The ADB is funding a study through a US$850,000 technical assistance grant to help countries of the Greater Mekong region prepare a regional power trade operating agreement. The countries include Cambodia, Laos, Myanmar, Thailand, Vietnam, and China’s Yunnan province.

The study will review present agreements and arrangements on power trade in the Mekong area and elsewhere. The agreement will contain detailed operating rules and guidelines for technical coordination and cross-border transmission pricing schemes among member countries. It will also specify the required institutional framework to advance power trade in the region.

The agreement was signed the six member countries at the 11th Greater Mekong Sub-region (GMS) Ministerial Conference on November 3, 2002.

Till now, power has been traded on a bilateral basis, mainly either through a memorandum of understanding between governments or long-term power purchase agreements.

“Although bilateral trade brings some advantages, full potential will not be realised unless regional power transmission networks are formed,” said Jong-Inn Kim, an ADB project engineer.

“The power grid needs to be developed in a coordinated manner through an operating agreement on power trade in order to move toward a competitive subregional electricity market for the GMS.”

The ADB said greater subregional power trade should prove a source of significant economic and environmental benefits, at national level and subregional levels. It will enable GMS members to:

  • Reduce national investments
    in the power reserves maintained to meet peak demand
  • Reduce national investments in the power reserves
    maintained to meet peak demand
  • Provide a more reliable
    supply of electricity
  • Reduce operational costs in
    the power sector
  • Cut down on greenhouse gas
    emissions and other pollutants
  • Increase access for consumers to cheaper and more
    environmentally friendly sources of electricity.

The agreement will provide harmonised rules of technical coordination and agree cross-border transmission tariff schemes, and will have an important role in providing the policy environment needed to attract the private sector to physical investments in the region.