Gulf Energy Development Plc and China Datang Overseas Investment Co (CDTO), a state-owned subsidiary of an energy company on the mainland, have entered into a tariff memorandum of understanding (MoU) with the Electricity Generating Authority of Thailand (Egat) to develop the Pak Beng hydroelectric power project.
According to a statement by Gulf to the Stock Exchange of Thailand on Thursday, Pak Beng Power is a joint venture in which Gulf holds a 49% stake and CDTO a 51% equity stake to operate the Pak Beng project.
The venture entered into a power purchase agreement with Egat for 29 years from the commercial operation date, with an average electricity tariff of 2.7129 baht per kilowatt-hour (unit).
The Pak Beng project has a total investment cost of 100 billion baht and is securing loans from financial institutions, with the closing date expected by the end of 2024. Construction is projected to take roughly eight years to meet the scheduled commercial operation date in 2033.
The project is located on the Mekong River in Pak Beng district, Oudomxay province, Laos, and has an installed capacity of 912 megawatts. The project is expected to produce and sell all of the electricity it generates to Egat.
It is one of the projects under the MoU between Thailand and Laos on cooperation to develop energy in Laos to promote decarbonisation and increase the deployment of clean energy during a transition period. Under the MoU, electricity is purchased from power projects developed in Laos and transmitted through the cross-border electricity transmission system.
The Pak Beng project is expected to accommodate rising power demand from higher electric vehicle usage.
Buying electricity from the project is expected to help reduce fuel price volatility, lowering power bills for both households and the industrial sector for the duration of the contract, according to the statement.
The project has a lower electricity production cost than the current average electricity price of 4-5 baht per unit.
The power purchase agreement stipulates the proportion of raw materials and products from Thailand, as well as personnel, employment and services used during construction, which is expected to help stimulate economic development and employment in the country.