Section 1 Hydropower slated to fuel regional growth

The three countries that share the 3S basin are all currently experiencing power shortages. Both Cambodia and Laos still have undeveloped generation and transmission capacity, and Cambodia in particular has a significant shortfall, which requires the country to import a large amount of its power from neighbouring countries. The remainder is generated domestically using expensive imported diesel fuel. Laos has been developing its hydropower capacities for a number of years, and has recently accelerated development in the south of the country. Likewise, Cambodia is pushing ahead with rapid development of its hydropower sector in order to meet its expanding energy needs. Vietnam's power generating capacity is significantly more developed than that of its neighbours, and the country has already commissioned a number of large scale hydropower dams, including the 720 MW Yali Falls Dam in the upstream of the Sesan River in Vietnam. However, rapid development in Vietnam has led to huge demand for power, which at present cannot be met by domestic power generation alone. For this reason, Vietnam is planning to fund and construct a number of dams in neighbouring Cambodia and Laos, with the intention of supplying a portion of the generated power to local markets and exporting the excess back to the national grid of Vietnam. Thailand has also stated that it has insufficient power to feed its domestic demand, and has signed agreements for exports of power from Laos.6

A large number of foreign private and state-owned companies have shown an interest in developing hydropower projects in Cambodia and Laos, as the technical and financial capacity to build these types of projects does not yet exist domestically. In most cases, these companies are negotiating Build-Operate-Transfer contracts of 25 years and up, and with energy demand increasing so rapidly, developing these projects has the potential to be highly profitable.

6 It should be noted that in a 2006 report, it was claimed that the Thai Load Forecast Subcommittee has a "historical and persistent tendency to overestimate future demand". Greacen, C. & Footner, J. Decentralizing Thai Power: Towards a Sustainable Energy System. Greenpeace Thailand & Palang Thai, November 2006.