Lao People's Democratic Republic: LAO: GMS NAM THEUN 2 HYDROELECTRIC PROJECT

Nonsovereign Project | 37910-014

Summary

The Project includes the development, construction and operation of a 1,070 megawatt (MW) trans-basin diversion power on the Nam Theun River, a tributary of the Mekong, in the central region of the Lao People's Democratic Republic (Lao PDR). A 450 square kilometer reservoir will be formed on the Nakai Plateau by constructing a dam 39 meters high northwest of the plateau. Water from the reservoir will drop about 350 meters to a powerhouse. The Project will divert about 260 cubic meters of water per second through a power station to the Xe Bang Fai River Basin, also a tributary of the Mekong. The water discharged from the power house will be released to the Xe Bang Fai through a 27 kilometer channel and a regulating pond.

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Project Name LAO: GMS NAM THEUN 2 HYDROELECTRIC PROJECT
Project Number 37910-014
Borrower/Company NAM THEUN 2 POWER COMPANY LIMITED
Country Lao People's Democratic Republic
Location Bolikhamsai and Khammouane Provinces in Central Lao.
Approval Number 7210/2161
Type or Modality of Assistance
7210/2161 Political Risk Guarantee with Govt Guarantee USD 50.00 million Committed
7210/2161 Political Risk Guarantee with Govt Guarantee USD 50.00 million Committed
Strategic Agendas
Drivers of Change
Sector / Subsector Energy - Large hydropower generation
Gender Equity and Mainstreaming
Responsible ADB Department Private Sector Operations Department
Responsible ADB Division Portfolio Management Division, PSOD
Responsible ADB Officer Hayato Hoshi
Project Sponsor(s) Government Of Laos
Electricity Generating Public Co.,
Edf International
Italian-Thai Development Public
Description

The Project includes the development, construction and operation of a 1,070 megawatt (MW) trans-basin diversion power on the Nam Theun River, a tributary of the Mekong, in the central region of the Lao People's Democratic Republic (Lao PDR). A 450 square kilometer reservoir will be formed on the Nakai Plateau by constructing a dam 39 meters high northwest of the plateau. Water from the reservoir will drop about 350 meters to a powerhouse. The Project will divert about 260 cubic meters of water per second through a power station to the Xe Bang Fai River Basin, also a tributary of the Mekong. The water discharged from the power house will be released to the Xe Bang Fai through a 27 kilometer channel and a regulating pond.

The Project will export 5,354 gigawatt-hours (GWh) of electricity to Thailand and will provide revenue to the Lao PDR through taxes, royalties, and dividend. About 200 300 GWh will be supplied to electricity consumers in the Lao PDR. The Project is structured as a build-own-operate-transfer, with a concession period of 31 years, of which the operating period is 25 years. At the end of the concession period, the project facilities will be transferred to the Government free of charge.

Objectives and Scope

The Project:

(i) supports the Government of Laos' poverty alleviation efforts by generating income of about $1.9 billion over the life of the Concession to support Government poverty reduction programs;

(ii) supports the Government's energy policy of developing hydropower resources to generate revenues from the export of power;

(iii) promotes private sector participation in infrastructure;

(iv) will supply Thailand with long-term and competitively priced power and strengthen its security of supply; and,

(v) promotes regional cooperation as the Project is part of the GMS Master Plan for power generation.

Linkage to Country/Regional Strategy ADB's country strategy and program for the Lao PDR aims to promote sustainable economic growth and development through infrastructure investments. Specifically, ADB will continue to help to develop the country's energy resources, including hydroelectric power resources in a sustainable manner.
Status of Development Objectives Will be evaluated upon completion of the project.
Safeguard Categories
Environment A
Involuntary Resettlement
Indigenous Peoples
Summary of Environmental and Social Aspects
Environmental Aspects The Project involves three ADB safeguard policies on involuntary resettlement, indigenous peoples, and environment. It also involves operational provisions in sector and thematic policies such as forestry, water, energy, and gender and development. The key safeguard documents are (i) the environmental assessment and management plan (EAMP), which assesses project impacts and details plans to minimize, mitigate, or compensate for these impacts; (ii) the SDP, to manage social impacts, including those related to resettlement, health, gender, and downstream impacts and to address special issues related to ethnic minorities; and (iii) the social and environment management framework and operational plan (SEMFOP), to manage the NNT NPA, including its corridors. The Government, NTPC, and IFIs also prepared the summary environmental and social impact assessment, cumulative impact assessment (CIA), and NT2 contributions, safeguard due diligence on the Thai transmission lines, social and environment cost benefit analysis, and capacity assessment. All NTPC obligations, including those related to social and environmental mitigation, are detailed in the safeguard documents and summarized in schedule 4 of the concession agreement.
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation

ADB has promoted the informed participation of the Government, civil society, and other stakeholders in an open and inclusive manner. Throughout implementation, consultations have been carried out with project-affected people in the major impact zones: Nakai Plateau, project land areas, downstream Xe Bang Fai, downstream of the dam, among others. Information on the compensation and resettlement plans, and livelihood options have been presented to the project-affected people by trained community and district facilitators through media they can understand, including radio broadcasts in minority languages, visual materials together with verbal explanations, site visits to proposed and pilot resettlement areas, and open discussions. The project design was adjusted to accommodate concerns of the project-affected people, such as location of the plateau resettlement area, village layout, housing design, and types of crops under the livelihood program as well as livelihood options for project lands and downstream areas. Resettlement is ongoing and making progress. Measures to mitigate environmental impacts related to construction activities are being implemented and closely monitored.

