Narrative
Full Description
Project narrative
In February 2017, Yunnan Provincial Energy Investment Group Co., Ltd. (香港雲能國際投資有限公司) and Électricité du Laos (EDL) signed a power purchase agreement (PPA) for the 70MW Xelanong 1 Hydroelectric Power Plant Construction Project. Then, in 2020, Yunnan Provincial Energy Investment Group Co., Ltd. issued a loan to Xelanong 1 Hydropower Company — a special purpose vehicle (SPV) and joint venture of Yunnan Provincial Energy Investment Group Co., Ltd. (YEIG) [70% equity stake], Daosavanh Investment & Construction DICG Group Co., Ltd. [15% equity stake], EDL [10% equity stake], and China's Sun Paper Holdings Laos Co., Ltd. [5% equity stake] — for the 70MW Xelanong 1 Hydroelectric Power Plant Construction Project. The borrowing terms of the loan are unknown. The purpose of the $163 million project was to construct a 70MW hydroelectric power plant — with two 35MW vertical-axis Francis turbine-generator sets — in Savannakhet Province between Phin district and Nong district in the south of Lao PDR (exact locational coordinates: 16.355732, 106.237564). The project covers an area of almost 2,500 hectares in the Dong Phu Vieng National Protected Area. Sinohydro Bureau 10 Co., Ltd. was the EPC contractor responsible for project implementation. Power China Chengdu Engineering Corporation Limited was responsible for the design and supply of electromechanical equipment. Construction commenced in 2017. 88 families were relocated in June 2019 to make way for the construction of the power plant. However, those who were relocated reportedly did not yet to receive any kind of compensation from the project company (SPV), despite being promised 40 million kip (approximately $320) for each hectare (2.47 acres) of land that they lost to the project. The tract that the relocated villagers were given to grow food on was reportedly unsuitable for rice and other crops. The new village that was built for the families also remained unfinished as of February 2020, with some houses having no walls, running water, or toilets. The new village also lacked a school or health center. The first power generation unit was connected to the grid on July 22, 2020. The second power generation unit was connected to the grid on August 7, 2020.
Staff comments
1. This project is also known as the Laos Xelanong Grade One Hydropower Station Project, the Selanong 1 Hydropower Station Project, Xe La Nong 1 Hydropower Station Project, and the Xe Lanong 1 Hydropower Station Project. The Chinese project title is 色拉龙一级水电站 or 老撾沙拉龍一級水電站 or 老挝色拉龙一级水电项目 or 老挝色拉龙水电一级开发项目 or 老撾色拉龍一級水電站項目. The Lao project title is ໂຄງການ ເຂື່ອນໄຟຟ້າ ເຊລະນອງ. The Vietnamese project title ix Dự án thủy điện Xelanong 1. 2. The face value of the loan from Yunnan Provincial Energy Investment Group Co., Ltd. is unknown. For the time being, AidData assumes that the $163 million project was financed according to a debt-to-equity ratio of 70:30, which implies that the loan commitment was equivalent to $114.11 million. This issue warrants further investigation. 3. Yunnan Provincial Energy Investment Group Co., Ltd is a provincial state-owned enterprise (SOE) based in Yunnan Province, China. YEIG is principally engaged in the investment and management of natural gas, hydropower, power grid, and coal energy businesses worldwide. YEIG is more than 90% indirectly owned by the Yunnan SASAC, with 83.1% held through Yunnan Provincial Investment Holdings Group Co. Ltd. (YIG). 4. Rajah & Tann -- a Singaporean law firm -- advised on this project finance transaction in 2020 (https://www.rajahtannasia.com/accolades/2020-accolades/iflr-1000). 5. Électricité du Laos (EDL) is the state corporation of Laos that owns and operates the country's electricity generation, electricity transmission and electricity distribution assets. The company also manages the import and export of electricity from the national electricity grid of the country.