ADB provides loan for first cross-border wind power project in Asia

The Asian Development Bank (ADB) and the Monsoon Wind Power Company Limited (Monsoon) signed a $682.55 million non-recourse project financing package on March 1 to build a 600-MW wind power plant in Sekong and Attapeu provinces in the southern region of Laos, to export and sell power to neighboring Vietnam. Comprising 133 wind turbines, the project will be the largest wind power plant in Southeast Asia and the first in Laos.

As sole mandated lead arranger and bookrunner, ADB arranged, structured, and syndicated the entire financing package, which is the largest syndicated renewable project financing transaction in ASEAN to date. The package comprises a $100 million A loan from ADB’s ordinary capital resources, a $150 million syndicated B loan, $60 million in concessional financing, $382.55 million in parallel loans, and a $10 million grant. Cutting edge use of concessional blended finance was critical in overcoming the project’s bankability hurdles to crowd in the commercial capital.

According to Ms. Suzanne Gaboury, Director General of the Private Sector Operations Department at ADB, developing economies in Asia and the Pacific face shortfalls in climate investments needed to clear a pathway to green growth. This project’s syndication of development and commercial financing will help bridge this gap by mobilizing private capital to develop wind resources that can spur economic and social advancement in the region.

“The financing from ADB and its partners will help unlock Laos’ untapped wind resources, providing a basis for a transition to clean energy and green growth that will have lasting benefits for its economy,” she added.

Cross-border power supply has been a pillar of Laos’ economic growth. Harnessing the country’s untapped wind resources can provide power diversification as the seasonality of resources is countercyclical to the rainy season, which supports the country’s hydropower generation. The project will reduce annual greenhouse gas emissions by at least 748,867 tons of carbon dioxide equivalent.

The B loan comprises $100 million from Siam Commercial Bank and $50 million from Sumitomo Mitsui Banking Corporation, while the concessional financing administered by ADB comprises $20 million from the Leading Asia’s Private Infrastructure Fund (LEAP) and $30 million from the Canadian Climate Fund for the Private Sector in Asia (CFPS, CFPS II).

Parallel loans include $120 million from the Japan International Cooperation Agency, $100 million from Kasikorn Bank, $72.55 million from the Asian Infrastructure Investment Bank, $60 million from the Export-Import Bank of Thailand, and $30 million from the Hong Kong Mortgage Corporation Limited. A $10 million grant from ADB’s Asian Development Fund (ADF) - Private Sector Window (ADB-PSW) will help mitigate key project risks, including potential curtailment risk, which is a key bankability issue for lenders.

“Together with ADB, we take this milestone step in the global fight against climate change coupled with our own corporate mission to uplift the well-being and happiness of the local communities we work in,” said Mr. Peck Khamkanist, CEO of Impact Electrons Siam Co., Ltd . “We thank ADB for its leadership in the catalytic arrangement of this deal’s financing, bringing together multiple parties both from the commercial and development spheres.”