RPT-PowerChina Unit Sues Laos Utility for $555 Million
A review of an arbitration document shows that Nam Ou Power, part of the state-owned Power Construction Corp of China has sued Laos utility Electricite du Laos for $555m in unpaid hydropower dues.
According to a source with knowledge of the case, EdL has not yet responded to the filing. The source also stated that this was the first time an entity run by the Chinese government had filed a claim against a Laos-owned firm.
As the case is private, it was not possible to identify the person. The details of the case have been reported for the very first time.
According to a Singapore International Arbitration Centre filing, the unpaid dues are based on electricity generated by the $2.73 billion Namou River Cascade hydropower project.
The Nam Ou Project, which is one of Laos’ largest hydropower projects and accounts for 7% the 18 gigawatts in Laos, is part of China’s Belt and Road Initiative, which aims to create trade and transport connections across Asia and beyond. Western critics claim that China's significant investments in countries struggling to pay back loans helped it gain a competitive advantage. China denies this.
PowerChina and EdL didn't immediately respond to requests for comment. Wong & Leow is a law office that represents Nam Ou Power. They declined to comment.
The hydroelectric project, operated by Nam Ou Power (part of PowerChina), has a 1,27 gigawatt capacity from its seven cascades that run along 350 km of river in this landlocked mountainous nation of about eight million people.
The Chinese foreign ministry, energy regulator, and commerce ministries did not provide any comment.
INVESTING in HYDROPOWER
Laos spent heavily on hydroelectric projects, some of which were financed by China. The goal was to become "the battery" of Southeast Asia by exporting electricity.
These projects, as well as a high-speed rail built by the Chinese, have led to high levels of debt.
PowerChina filed a complaint last month at the Singapore International Arbitration Centre claiming that EdL owed them $486.27 millions in debts, plus an estimated $65.79million in interest. These claims relate to monthly invoices between January 2020 and Dec 2024.
Total is equal to approximately 4% of Laos’ gross domestic product. EdL ceded control of its transmission unit in 2020 to China Southern Power Grid Co, a state-owned company. The debt and the COVID-19 pandemic had strained the public finances, pushing Laos close to a sovereign default.
Nam Ou claimed $3.02million in damages for EdL paying its dues primarily with Lao Kip, despite the agreement requiring that 85% be paid using U.S. dollars.
Since the pandemic began, Laos has been struggling with hyperinflation. Its foreign exchange reserves have rapidly depleted. The value of the Lao Kip has fallen by nearly three-fifths in the past five years. Reporting by Staff; Editing by Sharon Singleton & Barbara Lewis
(source: Reuters)
