Sustainability is never achieved overnight. In the hydropower sector, it begins with developing up-to-date policy and regulations that can be put into practice. With the World Bank Group’s support, Lao PDR’s Ministry of Energy and Mines has recently updated its Policy on Sustainable Hydropower Development, strengthening the sector and encouraging leadership in this effort.
“In Lao PDR, this policy will guide us to develop our water and energy resources competitively, sustainably and efficiently,” said Daovong Phonekeo, Director General, Department of Energy Policy and Planning, Ministry of Energy and Mines. “Sustainable hydropower is vital for Lao PDR if we plan to achieve our 2030 goal of 98 percent electrification.”
Lao PDR has a long history of energy policy development. In 1990, the government formulated its first power sector strategy, focusing on foreign exchange through electricity exports and aiming to increase domestic access to the grid while maintaining affordable local tariffs. The Electricity Law was amended in 1997, and updated with support from the World Bank from 2010-2012. The new legislation considered the environmental and social aspects of electricity generation and trade.
“Improving the Electricity Law set the stage for the development of this policy,” said Phonekeo. “We remain committed to continue to develop technical guidelines for hydropower development that reflect good international and industry practices.”
In 2005, Lao PDR adopted its first National Policy on Sustainable Hydropower to address environmental and social issues. As hydropower development increased, the World Bank Group helped the Lao government prepare a more holistic policy that added technical, economic, and financial components.
“Our technical experts helped push the policy forward, ensuring that international guidance was in place,” said Kate Lazarus, Team Lead for IFC’s hydro advisory program in Asia.
A group effort, the policy was supported by the World Bank Group, while Lao PDR’s Department of Energy Policy and Planning under the Ministry of Energy and Mines took the lead in terms of policy coordination, implementation and monitoring. With support from the World Bank and the Australian and Japanese governments, policy took more than a year and a half to complete, and was then under ministerial review for another year.
“This policy demonstrates the government’s willingness to build a more sustainable hydropower sector,” said Franz Gerner, Lead Energy Specialist at World Bank. “Our commitment to working together is what moved this policy forward.”
More than 95 percent of Lao PDR’s electricity is generated by hydropower stations, with an installed capacity of 3,230 megawatts. But Lao could still develop an additional 18 gigawatts of hydropower capacity, according to the World Energy Council. Of the already existing 3,230 MW of hydropower capacity, 812 MW generates electricity to meet domestic demand, while the remaining 2,417 MW is generated for export, primarily to Thailand. The World Bank Group is building capacity and supporting policy and regulations to contribute to Lao hydropower development that meets good practices.
Approved in January 2016, policy implementation is underway, following a detailed action plan that prioritizes activities by key agencies.
Looking ahead, technical guidelines will be developed soon. The guidelines will address the complexities of implementing an inter-ministerial policy including water use, watershed management, environmental and social impacts, resettlement, and monitoring.
“Key officials now have a good grasp of what it takes to make their hydropower sector sustainable,” said Phonekeo. “The World Bank Group is helping us maintain our momentum. We have the important building blocks in place, now it’s time to further build capacity to advance sustainability in the hydropower sector as more projects are developed and come online.”
To read Lao PDR"s Policy on Sustainable Hydropower Development, click here.