PowerChina unit claims $555 mln in unpaid dues
EdL has yet to respond to the filing
Case relates to Laos' Nam Ou hydropower project
March 5 (Reuters) - A unit of China's state-owned Power Construction Corp of China (PowerChina) has sued Laos utility Electricite du Laos (EdL) in Singapore claiming $555 million in unpaid dues from a hydropower project, according to an arbitration filing reviewed by Reuters.
The claim stems from electricity generated by the $2.73 billion Nam Ou River Cascade Hydropower project - operated by PowerChina 601669.SS unit Nam Ou Power - with a capacity of 1.27 gigawatts (GW) from its seven cascades along 350 km (217 miles) of river in the Southeast Asian country.
The Nam Ou project is one of Laos' largest, accounting for 7% of the 18 GW hydropower capacity in the landlocked, mountainous country of nearly eight million people.
EdL has yet to respond to the filing, according to a source familiar with the case, who also said that it was the first instance of international arbitration by a Chinese state-run entity against a Lao government-run firm. The person declined to be identified as the matter is not public.
The details of the case are being reported for the first time.
The project is a part of China's Belt and Road Initiative to build trade and transport links across Asia and beyond. Western critics have said significant investments by China in countries struggling to repay loans have helped it gain a strategic advantage, which China rejects.
PowerChina, EdL and lawyers for Nam Ou did not immediately respond to requests seeking comment. China's foreign ministry, energy regulator and commerce ministries also did not respond to requests seeking comment.
INVESTING IN HYDROPOWER
Laos has spent heavily on hydroelectric schemes, many financed by its northern neighbour China, with the aim of becoming "the battery of Southeast Asia" by exporting electricity to neighbouring countries.
Those projects, along with a Chinese-built high-speed railway, are at the centre of a debt crunch.
In its filing last month with the Singapore International Arbitration Centre, PowerChina said EdL owed it $486.27 million in dues plus interest it estimates at $65.79 million. The claims are associated with monthly invoices made between January 2020 and December 2024.
The total is equivalent to about 4% of Laos' gross domestic product.
EdL ceded majority control of its transmission unit to state-owned China Southern Power Grid Co in 2020, as mounting debt amid the Covid-19 pandemic strained public finances and pushed Laos to the brink of a sovereign default.
Nam Ou, in the same filing, also claimed damages of $3.02 million for EdL predominantly paying its dues using the Lao kip currency, while the agreement had stipulated that 85% of the payments be made with the U.S. dollar.
Laos has struggled with hyperinflation and fast depleting foreign exchange reserves ever since the pandemic, with the value of the Lao kip plunging nearly three-fifths over the last five years.
(Reporting by Reuters staff; Editing by Sharon Singleton)
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