EdL is a government-owned power utility in Lao PDR. It currently has a total annual generation capacity of 1.4 million MWh and serves electricity to over 517,000 households in the country. It owns and operates the country's main generation, transmission and distribution assets, manages electricity imports into its grids and exports from its stations. EdL also has a project development role and has been the implementing agency for government hydropower power projects and in the case of some IPP projects acts as shareholder on behalf of the Lao Government.

The total project cost is estimated at up to $50million. The proposed IFC investment is a senior loan of up to $15MM.

15.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	15.0
Equity

* These investment figures are indicative

IFC financing will be used to to implement rural electrification, electricity loss reduction and energy efficiency investments in the Southern Provinces of Lao PDR.

Increased rural electrification. Lao PDR has increased its electrification rates substantially from 16% in 1995 to 44.6% in 2004 and to approximately 60% in 2007. However, the country continues to have one of the lowest electrification rates in the Mekong region, which hinders its ability to attract investments and to develop rural areas. The project will provide access to electricity to approximately 27,000 rural families and assist the GoL’s MDG of increasing electrification coverage to 70% by 2012, including rural areas. Rural electrification has been identified as critical for employment generation and for the creation and ongoing support to SMEs. Climate change mitigation through increased energy efficiency. The Project has a strong climate change component with its emphasis on (i) distribution system loss reduction, energy conservation, and energy efficiency improvements; (ii) improved access to electricity thereby reducing use of traditional fuels. Achievement of the project development objective would be measured by: (i) number of households electrified; and (iii) EdL’s distribution system losses;

IFC’s role is to provide long term commercial financing, currently not available in the market to support EdL/ GoL’s rural electrification program and help meet MDG targets. IDA resources and country allocations are limited. Thus, IFC in addition to being the first direct commercial financier to EdL, will be partnering with and leveraging the IDA’s long relationship and augmenting constrained grant resources (NORAD, IDA, GEF, AusAid) to complete the financing for the up to US50Million project.

The proposed IFC investment is a Category B project because a limited number of specific environmental and social impacts may result, which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The key social and environmental aspects that are associated with the Project relate to EDL’s Environmental, Occupational Health, Safety and Social (EHSS) assessment, management system and implementation. The Bank Group’s experience during the planning and implementation of Rural Electrification Program Phase I (REP-I) suggested that implementation of subprojects will involve small scale physical and civil works, which require very minor land acquisition or restrictions on land use and the negative impacts on local environment during construction are short term, very limited and localized. Further, it is possible to readily design and implement engineering and management measures to mitigate adverse impacts. The Project will be implemented in accordance with applicable local laws and regulations, The World Bank Social and Environmental Safeguard Policies and IFC’s Performance Standards on Social and Environmental Sustainability.

The distribution grid extension subprojects to be financed by IFC have as yet not been finalized. However, these are expected to be similar (in nature and scale) to the sub projects proposed under REP-I. In light of this, the focus of this review is on: social and environmental assessment, including identification of issues that need to be managed in accordance to the Performance Standards 2-8 and relevant IFC environmental, health and safety guidelines; social, environmental, occupational health and safety (SEHS) management systems; and corporate capacity to successfully implement and monitor projects.

A summary discussion on the social and environmental aspects of relevance to the Project including the company’s plans to address these impacts has been provided in the Environmental and Social Review Summary (ESRS) prepared by IFC.