Renewal of Singapore-Laos clean power deal stuck over transmission issues, sources say

SINGAPORE/BANGKOK - The Lao PDR-Thailand-Malaysia-Singapore (LTMS) Power Integration Project to supply up to 100MW of electricity from Laos via Thailand and neighbouring Malaysia was hailed by Singapore as “historic” when it was signed in 2022.

However, the extension of a multilateral deal by Singapore to import hydropower from Laos is stuck due to disagreements over how the energy will be transmitted through Thailand and Malaysia, said two regional government sources familiar with the matter.

Grid interconnection is widely seen as a key solution to cut a growing reliance on fossil fuels for power generation, and the deal was valid for two years, ending on June 22, 2024.

The power retail arm of Singapore’s Keppel and Electricite du Laos signed a renewal agreement on June 24, but Singapore has yet to sign deals with Thailand and Malaysia due to disagreements over the quantity of power to be purchased, the sources said.

Singapore, Thailand and Malaysia have until Dec 31 to sign transmission agreements, said one of the sources, who was directly involved in the negotiations. But both sources, who declined to be named because they are not authorised to speak to the media, said a final agreement was unlikely.

“LTMS might be dead for the moment. There’s truly no extension,” the source involved in the discussion said.

The Singapore Energy Market Authority and the state-run utilities of Thailand, Malaysia and Laos did not respond to Reuters’ requests for comment. A Keppel spokesperson said the firm does not comment on “market talk”.

During discussions in June in Vientiane, officials from Thailand and Malaysia had asked Singapore to guarantee the purchase of a fixed amount of electricity to cover transmission costs, a condition Singapore refused, both sources said.

The original agreement provided for payment of transmission charges only for the power purchased, one of the sources said.

Extending the deal was also complicated by competition among economies for access to renewable electricity.

In December, Thai Prime Minister Srettha Thavisin said the country had informed Laos that it

will not allow electricity to pass through to Singapore

as it wanted to purchase the power itself, Thai news portal The Nation quoted him as saying at a public event.

Thai officials at the Vientiane meeting also said they were awaiting policy directions from the government to continue with LTMS, and an approval seemed unlikely, the source said.

“Nobody wants to defy the words of the Prime Minister,” the source said. REUTERS