Sinohydro Corporation, China's largest builder of hydropower plants, has signed a contract with Laos' electricity supplier, Electricite Du Laos (EDL), to build two hydropower stations and a power transmission line in a deal that is cumulatively worth around $559 million.

The two companies will construct the 130,000-kW Nam Kham 2 hydropower plant located 30 km southeast of Luang Prabang city on the Nam Kham river, and is expected to generate 556 million kWh of electricity a year, according to a statement posted on the State-owned Assets Supervision and Administration Commission website.

And another 47,000-kW Nam Kham 3 hydropower plant will be located 70 km north of Luang Prabang city, which is expected to generate 222 million kWh of electricity in a year. The two projects alone involve about $430 million investment in total.

Besides, the contracts also include the construction of the 230-kV power transmission line from Xiengkhouang to Luang Prabang city, which is the major part of Laos' 2020 national grid network plan.

Under the project, a transformer station at Xiekhouang will be further expanded and a new transformer station at Luang Prabang will be constructed along with relevant supporting facilities.

EDL is a state-owned corporation which owns and operates the main generation, transmission and distribution assets in Laos, and manages electricity imports into its grids and exports from its stations.

Khammone Phonekeo, chairman of EDL, said: "The energy sector, especially hydropower, plays a very key role in Laos' economic development." He hoped construction work on the new projects would begin very soon.

Huang Baodong, deputy general manager of Sinohydro, said: "Sinohydro has over 10 years of business experience in Laos and the contracts with EDL will further consolidate and improve Sinohydro's market share in the country's hydropower sector."

Ma Jun, a hydropower insider and director of the Institute of Public and Environmental Affairs, said: "Chinese hydropower enterprises should strictly abide by local environmental rules and reduce impacts on local environment as much as possible when they are exploring hydropower projects overseas, especially when they're doing projects in some developing countries in which the environmental assessment and supervision system still needs improvement."

(China Daily August 14, 2009)