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Project for the Improvement of the Governance Mechanism for Sustainable Power Development Planning

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Project for the Improvement of the Governance Mechanism for Sustainable Power Development Planning Department of Energy Policy and Planning Ministry of Energy and Mines Lao People's Democratic Republic Project for the Improvement of the Governance Mechanism for Sustainable Power Development Planning Final Report June 2013 Japan International Cooperation Agency Chubu Electric Power Co., Inc. Electric Power Development Co., Ltd. LA JR 13-006 Table of Contents Executive Summary ....................................................................................................................... I Chapter 1 Introduction........................................................................................................... 1-1 1.1 Background ................................................................................................................................. 1-1 1.2 Outline of Project ........................................................................................................................ 1-2 1.2.1 Title ..................................................................................................................................... 1-2 1.2.2 Overall goal ......................................................................................................................... 1-2 1.2.3 Purpose ................................................................................................................................ 1-2 1.2.4 Output ................................................................................................................................. 1-2 1.2.5 Implementation structure .................................................................................................... 1-4 1.2.6 Project duration ................................................................................................................... 1-6 1.3 Route map of Study .................................................................................................................... 1-8 1.3.1 JICA Power Sector Cooperation Program ........................................................................... 1-8 1.3.2 Route map of Study ............................................................................................................. 1-8 Chapter 2 Present Status of Power Sector Governance ...................................................... 2-1 2.1 Power sector performance in Laos ............................................................................................. 2-1 2.1.1 Current power situation ....................................................................................................... 2-1 2.2 Government policies on power sector ........................................................................................ 2-9 2.2.1 Regional cooperation .......................................................................................................... 2-9 2.2.2 National power sector policies .......................................................................................... 2-13 2.3 Power sector organizations ....................................................................................................... 2-18 2.3.1 Institutional structure of power sector ............................................................................... 2-18 2.3.2 Administrative organizations ............................................................................................ 2-19 2.3.3 Business entities ................................................................................................................ 2-20 2.3.4 Organizational management and human resources development of MEM....................... 2-24 2.3.5 Organizational management and human resources development of EDL ........................ 2-29 2.3.6 Problem analysis on organizational management of power sector ................................... 2-31 2.4 Mobilization of private initiatives ............................................................................................ 2-35 2.4.1 Procedure of agreements for power development with IPPs ............................................ 2-35 2.4.2 Supervision of IPP activities (regulation, monitoring, reporting and statistics) ................ 2-41 2.4.3 Functional structure for monitoring, examination and inspection of power facilities ...... 2-43 2.5 Current power development plan (PDP) ................................................................................... 2-43 2.5.1 Demand forecast ............................................................................................................... 2-43 2.5.2 Power supply ..................................................................................................................... 2-49 2.5.3 Finance .............................................................................................................................. 2-59 2.6 Environmental and social considerations ................................................................................. 2-74 2.6.1 EIA related policies, and laws and regulations ................................................................. 2-74 2.6.2 Establishment of institutional framework for Strategic Environmental Assessment ........ 2-78 i 2.6.3 Project-by-project EIA procedures and need of SEA capacity development .................... 2-80 2.6.4 Past EIA report review and issuance of ECC by MONRE ............................................... 2-86 2.7 Assistance by other donors for power sector ............................................................................ 2-88 2.7.1 World Bank ....................................................................................................................... 2-88 2.7.2 Asian Development Bank ................................................................................................. 2-89 2.7.3 Others ................................................................................................................................ 2-90 2.8 Summary ................................................................................................................................... 2-90 Chapter 3 Measures to Strengthen Governance in Power Sector ...................................... 3-1 3.1 Formulation of NPDP ................................................................................................................. 3-1 3.1.1 Structure of NPDP .............................................................................................................. 3-1 3.1.2 Clarification of policies for future power development ...................................................... 3-3 3.1.3 Approaches for preparation of NPDP ............................................................................... 3-13 3.1.4 Contents of NPDP ............................................................................................................. 3-22 3.2 Perception of EDL role and future power development ........................................................... 3-23 3.2.1 Reduction of investment risk ............................................................................................ 3-24 3.2.2 Necessity of reform of current tariff scheme .................................................................... 3-26 3.3 Comprehensive management aimed at sustainable power development .................................. 3-26 3.3.1 Internal linkage in MEM to strengthen governance .......................................................... 3-26 3.3.2 IPP management mechanism ............................................................................................ 3-27 3.3.3 Possibility to collaborate with World Bank ....................................................................... 3-36 3.3.4 Future monitoring and management on workflow ............................................................ 3-37 3.3.5 Power development mechanism manual (guidance) ......................................................... 3-38 Chapter 4 Improvement of EDL-PDP .................................................................................. 4-1 4.1 Points of improvement ................................................................................................................ 4-1 4.2 Demand forecast ......................................................................................................................... 4-2 4.2.1 Outline of demand forecasting in econometric approach .................................................... 4-2 4.2.2 Work flow of model building and simulations (prediction) ................................................ 4-4 4.2.3 Simulation results in ―Default Case‖ .................................................................................. 4-6 4.3 Generation plan ......................................................................................................................... 4-12 4.3.1 Revision of Power Development Plan .............................................................................. 4-12 4.3.2 Enhance reliability of generation planning ....................................................................... 4-24 4.4 Transmission plan ..................................................................................................................... 4-32 4.4.1 Challenges in planning ...................................................................................................... 4-32 4.4.2 Demand and supply balance.............................................................................................. 4-34 4.4.3 System analysis
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