Thailand's state utility, Electricity Generating Authority of Thailand (EGAT), has signed an agreement to buy electricity generated at the US$1.2B Nam Theun II hydroelectric power project in Laos, for a period of 25 years.

The signing of the agreement completed in the Lao capital Vientiane by EGAT enables Nam Theun 2 Power Company (NTPC), the developer of the project, to proceed with the construction of the hydro plant on the Nakai Plateau, some 250km east of Vientiane. The plant will provide 995MW of electricity to EGAT and 75MW to Electricite du Laos.

The majority share holder of NTPC is Electricite de France (edf). The project is to be financed by a combination of equity from the shareholders, multilateral institutions including the World Bank, Asian Development Bank, European Investment Bank, as well as the Agence Francaise de Developpement, Export Credit Agencies and Commercial Banks.

Laos is expected to accrue an estimated US$2B in revenue over 25 years from the plant and has touted it as essential to helping alleviate widespread poverty in the Southeast Asian country.

EDF owns a 35% stake in NTPC. Electricite du Laos and EGAT subsidiary EGCO each took a 25% holding, while Italian-Thai Development Co, another Thai company, took a 15% stake.