Power for the People
A hydropower project in the Lao PDR is showing the potential of subregional cooperation and private sector participation—as well as building a sense of ownership in communities
By Omana Nair ( onair@adb.org )
External Relations Officer
Life has never been better for villager Thongpet, who lives upstream from the Theun Hinboun Hydropower Project in the Lao People’s Democratic Republic (Lao PDR). His village now has access to electricity and better roads provided by the innovative joint venture to tap the nation’s rich hydropower potential.
The mostly mountainous Lao PDR is one of the poorest nations in Asia and the Pacific. But the 210-megawatt project has benefited villagers in ways they never before thought possible.
The $270 million Project, partly financed by ADB, is the Lao PDR’s first major public-private hydropower venture. For Thailand, under a long-term power purchase agreement signed in June 1996, the Project provides an inexpensive and reliable power source.
Although little of the Lao PDR’s hydropower potential has been developed to date, current exports of electricity to Thailand already account for about 25% of the country’s total export earnings. Through dividends, royalties, and taxes, the Lao PDR has earned about $95 million over just 5 years, with the Project helping quintuple the country’s energy exports between 1997 and 2001.
“As the first public-private power project undertaken in the Lao PDR, it has paved the way for energy trade and cooperation in the GMS and for private sector participation in financing, constructing, and operating the plant,” says Viraphonh Viravong, General Manager of Electricité du Laos, the state utility company that has a 60% equity in the hydropower plant.
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NERVE CENTER
The power station uses modern technology
The Theun Hinboun Power Company (THPC) is running the joint venture, commissioned in April 1998, on a 30-year build-operate-transfer scheme. GMS Power, a Thai power developer, and Nordic Hydropower AB of Sweden—a consortium of the two largest Nordic hydro utilities, Norway’s Statkraft and Sweden’s Vattenfall—each has a 20% share.
The Project is a breakthrough for bilateral partnership, private sector participation, and poverty reduction efforts in the GMS.
Theun Hinboun is the first major hydropower project to use the resources of the Nam Theun River, a major tributary of the Mekong River in central Lao PDR. The Project is about 100 kilometers (km) upstream of the confluence of the Mekong where a narrow mountain ridge separates the Nam Theun basin from the lower Nam Hinboun basin. The elevation of the two basins differs by 240 meters, and this is used to generate power. A 195-km, 230-kilovolt transmission line takes the electricity across the Mekong to the north of Thakhek and connects to the main Thai grid at Sakhon Nakhon.
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To address the Project’s environmental and social impact, a 10-year Mitigation Compensation Plan was formulated, and THPC created an Environmental Management Division to implement the plan through participatory techniques and ownership building. The plan is being pilot-tested in 11 villages.
Paul Turner, Country Director, ADB Lao Resident Mission, says ADB has learned a great deal from the environmental and social impacts in the project area and downstream.
“The Project proves that the Lao PDR can tap its natural resources to derive important foreign exchange earnings to finance much needed social and economic development projects in the country,” he says.
Nongovernment organizations (NGOs) have had an important role in the Project. Robert J. Dobias, Principal NGO Network Coordinator, says NGOs helped alert the Lao PDR Government, THPC, and ADB about social and environmental impacts. “NGOs did this on their own initiative, using their own resources,” he says.
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"While we have lost riverbank gardens and some species of fish, we now have other income-generating activities and access to clean water and electricity"
– Chang Tang, upstream villager
According to THPC General Manager Robert R. Allen Jr., 57 villages and 3,000 families have been affected, mainly through the partial loss of seasonal vegetable water gardens and changes in fish ecology. Activities introduced as part of a mitigation plan included improving water supply quality, establishing a savings and credit scheme, developing home gardens for planting fruit trees and vegetables, providing protein replenishment, and facilitating training in silkworm cultivation, weaving, and livestock management.
Mr. Allen says the first phase of the mitigation plan, using participatory techniques and best practices in development activities, has had positive results. “All activities are implemented after discussions with the villagers, and the participatory approach is providing villagers with a sense of ownership. We are making good progress, and getting very good feedback, particularly on the rural credit savings scheme,” he says.
Adjacent to the power plant, THPC also runs a school and health center, which local people can use.
Upstream villagers who recently attended a gender workshop conducted by THPC welcomed the improvements brought about by the mitigation plan. Some villagers, such as Chang Tang, Chairwoman of the Lao Women’s Union for the village, says there are two sides to the Project. “While we have lost riverbank gardens and some species of fish,” she says, “we now have other income-generating activities and access to clean water and electricity.”
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For Sing Onn, another upstream villager, the issue of sustainability looms large. “I hope this is a long-term effort by the company as the villagers need the support,” he says.
NGO representatives recently toured villages upstream and downstream of the Project to see firsthand the benefits to villagers. Bounlap Pathilath, a representative of the NGO Norwegian Church Aid, based in Vientiane, says that the livelihoods of the Lao people are directly tied to the quality of the ecosystems where they live.
“THPC seems to be more responsive, and we hope this will be a long-term sustainable effort,” he says. “We also hope ADB, as the major financier, will be more involved, and provide direct feedback to NGOs on the progress of the mitigation activities.”
But for villagers such as Thongpet, the venture’s immediate benefits far outweigh the losses. For him—and many others in the Lao PDR—the power of partnership and an innovative approach to development is bringing hope for a better quality of life.
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