Terms of Reference

Ministry of Energy and Mines

(EPD, DOE and SOEs)

Energy-Related Departments

Under the Lao Ministry of Energy and Mines (MEM), there are two ministerial departments and three state-own enterprises that together are responsible for the supply and development of electric energy in accordance with power and authority devolved to each unit under principles of clear-cut task allocation and efficient coordination.

Ministerial Departments

Department of Electricity (Policy & Regulatory Side)

Dealing with energy policy and regulation for IPP and public projects, the Department of Electricity (DOE) has the following overall responsibilities:

• Development of national energy policy (including tariff policy, imported fuels policy and stock piling)
• Introduction and adapting pertinent laws, regulations, decrees and official orders.
• Strategic master planning (covering generation, transmission, demand, exporting capacity and energy source diversification); this role is performed with support from Electricité du Laos (EdL) and Lao Holding State Enterprise (LHSE)
• Issuing certificates to developers in respect of technical matters as required by applicable Lao laws.
• Defining of standards as they impact on energy projects (technical, environmental and social)
• Monitoring of industry compliance with policies
• Adoption of renewable energy - strategic planning and promotion
• Rural electrification - planning and arranging implementation for off-grid power (including pilot programs)
• Energy Efficiency/Energy Conservation - strategic planning and promotion
• Clean Development Mechanism (CDM) - maximizing benefits to GOL
• Special energy-related funds
• Regulatory body

Department of Energy Promotion and Development (Development & Management Side)

Dealing with energy promotion and development of IPP projects, EPD has the following overall responsibilities:

• Promotion of Independent Power Producer (IPP) development, including advising and informing developers
• Processing project proposals and advising decision makers for approvals
• Reviewing all project documents necessary for the negotiation, conclusion and endorsement of related agreements as the case may be.
• Drafting and negotiation of contracts (including Memoranda of Understanding, Project Development Agreements, Concession Agreements)
• Participation in negotiation of agreements (including Power Purchase Agreements, Credit Facility Agreements, Construction Contracts)
• Analyzing the financial feasibility of projects
• Acting as the implementing agency in enforcing agreements to which the Lao government is party (within its power and authority giving no objection and approval, and acting as the notice serving point)
• Managing compliance with IPP agreements, including:
  • direct responsibility for business compliance (i.e. fees, delivery schedules, etc.)
  • participation in regulatory functions  with line departments (i.e.  approvals required from whom and when, responsibilities of each party);
  • ensuring these obligations are clearly specified in all agreements
  • arranging for funding of these activities by developer
  • General coordination with local authorities, developers, financiers, international financial institutions and other stakeholders.
  • Overall monitoring of project implementation

State-Owned Electricity Enterprises

Electricité du Laos (EdL)

As a state-own enterprise, the role of EdL covers:

• Generation
• Distribution. This includes export of surplus electricity and import of electricity when deficit occurred and where, mostly along the border, needed
• Rural electrification  expansion

EdL mainly focuses on public investment in new projects for domestic supply. EdL currently has shares in three IPP export projects the development of which started before the MEM revamped its structure. In addition,  EdL participates in two medium size IPP projects that will supply domestic grid. 

Lao Holding State Enterprise (LHSE)

LHSE plays a key role in participating as shareholder of export IPP projects. In future, this state-owned enterprise  may be a  stakeholder in some large scale IPP projects for the supply of electricity to domestic load demand center.

Electric Construction & Installation (ECI)

This state-owned enterprise plays a key role in construction for the domestic electricity sector, especially in the areas of distribution and rural transmission. ECI may jointly invest in small IPP projects aiming at supplying electricity to off-grid areas.

Near-term Planned Reforms

• Distribution will be clearly separated from generation; a national transmission network may be created as a separate entity
• GOL/MEM role will focus on facilitating the IPP process and carrying out the regulatory function; it will not include any operational role
• The IPP process will be reviewed, so that it becomes more focused and driven by MEM instead of by power off-takers and developers
• EdL should focus on maximizing benefits for the Lao grid rather than letting developers dictate investment only in associated transmission.
• GOL will increase support for LHSE to have the overall capacity to contribute shares on behalf of GOL in major IPP projects. In addition LHSE is studying its financial status for future listing.