Country Report Laos June 2009

The domestic economy: Utilities are reformed

Fees for the use of frequency spectrums by telecommunications operators have been introduced for the first time by the new telecoms regulator, the National Authority of Posts and Telecommunications. Fees are low by international standards, ranging from K200,000-400,000 (US$24-48) per kilohertz per year, but are proving unpopular with operators in what has become a competitive sector. The Lao Telecommunications Company and the Enterprise de Telecommunications Laos (ETL) are state-owned and are the biggest operators in the sector. They will each face total fees of about K8bn (US$940,000) this year. ETL has threatened to refuse to pay the fee, complaining that it was not informed of the new fees last year and so was unable to budget for them. Any telecoms operator that holds a frequency licence but fails to make use of it within a year will be fined 120% of the fee. This regulation may spell the end in the Lao market for Sky Telecom of the US, which received a licence more than two years ago, but has yet to open for business.

Vientiane's water supplier, Nam Papa Lao, is one of the state utilities that is considering listing on the future stockmarket. The company's director, Daophet Bouapha, has said that although listing would allow the enterprise to raise private sector financing, a public listing would also require a complete overhaul of its business. The utility does not have the necessary resources for expanding and maintaining water-supply facilities (currently only 80% of Vientiane residents receive piped water). Daophet acknowledged that in order to successfully list on the market, it would need to raise water rates to make its business profitable. Water prices are regulated by the state, while leakage and non-payment of bills by government agencies continue to render the water utility one of the worst performing state enterprises. In May Nam Papa was permitted to introduce a new sliding scale of water charges depending on the amount of water used. This is to be uniformly applied to all customers. (In the past government agencies were charged lower rates than average customers, while businesses and foreigners faced inflated rates.) It is estimated that the new tariff, which begins at K500 per cubic metre and rises to K5,000, will mean an average price increase of 20%.

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