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VIENTIANE, LAO PEOPLE’S DEMOCRATIC REPUBLIC - Two years after its approval, the Nam Theun 2 (NT2) Hydroelectric Project in Lao People’s Democratic Republic (PDR) continues to make satisfactory progress according to the latest annual update by the Asian Development Bank (ADB) and the World Bank (WB). The two Banks state that the next twelve months will be a vital phase ahead of reservoir impoundment anticipated for June 2008.
Nam Theun 2 is a 1,070 megawatt hydropower project in Lao PDR that aims to generate revenues - an average of about US$30 million (nominal) per year in the first ten years, and about US$110 million (nominal) per year from 2020 to 2034 - for poverty reduction efforts and environmental protection in the country. The project has been designed with a suite of environmental and social mitigation measures to ensure that living standards of people affected by the project improve and that the largest biodiversity area in mainland Southeast Asia is better protected and preserved.
“Important progress has been made in various areas since our last update in October of 2006, including having in place stronger government institutions and mechanisms, strengthening capacity in the company and government, and ensuring better alignment of the pace of construction with environmental and social mitigation measures,” remarked Ian Porter, World Bank Country Director for Lao PDR. “There has also been progress on salvage logging activities, resettlement of villages, implementation of pilot activities, and management of the protected area,” he added.
According to the report, completing village relocation and implementing livelihood activities are among actions needed to ensure social and environmental programs continue in tandem with project construction.
In the Nakai Plateau, 742 of the 1,216 affected households have already moved to their permanent resettlement sites and are benefiting from improved basic infrastructure (including roads, drinking water and schools), regular health checkups, and transitional packages (including rice allowance, protein supplements and payment for labor contribution). Delays in completing the building of permanent houses are being addressed. Another 19 households will complete their move by the end of June 2007 and the remaining 455 households will move in the 2007-2008 dry season, as planned.
In all project areas, livelihood development programs continue to receive attention and are beginning to make good progress. These programs include activities ranging from agriculture to weaving and village forestry. The report notes that concerted efforts are needed to accelerate these programs in the coming months, so that income begins to be generated from these livelihood activities.
Areas of concern include issues with erosion and drainage in some project roads, payments of compensation in project lands, finalization of resettlement preferences and entitlement packages for some households in two villages, and strengthening coordination, management and implementation of the livelihood programs. John Cooney, Director of Infrastructure for Southeast Asia at the Asian Development Bank, explained that “while these kinds of challenges are not unexpected in complex infrastructure projects such as this, the key is the ability that the Government, company and financing institutions are demonstrating to deal rapidly and effectively with problems that arise, complemented by the effective monitoring processes that have been put in place to ensure that such challenges are identified and rectified quickly.”
In this context, the report highlights refinements in oversight and monitoring arrangements, which include continued regular visits by independent experts, the financing institutions, government and company engineers and independent monitoring agencies. It also notes the continued openness and participation from various stakeholders, including ongoing consultations with villagers. The Government of Lao PDR will organize the second Annual Stakeholder Forum at the end of June 2007.
The International Advisory Group (IAG) that reports to the World Bank President has also published its report, available at www.worldbank.org/laont2 . The IAG notes the significant progress being made and highlights actions needed to strengthen the implementation of resettlement programs; especially livelihood development; downstream programs; the timely payment of compensation; and strengthening capacity for environmental and public financial management.
Main highlights from the Update include:
Nam Theun 2 is a US$1.45 billion, 1,070 megawatt hydropower project in Lao PDR that aims to generate revenues for poverty reduction efforts and environmental protection. In March 2005, when ADB and World Bank support for the project was approved, management of the two Banks made a commitment to supervise the project closely and report regularly on its implementation.