Latest news with #SonexaySitphaxay
The Star
2 days ago
- Business
- The Star
Laos to renegotiate power purchase deals in bid to cut bills for home-owners
FILE PHOTO: Aerial photo taken on July 31, 2020 shows the construction site of the Nam Theun 1 hydropower project in Borikhamxay Province, Laos. A group of Chinese builders have been working day and night in the vast Lancang-Mekong River Basin in Laos. Laos plans to renegotiate power purchase agreements with hydropower plant developers that sell power to the state for countrywide distribution. - Sinohydro 3/Hangout via Xinhua VIENTIANE: The government plans to renegotiate power purchase agreements with hydropower plant developers that sell power to the state for countrywide distribution, with the aim of reducing soaring electricity bills and easing the burden of domestic consumers. The cabinet endorsed the plan at a meeting last week with provincial governors and key state agencies, and the meeting agreed to push for a cut in electricity purchasing rates. Currently, Électricité du Laos (EDL), the state enterprise that oversees domestic power distribution, purchases electricity at an average cost of 6.2 US cents per kilowatt-hour (kWh) — equivalent to 1,260 kip — but sells it to households for an average of three cents (approximately 647 kip/kWh). This pricing disparity means the government provides substantial subsidies. According to a plan obtained by the Vientiane Times, EDL is preparing to renegotiate its contracts with power producers in the hope of securing lower purchasing prices, with the aim of reducing electricity rates and easing the financial burden on consumers. Power bills rose sharply after the government introduced a new tiered pricing system in February for the years 2025-2029. As a result, the cost of electricity for households consuming 0-25 kWh per month jumped from 355 kip in January (before the price hike) to 679 kip per kWh in July — a 91.27 per cent increase. Higher energy consumption incurs higher rates. If left unchanged, the rates are set to rise further. By 2029, households using 0-25 kWh per month will pay 911 kip per kWh, while those consuming over 1,500 kWh will face charges of up to 2,223 kip per kWh. The adjustment is part of the government's broader effort to reform EDL, which has been operating at a loss for many years and has accumulated substantial debt. EDL attributes its financial woes to massive investment in the expansion of infrastructure including power grids to rural areas — an essential but unprofitable undertaking - to ensure more people have access to power. The dramatic rise in electricity bills has sparked public complaints, with this concern dominating debate during the recent 9th Ordinary Session of the National Assembly. While the government defended the price adjustment as necessary for EDL's financial health, lawmakers called for the government to reconsider, warning of the economic strain on households and businesses already grappling with high-level inflation and soaring living costs for years. The government's spokesperson Sonexay Sitphaxay told reporters that last week's meeting adopted proposed solutions. 'The meeting agreed in principle to approve a report on the review of electricity price adjustments and proposed solutions,' he said, referring to the report presented and discussed at the meeting. He specified the renegotiation of power purchasing contracts as a key measure. EDL's statistics suggest that its subsidy extends beyond the basic power purchase price. The full cost structure of electricity — known as the base electricity tariff — includes four main components: power purchase costs (both domestic and imported), system power loss, operation and maintenance expenses, and exchange rate/inflation adjustments due to dollar-based purchases. Altogether, the average base tariff reaches 7.29 US cents (1,567 kip) per kWh, while the average household retail rate remains at just three cents (647 kip) per kWh. In addition to contract renegotiations, the government pledged to modernise electricity metering and payment systems to improve transparency and reduce billing errors, which have also triggered public complaints in previous cases. - Vientiane Times/ANN
The Star
02-06-2025
- Business
- The Star
Lao economic indicators show signs of recovery amid global uncertainty
Tourists visit the town of Luang Prabang, a Unesco world heritage site in Laos, July 15, 2022. Foreign tourist arrivals rose by 21 per cent year-on-year to 4.12 million, generating US$1.13 billion in revenue. - Xinhua) VIENTIANE: The Lao government has observed encouraging signs of economic recovery, despite ongoing domestic economic difficulties and global turbulence. Inflation dropped to 8.3 per cent in May, marking the first single-digit rate since May 2022. This reflects a steady decline over 11 consecutive months since June last year, easing the price hikes that had affected the country for years. Improved revenue collection also supported fiscal operations, with government earnings reaching 93 percent of the first half-year target, amounting to 31,773 billion kip (US$1.476 billion). However, expenditure reached only 56.26 per cent, or 21,682 billion kip, of the planned budget. 'The government will strive to meet or exceed its revenue targets,' the government spokesperson Sonexay Sitphaxay told local media on Friday (May 30) following the two-day cabinet meeting for May. Exports (excluding electricity) rose 16.2 per cent from the previous month to over US$662 million (14,284 billion kip), resulting in a trade surplus of over US$14 million (302 billion kip). Increased exports have strengthened foreign reserves, now sufficient to cover at least five months of imports. 'Debt servicing for both domestic and external obligations is proceeding as planned,' added Sonexay, who also serves as Minister to the Prime Minister's Office. Chaired by Prime Minister Sonexay Siphandone, the monthly cabinet meeting reviewed implementation of the socio-economic development plan and expected performance for the first half of 2025 and preparations for the second half. The government has set a growth target of 4.8 per cent this year, up from 4.6 per cent in 2024. The cabinet noted that efforts to ramp up domestic production and reduce imports are gaining momentum, as Laos is becoming largely self-sufficient in producing staple foods to meet domestic consumption needs. Meanwhile, tourism continues to rebound, thanks to improved transport networks and promotional campaigns under the Visit Laos Year 2024 initiative. Foreign tourist arrivals rose by 21 per cent year-on-year to 4.12 million, generating US$1.13 billion in revenue. The cabinet also discussed measures to further develop transport infrastructure. Key projects include the nearly completed bridge across the Mekong River linking Lao Xayaboury and Bokeo provinces, and the Fifth Lao-Thai Friendship Bridge connecting Borikhamxay province with Thailand's Bueng Kan province, set to open by year-end. These projects are expected to boost trade and regional connectivity. Efforts are underway to enhance passenger and freight transport, leveraging the Laos-China and Laos-Thailand railways and the Thanaleng Dry Port - Laos integrated logistics hub. Investment promotion remains a priority with effort being accelerated to improve the business environment. In May alone, seven new projects were approved, worth more than 9,244 billion kip and US$3 million (more than 64 billion kip). Looking ahead, the cabinet outlined key actions for the coming months, including strengthening foreign reserves, centralising foreign currency exchange, prioritising essential imports, monitoring goods price in local markets and enhancing revenue collection mechanisms. Other priorities include regulating movement of and certifying concentration of minerals, repairing disaster-hit infrastructure, expanding vocational training, and creating jobs. To support long-term growth and stability, the cabinet approved in principle seven strategic documents. These include draft strategies on state finance through 2035 and a vision for 2040, as well as draft decrees on direct borrowing, One District One Product, startup promotion, and tourism attraction management. The draft Five-Year National Socio-Economic Development Plan for 2026–2030 was also presented at the meeting. - Vientiane Times/ANN
