What is the Nam Ngum 3 Hydropower Project?

ADB is funding a 440 megawatt hydropower plant project to be built on the Nam Ngum river in Lao PDR.

Background information in Lao.

• Nam Ngum 3 (NN3) is a 440-megawatt hydropower project to be located on the Nam Ngum River, a tributary of the Mekong River in the Lao PDR, 130 kilometers from the capital city of Vientiane and 260 km upstream of the confluence with the main Mekong River.
• NN3 will export 2,072 gigawatt-hours of energy every year to Thailand.
• The project is estimated to cost $1.125 billion, including contingencies, and comprise a 220-meter-high dam, a 27.5-km² reservoir, an underground power station, a 10.6-km headrace tunnel, and a 99-km long, 500 kilovolt transmission line.
• Nam Ngum 3 Power Company (NN3PC) will own and run the plant. The company is owned by
  • GMS Lao Company Ltd. of the Lao PDR (27%)
  • Ratchaburi Electricity Generating Holding PCL. of Thailand (25%)
  • Axia Power Holdings, a wholly owned subsidiary of Marubeni Corporation of Japan (25%)
  • The Lao Holding State Enterprise (LHSE) of the Lao PDR (23%)

View the project records of the Nam Ngum 3 (private sector financing) and Greater Mekong Subregion Nam Ngum 3 Hydropower Project (public sector financing) for more information.

How much is ADB lending to NN3?

ADB is providing up to $465.1 million in sovereign (public sector) and private sector loans.

Why is ADB supporting this project?

• NN3 will provide clean, stable, and inexpensive energy to meet growing electricity demands in Thailand.
• NN3 will generate $770 million in revenue for the Government of the Lao PDR. Around $200 million will be allocated specifically for poverty alleviation programs such as education, rural infrastructure, and health services, and environmental protection programs.
• NN3 will encourage private sector investment in the Lao PDR.
• It will promote economic growth and improve energy security in Thailand.
• It will avoid an average 1 million tons of carbon dioxide emissions every year.
• NN3 will promote regional cooperation in the Greater Mekong Subregion (GMS) through power trading.

In terms of involuntary resettlement, how many people will be affected by NN3?

Ban Xiengdet will need to be resettled as part of the area will be periodically flooded by the reservoir.

• NN3 will have limited impact since the project footprint area and neighboring areas are sparsely populated.
• The project will affect in varying degrees, 782 households living in 29 villages in the upstream and downstream areas, including the following:
  • 144 households in Ban Xiengdet, a village near the planned reservoir, will be resettled in a new village 1.5 km away from their original village.
  • 40 households along the public road from Nam Ngone to Long Cheng and 5 households along the transmission line may lose housing or small parcels of land.
  • Another 91 households will lose some agricultural land and will be fully compensated and receive help to restore their livelihoods.

The final number, however, will be verified after the detailed engineering design is completed and will be included in the subsequent updating of the Resettlement and Ethnic Minority Development Plan (see Hmong and Lao translations of the REMDP Executive Summary).

What are the potential impacts of NN3 on the livelihood of the local people?

• The impact on livelihoods will be mainly caused by partial loss of agricultural land due to seasonal flooding at Ban Xiengdet, some loss of access to areas used for hunting and gathering of non-timber forest products, and some impacts on fisheries.
• Losses from fisheries and non timber forest products will be less than 10% of annual income. The project will provide a multi-components livelihood support program.

What kind of compensation package will be provided to the affected communities?

• NN3 will provide in-kind and cash compensation for the project.
• All eligible households will receive new houses and properly titled residential lands at no cost. Lost agricultural lands will also be replaced and land title certificates will be issued to recipients at no cost.
• Agricultural support programs will ensure that livelihood are restored and improved.
• The people Ban Xiengdet, the village most affected by the project, will gain improved access to electricity, domestic water supply, sanitation, health and education services, and markets.
• Various health programs will be implemented to address the health impacts during the construction period, including HIV/AIDS and sexually transmitted diseases, as well as an anti-trafficking program.

What are the potential impacts of NN3 on cultural properties?

• Physical resources of local archaeological and cultural significance have been identified in Ban Xiengdet. These include the remains and ruins of the former temple of Vat Vangsiang and the foundation of the Vat Xiengdet temple. Other physical resources in danger of flooding in the village are a graveyard and spirit houses.
• NN3 will finance the moving and rebuilding of any spiritual and community structures as well as supporting associated ceremonies and other rituals. A new public meeting facility, spirit house, or temple will be built depending on the wishes of the community.

How many ethnic minority households will be affected by the project?

There are over 2,500 households living in the 29 villages in the project area. Out of this, over half are considered ethnic minorities, namely, the Khmu representing 33% of the households and Hmong which constitute 25% of the households.

How will the project assist the affected ethnic groups?

• A Resettlement and Ethnic Minority Development Plan (see Hmong and Lao translations of the REMDP Executive Summary) has been prepared to address impacts on ethnic groups and others in the project area.
• Social plans have been designed to address issues related to land acquisition and involuntary resettlement, gender and development, public health, labor and social protection with particular attention and sensitivity to the special needs of affected ethnic minorities.
  • all affected peoples, irrespective of ethnic identity, are treated the same and are entitled to the same compensation and mitigation measures where eligible;
  • in all affected areas, compensation will be given to both husband and wife and both male and female affected people will be able to participate in jobs available, if interested and capable;
  • No Khmu from Ban Xiengdet will be required to relocate outside the existing village boundary;
  • house design will be according to specifications of a particular ethnic group. In the case of Ban Xiengdet, the standard plan of a Khmu house is presented in the REMDP;
  • public consultation meetings include verbal translation into ethnic minority languages;
  • support for non‐formal education in Ban Xiengdet, with an emphasis on female literacy;
  • women and men included on Ban Xiengdet's village resettlement and grievance process committees;
  • land titles will be ensured for Ban Xiengdet villagers, with title jointly in the name of husband and wife;
  • a code of conduct for all project and contractor's staff will be required. This code will contain provisions such as avoidance of all discrimination, with specific reference to culture, ethnic identity, religion, age, social status, and gender; respect for personal integrity; respecting property, respectful behavior towards local communities, respect towards women, among others. Breaches of the Workers' Code of Conduct will be the basis for investigation and dismissal.

