DFDL has advised the Nam Ngiep 1 Power Company Limited (NNP1) in connection with the limited recourse financing of its 290MW hydropower project located in Bolikhamxay and Xaysomboun provinces, Lao PDR.
This is the first significant investment by a Japanese sponsor in the Lao hydro sector since Nam Ngum 1 in the 1960s, the first hydro financing by Japan Bank for International Cooperation (JBIC) in the Lao PDR and the most recent large hydro financing by the Asian Development Bank (ADB) since Nam Theun 2 in 2010.
The project is a joint venture between the Government of the Lao PDR (via Lao Holding State Enterprise), KPIC Netherlands, a subsidiary of Japan’s Kansai Electric Power Company, and EGAT International. Kansai is the second largest power utility in Japan, while EGAT International is an international arm of the Electricity Generating Authority of Thailand (EGAT).
It will take approximately five years to complete construction and commercial operations are scheduled to commence in 2019. NNP1 has entered into long-term power purchase agreements with EGAT (95%) and Electricité du Laos (5%).
The senior project loans were provided by a syndicate of Thai (Bangkok Bank, Kasikornbank, Siam Commercial Bank and Thai Exim Bank) and Japanese (BTMU, Mizuhi and SMBC) banks and ADB. The subordinated LHSE equity financing was provided by a consortium of JBIC and certain Thai banks. The financing arrangements demonstrate the continuing willingness of Thai financial institutions to be involved in Lao hydro financing and the addition of new players from the Japanese financial institutions.
As NN1’s Lao PDR legal counsel DFDL assisted the company in the negotiation and finalization of key project documents, the permitting and approval process, and various corporate matters, as well as advising on local law matters in connection with the project financing, negotiating the Lao law security documents and assisting with the closing process.
David D. Doran
Partner and Chairman
Senior Legal Adviser
DFDL’s Chairman David Doran said “[t]his has been a very busy year for DFDL’s hydropower practice. DFDL is pleased to have advised on five major Lao HPPs (nearly USD 2 billion) which have reached financial close in the last 12 months, including three since February. To be able to handle this volume of work, DFDL has developed a very strong, well respected and efficient energy team with deep knowledge and up to date information of the GOL’s policies and procedures.”
Walter Heiser, Senior Counsel, an
Other law firms involved in the project include Allen & Overy (NN1 project counsel), Clifford Chance (lenders’ project counsel) and McDonald Steed McGrath (lenders’ Lao counsel).