Theun-Hinboun Power Company Limited (THPC) started diverting the Nam Ngouang River yesterday to block the waterway for dam construction in Borikhamxay province.

The diversion will direct water through a tunnel before it re-connects about 300 metres further on in Thasala village, Khamkeuth district.

The diversion is part of construction work for the Theun Hinboun Expansion Project in Khammuan province and marks a new stage in the project.

The Theun-Hinboun hydropower plant and its expansion are located in the provinces of Borikhamxay and Khammuan.

“The Nam Gnouang River was selected for the dam expansion because it will store water during the rainy season for release into the Theun Hinboun dam in the dry season,” said Electricite du Laos (EDL) Managing Director Khammany Inthirath, at the Nam Ngouang River diversion ceremony.

The ceremony was also attended by Deputy Prime Minister Asang Laoly.

During the rainy season, the Theun Hinboun dam will be operated solely by water from the Nam Theun River.

The expansion project is expected to be completed by June 2012 and will have an installed capacity of 280 megawatts to generate electricity.

“It is estimated that 24 percent of the expansion project has been completed so far, after work began in May this year following preliminary planning in 2008,” Khammany said.

THPC is spending about 6.2 trillion kip (US$720 million) on the project, 20 percent of which consists of the company's own equity and the remaining 80 percent is sourced from financial institutions.

It is developing an expansion project to improve the distribution of energy for local supply and export as well as increasing generator capacity from 220MW to 500MW, which will generate more than 3,000 million kilowatt hours per year.

Upon completion of the dam, 440MW will be sold to Thailand with the remaining 60MW sold to EDL for local supply.

The expansion project was initiated following financial restructuring in mid-2002 and because the Nam Theun 2 hydropower project's completion and commercial operation will reduce the volume of water currently available for the Theun Hinboun dam.

Currently the company sells 95 percent of its existing plant's installed capacity of 220MW, with just 5 percent put aside for local supply.

THPC's three shareholders have sought compensatory alternatives by studying the viability of a water storage dam along the Nam Gnouang River in Borikhamxay province, with water diverted to the Theun Hinboun dam.

Shareholding in THPC consists of 60 percent for the government through EDL, with Nordic Hydro (Statkraft) and GMS Lao holding 20 percent each.

THPC was the first independent hydropower project in Laos and has operated successfully since 1998. The project began in 1995.