New Lao PDR Hydro Project to Spur Development, Improve Lives

News Release | 9 December 2010

VIENTIANE, LAO PDR - Nam Theun 2, the Lao People's Democratic Republic's (Lao PDR) largest hydropower facility, was officially inaugurated today, signaling a new era for growth, development and poverty reduction in the landlocked Southeast Asian country.

Over 90% of the electricity generated by the project is being sold to Thailand, providing Lao PDR with a $2 billion revenue stream over the next 25 years.

The funds are earmarked for the nationwide improvement of health and education services, and other poverty alleviation programs.

"This project is a testament to the fact that when hydropower projects are done right, in a socially and environmentally responsible manner, the benefits are considerable," said Kunio Senga, Director General of ADB's Southeast Asia Department.

Before the Nam Theun 2 project, more than half of the families in Nakai Plateau villages, where the project is located, lived in poverty. Child mortality rates were high, clean drinking water was scarce, and sanitation was almost non-existent.

"Today, the vast majority of residents say they are better off than ever before," said Mr. Senga.

Families who had to move to make way for the dam have been provided with new hardwood homes complete with electricity, clean water and sanitation facilities.

These improvements, coupled with improved healthcare services, have resulted in a measurable decline in child and infant mortality rates, with parasitic infections falling by 90 percent.

The transition from subsistence livelihoods, based on slash-and-burn agriculture, to a more settled agricultural market economy has not always been easy for many households, but families report their food security has notably improved since their move.

"This is an incredibly complex project, and numerous challenges have arisen along the way," said Mr. Senga. "By working closely with communities we strive to address their concerns - from compensation to the need for more land - and to introduce programs tailored to their specific needs. We will continue to closely monitor the situation."

The project has also placed great emphasis on environmental management. Over $60 million has been invested in downstream water quality management, with better than expected results.

The Nam Theun 2 Power Company is also disbursing $1 million annually for the protection of the 4,000 square kilometer Nakai-Nam Theun Biodiversity Conservation Area.

Nam Theun 2 will release 35 times less greenhouse gases than a coal-fired power plant of equivalent size, and the biodiversity conservation area will help sequester an additional 40-60 million tons of CO2 emissions.

ADB provided $120 million in support of the $1.43 billion project. Twenty-seven different financing institutions supported the project, including the World Bank, the European Investment Bank, and Agence Francaise du Developpement.

The Nam Theun 2 Power Company is jointly owned by Electricite de France International, Electricity Generating Public Company (Thailand), and the Government of Lao PDR.

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Attention Broadcasters: Video footage available via the NewsMarket or directly from ADB.

Attention Publishers: Photographs also available directly from ADB.

Contact Samantha Tongson-Rubio at: phone: +632-632-4816; email: strubio@adb.org