ADB finances construction of Southeast Asia's first largest wind power plant in Lao PDR

The Asian Development Bank (ADB) and Monsoon Wind Power Company Limited (Moosoon) on March 1 signed a non-recourse project financing package worth US$682.55 million to build a 600-megawatt (MW) wind power plant in Sekong and Attapeu provinces in the southern region of the Lao People's Democratic Republic (Lao PDR) to export and sell electricity to neighboring Vietnam.

With 133 wind turbines, it will be the largest project in Southeast Asia to date, and also the first wind power plant in Lao PDR.

ADB, as the sole lead arranger and guarantor, arranged, structured, and allocated the entire financing package, which is the largest syndicated renewable energy project financing transaction among ASEAN countries to date. The financing package comprises a $100 million A loan from ADB’s ordinary capital resources, a $150 million syndicated B loan, a $60 million concessional loan, a $382.55 million parallel loan, and a $10 million grant. The use of this advanced concessional blended finance was critical in overcoming the project’s bankability barriers to commercial financing.

“Developing economies in Asia and the Pacific are facing a gap in climate finance needed to pave the way for green growth. This project’s combination of development and commercial finance will help bridge this gap by mobilizing private capital to develop wind resources for power generation, helping to spur economic and social progress in the region,” said Jackie B. Surtani, Director of the Infrastructure Finance Division for East Asia, Southeast Asia, and the Pacific at ADB’s Private Sector Operations Department. “The financing from ADB and its partners will help unlock Lao PDR’s untapped wind resources, laying the foundation for a clean energy transition and green growth that will benefit the economy in the long term.”

Cross-border power supply is a pillar of Laos’ economic growth. Tapping into Laos’ untapped wind resources could help diversify its energy mix as the wind season is opposite to the rainy season, which supports Laos’ hydropower generation. The project will reduce annual greenhouse gas emissions by at least 748,867 tonnes of carbon dioxide equivalent.

Loan B includes $100 million from Siam Commercial Bank and $50 million from Sumitomo Mitsui Banking Corporation, as well as ADB-administered concessional financing of $20 million from the Leading Asia Private Infrastructure Fund (LEAP) and $30 million from the Canadian Climate Fund for the Private Sector in Asia (CFPS, CFPS II). Parallel loans include $120 million from the Japan International Cooperation Agency, $100 million from Kasikorn Bank, $72.55 million from the Asian Infrastructure Investment Bank, $60 million from the Export-Import Bank of Thailand, and $30 million from Hong Kong Mortgage Corporation Limited. The $10 million grant from ADB’s Asian Development Fund (ADF) – Private Sector Window (ADB-PSW) will help mitigate key project risks, including potential curtailment risk, which is a key bankability issue for lenders.

“Together with ADB, we take this important step in the global fight against climate change in line with our company’s mission to enhance the well-being and happiness of the local communities where we work,” said project developer Impact Electrons Siam Co., Ltd. CEO Peck Khamkanist.

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