Significant consultations were carried out with affected persons and international community prior to Board presentation and approval. Stakeholder workshops are organized annually.

Timetable for assistance design, processing and implementation
Concept Clearance 19 May 2003
Due Diligence 16 Feb 2005
Credit Committee Meeting 28 Feb 2005
Approval 04 Apr 2005
PDS Creation Date 06 Apr 2006
Last PDS Update 26 Sep 2014

No documents found.

Safeguard Documents

See also: Safeguards

No documents found.

Evaluation Documents

See also: Independent Evaluation

No documents found.


The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Fast Facts about Nam Theun 2

Description

  • a 1,070-megawatt trans-basin diversion power plant on the Nam Theun River,
  • a 450-square kilometer (km2) reservoir on the Nakai Plateau,
  • a 39-meter-high dam northwest of the plateau,
  • a powerhouse 350 meters below the plateau,
  • a regulating pond below the powerhouse, and
  • a 27-kilometer (km) channel from the regulating pond to the Xe Bang Fai River Basin, also a tributary of the Mekong River.

The plant would sell most of its production to Thailand, generating a secure, long-term flow of revenue for the Government of the Lao People’s Democratic Republic. This revenue would be an important source of funding for the government's efforts to sustain economic development based on its National Growth and Poverty Eradication Strategy and reduce poverty in Lao PDR.

The Nam Theun 2 Power Company Limited (NTPC) will develop the project on a build-own-operate-transfer (BOOT) basis for a concession period of 31 years, of which the operating period is 25 years. The project will be transferred to the Government of the Lao PDR free of charge at the end of the concession period.

NTPC is owned by a consortium comprising

  • Electricity de France International (EdFI) - 35%
  • Electricity Generating Company (EGCO) of Thailand - 25%
  • Italian Thai Development Company Limited (ITD) of Thailand - 15%, and
  • Government of Lao PDR - 25%

NTPC and the Lao PDR government have comprehensively assessed and evaluated the potential social and environmental impacts of the proposed project.

The project has been designed in extensive consultation with affected people and international civil society. It is focused on avoiding and mitigating negative impacts, and includes compensatory provisions where impacts cannot be fully mitigated.

International agencies are providing funding and support to the project, including

  • Agence Française de Développement,
  • Asian Development Bank (ADB),
  • European Investment Bank, and
  • World Bank.

These institutions are undertaking an extensive due diligence process to ensure the design and implementation of the project meet or exceed the safeguard compliance requirements of each institution.

ADB's Assistance

ADB is providing technical assistance (TA) to the Government of Lao PDR to prepare the project. The first TA was approved in November 2003. The second TA was approved in April 2004.

ADB will support the project through

ADB's assistance also includes:

  • preparing the cumulative impact assessment study,
  • assessing capacity of the Government of Lao PDR to implement social and environmental mitigation measures,
  • implementing a short-term capacity building program,
  • preparing and facilitating effective local consultation,
  • undertaking supplementary financial and economic analysis,
  • reviewing key safeguard documents,
  • preparing the summary environmental and social impact assessment, and
  • facilitating stakeholder participation and consultation.

Consultations on Nam Theun 2

Extensive local consultations were undertaken in the areas affected by the project. Local consultation will continue during the remaining project preparation and implementation process.

ADB and the World Bank are assisting the Government of Lao PDR with local and international consultations through the provision of external experts to ensure transparency and balance in the consultation process. Extensive local consultations were undertaken in the areas affected by the project. Local consultation will continue during the remaining project preparation and implementation process.

The external experts created a set of documents and visual aids explaining relevant information about the project and its impact on affected areas. The experts also trained local facilitators at the village and district level to

  • present the content of the documents,
  • conduct inclusive and participatory discussions involving all households in each village,
  • lead follow-up activities, and
  • prepare village reports for the public domain.

A series of international stakeholder workshops were held in Bangkok, Tokyo, Paris, Washington, D.C., and Vientiane from 31 August through 24 September 2004.

The international workshops were organized to

  • disseminate information about the proposed project,
  • provide a forum for interested parties to state their concerns, views, and ideas, and
  • provide feedback to the Government of Lao PDR and NTPC before the safeguard documents are finalized.

Independent moderators facilitated each workshop and prepared summaries of the discussions. ADB and other international financial institutions will consider the results of the international workshops during their decision-making processes.

  • 17 Nov 2010 | Article

    Life Beyond the Dam

    Though a hydropower project relocated villagers, it also brought electricity, roads, and schools to a remote valley. Phon Sa-On Resettlement Village, Nakai Province - Kai Kensavaong will never again walk the muddy lanes of her birth village. Her old home is beneath a reservoir of caramel-brown water. "I'll never forget that place," said the 41-year-old villager, her lips dyed pink from chewing betel nut. "It was my home. I picked my first bamboo stalks there."
  • 31 Jan 2009 | Project Result / Case Study

    Hydropower Helps Lift Rural Communities

    The $1.25 billion Nam Theun 2 Hydroelectric Project in central Lao PDR is improving the economic landscape in one of Asia's poorest countries In the remote jungles of central Lao People's Democratic Republic (Lao PDR), a landmark experiment has been going on. A vast array of hard hats and heavy machinery has been working on a project that has been changing the lives of thousands of families and boosting the economy of one of Asia's poorest - yet most promising - countries.