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Don Sahong Hydropower Project

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Don Sahong Hydropower Project

The Don Sahong Hydropower Project is a run-of-river hydropower scheme located in the Khong District of Champasak Province in Southern Laos. The scheme has been designed with a generation capacity of 260MW.

The Don Sahong dam is located at the southern end of the Sahong channel, one of seven major channels of the Mekong River in the Siphandone (Four Thousand Islands) area that flow over the geological feature called the “Great Fault Line”. The Project would utilise 15% of the total Mekong flow.

The dam and associated embankments will create a small head-pond (inundating only 125 hectares of land) between the islands of Don Sahong and Don Sadam. This head-pond will allow the natural fall of approximately 20m across the “Great Fault Line” to be utilised for power generation.

The ultimate goal is not only to build an economically viable project, but one that will provide the infrastructure, opportunity, and assistance for local development. Accordingly, a strong focus has been placed on understanding the social and environmental impacts of the Project. Implementation of the social and environmental management plans, based on the process of local consultation and coordination will extend the opportunities of local people and provide the means to better their livelihoods, a key criterion for the success of the Project.

While producing 260MW of renewable energy for the expanding Lao national grid, the Don Sahong Hydropower Project would make a significant contribution to the socio-economic development of the country.

Background

On 13 February 2008, MFCB had signed the Project Development Agreement with the Government of Lao People’s Democratic Republic (“Laos”) to develop, build, own and operate the Don Sahong Hydropower Project in Laos.

On 15 September 2015, the project company has entered into a Concession Agreement (“CA”) with the Government of Laos (“GOL”), whereby the GOL has granted on a build, operate and transfer basis, the concession rights to the project company for the development of the Project. The Project, which is a 260MW run-of-river hydropower project capable of generating about 2,000GWh of electricity per year, is expected to commence commercial operation in early 2020. The concession period shall end on the date occurring 25 years after the commercial operation date (“COD”). Electricity generated by the Project shall be sold to Electricite Du Laos, Laos (“EDL”) under a Power Purchase Agreement (“PPA”).

At the expiration of the concession period or upon the early termination of the CA by either party, MFCB shall transfer the Project Assets to the GOL, in accordance with the terms and conditions of the CA including MFCB’s obligations with respect to Prudent Utility Practices and in compliance with the Laos Law, together with all data and information required to be provided to the GOL.

On 1 October 2015, the project company entered into a PPA with EDL for the sale by the project company and the purchase by EDL of all electricity generated by the Project on a take-or-pay basis. The PPA shall be for a period of 25 years from the COD of the Project. The project company shall construct a 230kV transmission line from the Project’s switchyard to interconnect with the existing EDL Grid System. Construction works on the Project had commenced towards end of 2015 and completion is anticipated by end of 2019.

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