Lao EconomyUtilities (Water, Electricity etc)

Govt Mulls Revising Electricity Fee

Source: Vientiane Times

The government is mulling a revision of electricity tariffs after Electricite du Laos (EDL) submitted a draft revision that proposes reducing power fees to the government for consideration and approval.

If approved, EDL will subsidise up to six billion kip per month in power costs as per the proposed revision set to reduce electricity tariffs, Managing Director of EDL Sisavath Thiravong told Vientiane Times yesterday.

In 2015, EDL subsidised as much as 150 billion kip in electricity costs nationwide, notably for those poor families whose power fees were charged at lower than the actual price rate.

With Laos currently importing electricity from neighbouring countries for local consumption, especially those communities along border areas where the power grid does not reach, the power fees charged in these communities are lower than the actual price as part of the government’s subsidy policy for poor households.

Currently, electricity fees are charged in three categories – power usage ranging from 0-25 kilowatt hours (kWh) is charged at 348 kip per kwh, 26-150 kwh is charged at 414 kip, while consumption in excess of 150 kwh is charged at 999 kip.

Mr Sisavath stated that the revised fee will be charged in five categories. However he declined to elaborate, saying the details will be given once the government has approved the revision.

EDL submitted the revised draft to the Ministry of Energy and Mines in March this year but the director was unable to confirm when the revision will be approved by the government.

In recent years many members of the public have claimed that electricity fees are quite high, especially the fees charged for electricity consumption in the month of April, which were two or three times what they normally were, which led to an increase in calls for revision.

Mr Sisavath explained that the fees cannot be reduced to unreasonably low rates, given that although a number of hydropower projects have been developed in Laos, they are built by investors who have to follow economic studies that take into account the investors’ capability of repaying the bank loans they borrowed to develop the projects. These are part of the loan conditions.

“Once these project concessions that run between 25-30 years finish and the hydropower plants fall under our ownership, we can reduce the fees more and people will benefit from cheaper tariffs,” Mr Sisavath added.

The Lao government is promoting the development of power plants for both domestic supply and export as the country has high potential for hydropower development.

As of 2015, Laos had built 38 power plants at a total cost of more than 81.7 trillion kip (US$10 billion) with a total installed capacity of 6,265MW. Combined, they can generate 33,315 million kWh of electricity per annum, Minister of Energy and Mines Dr Khammany Inthirath said previously.

There are another 45 power plants under construction and yet more to be developed in the future. Laos is aiming for a total installed capacity of about 12,000MW by 2025. The abundant resources of the Mekong River and its tributaries give Laos the potential to produce more than 25,000MW of electricity.

So far, 90.6 percent of more than one million families across the country have access to electricity, according to the minister.