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Theun-Hinboun Hydropower Project (Loan 1329-LAO[SF])

Theun-Hinboun Hydropower Project (Loan 1329-LAO[SF])

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46. The Project was completed on schedule and 11% below the cost estimate. The
construction cost compares well with other similar power plants. At less than $0.02 per kWh, the
cost of generation is low. Excluding the unquantifiable environmental and social impacts, the
EIRR from the country’s perspective is 18.5%. The FIRR is 17.0%, well above the weighted
average cost of capital of 8.3%. In 2002, THPC refinanced its debts, replacing the more
expensive commercial loans. This also enabled a capital reduction of $55 million by the
shareholders. The Project is assessed as highly efficient.



47. Given the quality of construction and maintenance, the Project should be physically
sustainable throughout its expected service life and beyond. The issues of sedimentation need
to be addressed by periodic inspection and maintenance. The PPA with EGAT, in its present
form, ensures financial sustainability provided that future baht devaluations, if any, are not of
extreme magnitudes and the US inflation remains low. The PPA will be renegotiated in 2008.
The impact of Nam Theun 2 upstream of the Project is expected to be limited. The sustainability


of the MCP and the enhanced livelihood programs is not fully assured, but EMD is working
toward this goal. Overall, the sustainability of the Project is assessed as likely.

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