and small-scale dams on the Mekong River and its tributaries.
Selling the excess energy has been a problem for heavily indebted Laos, which has agreements to buy the power from the dams at a fixed rate, but sells it at market rates, which has been lower due to the coronavirus pandemic.
Though the agreement paves the way for Thailand to purchase more power from Laos, prices still must be negotiated.
“The next step will be for each dam developer to negotiate prices and a power purchase agreement directly with the buyer, Thailand,” the Lao energy official said on condition of anonymity for safety reasons.
The energy official also said that Laos plans to build even more dams including at least five more on the Mekong River mainstream. Though he acknowledged that selling energy from the dams has been difficult recently as neighboring countries have their own power surpluses. Thailand, however, remains Laos’ largest market.
Laos’ state-run power company Électricité du Laos (EDL) is optimistic about the deal, an EDL official told RFA.
“Data shows that the Electricity Generating Authority of Thailand is the most reliable buyer of our power,” the EDL official said.
Environmentalist opposition
Thai environmental advocacy groups criticized the agreement, saying that it would promote more degradation of the Mekong River’s ecology and impact riparian communities.
“It’s not fair. The Thai government claims that the economy will recover after the COVID-19 pandemic and electric vehicles will be on their way, so they are saying they will need more power. But that’s just what they claim,” Witoon Permpongsacharoen from the Mekong River Energy and Ecology Network in Thailand told RFA.
“Laos on the other hand isn’t listening to any criticism. Its government always believes that building dams is the only way that they can develop the country, but that’s not always true,” Permpongsacharoen said.
He pointed out that Thailand has a 41 percent surplus of power, and it doesn’t need more from Laos.
“The Thai government made this decision only for the interest of the Thai investors. They don’t care about the environmental and social impact of this deal. They don’t care that the dams are going to make climate change worse and create more methane in our air,” he said.
The move only helps dam developers, a member of the Love Chiang Khong Group, a Thai riparian activist organization told RFA.
“We in this group have been aggressively opposed to all these dams. It’s clear that the investors who are going to build dams in Laos do not care about the people,” said the activist, who requested anonymity to speak freely.
“We’re going to continue to fight against these dams and for the people, not to mention all the aquatic species and wildlife in the Mekong region,” the activist said.
According to a report published by the Lao Ministry of Energy and Mines, Laos has contracts to sell power to most of its neighbors, with Thailand on the hook for 10,500 megawatts. Laos is projected to be able to produce as high as 28,000 megawatts by 2030.
Laos has built dozens of hydropower dams on the Mekong River and its tributaries in pursuit of its controversial economic plans.
Though the Lao government sees power generation as a means to boost the country’s economy, the projects have faced criticism because of their environmental impact, displacement of villagers and questionable financial arrangements.
Translated by Max Avary. Written in English by Eugene Whong.