How did the project secure consent of the affected community?

• Initial engagement with affected villages started in 1998 and a series of meaningful and sustained consultations have been held in directly and indirectly affected communities since 2007. The talks with affected households have focused on project impacts and in formulating compensation and mitigation measures, including resettlement planning.
• Consultations have been held at the national, provincial, district, kum ban (village clusters), and village levels. During these consultations, various issues were raised and addressed in the Resettlement and Ethnic Minority Development Plan (see Hmong and Lao translations of the REMDP Executive Summary) and the Environment Management and Monitoring Plan.
• Entitlements for the affected households and eligibility criteria for these entitlements have been discussed and agreed by the affected people.
• At Ban Xiengdet, there have been full community consultations in Khmu and Lao languages and affected people have provided broad community support to the project as documented in records of meetings, consultation reports, and household level consent-to-relocate forms.
• At Ban Xiengdet, the village grievance process is already in place to ensure that any issues or grievances are attended to and resolved.

What will the project do to address the impact of the influx of labor and camp followers for NN3 on public health?

• A Public Health Action Plan and a Construction Social Management Plan will be detailed to address project impacts related to community health, safety and security, labor and working conditions, a code of conduct for workers, labor influx management, among other measures.
• There will be programs to improve water supply and sanitation facilities, waste disposal, disease prevention measures including health check-ups and awareness campaigns on HIV/AIDs and human trafficking.
• Public health centers in the project area will be upgraded and the skills of health workers will be strengthened to better serve the local population and camp followers.

What is the current environmental condition of the proposed project area?

• The Nam Ngum River Basin has been highly disturbed by numerous hydropower plants that are either in operation or under construction, as well as mining activities.
• Fish migration has already been hampered by the construction of two dams: Nam Ngum 1 in the 1970s and Nam Ngum 2 from 2008, which are downstream of NN3. NN5 is also being constructed upstream of NN3.
• Fishing activities downstream have stopped since NN2 became operational in 2010, and villagers have been relocated 80 km from their original location.

What are the expected environmental impacts?

The main impacts during the NN3 plant operation will be changes in water discharges, and changes in water quality.

• The NN3 reservoir will inundate 27.5 km2, an area of largely degraded forest.
• NN3's transmission line will run parallel to an existing transmission line through the Phu Khao Khouay National Protected Area. There are no protected areas in the NN3 project area.
• The main environmental impacts are on water quality, aquatic life and fisheries, and construction-related disturbances.
• Movement of certain wildlife might also be affected by the proposed transmission line.

What is the project doing to mitigate the environmental impacts?

• NN3 will apply the highest international standards for social and environmental safeguards.
• The project has prepared an Environmental and Social Impact Assessment (ESIA) to address project impacts with an indicative budget of $22 million, before commissioning.
• The transmission line corridor will run parallel with that of NN2 to minimize the footprint of the project and the impact on the neighboring Phu Khao Khouay National Protected Area through which both will run.
• The project will be updating an Integrated Watershed Management Plan to address biodiversity and conservation issues.
• A reforestation program will be implemented in the project areas.
• ADB supports the establishment of the Nam Ngum River Basin Committee to address the river basin-wide impacts.

How will biodiversity be protected in the project area, specifically fish species?

• NN3 will be located in a largely degraded forest area which does not have a wide diversity of wildlife.
• The project has prepared an initial Integrated Watershed Management Plan that addresses biodiversity management issues such as the project impact on biodiversity.

What specific action plans are in place to address changes in water discharges and deterioration of water quality during the construction and operation of NN3?

• NN3 will undertake a water quality management and monitoring program to document water quality changes during the construction and operation of NN3.
• NN3PC will be implementing a biomass clearance programme before impoundment of the reservoir.
• The results of the Water Quality Management and Monitoring Plan will determine whether NN3 will be required to revise existing mitigating measures or compensation or to adopt other corrective actions.

Will there be mining activities in the same area where household resettlement will take place?

• The Government of the Lao PDR has committed to awarding no mining concessions within village boundaries or within areas that may affect the resources on which the NN3 affected villagers depend.
• However, there are already many formal and informal mining activities in the Nam Ngum River Basin overall.

Does ADB have any other hydropower projects in the pipeline on the Mekong River, or any plan to finance projects on the mainstream Mekong?

• No, ADB has no project in the pipeline, nor any plan to finance any project on the mainstream Mekong River.
• The potential impacts of such mainstream Mekong River activities have not been clearly determined.
• We believe that given the potential risks, further in-depth studies need to be undertaken to get a better understanding of the impacts. A 10-year deferral period would provide breathing room to conduct such studies. The Mekong River Commission has called for further detailed studies to be undertaken.

Will ADB continue the financing of non-mainstream hydropower projects on the Mekong's tributaries?

Yes, ADB will consider supporting hydro projects on Mekong River tributaries provided they meet our stringent social and environmental safeguards. These require that all potential impacts be fully assessed and mitigation measures be drawn up before a project can proceed.

What will be the focus of ADB's approach to hydropower development over the next few years in the Lao PDR and the GMS?

• ADB will work with other organizations to build up the capacity of GMS countries to undertake comprehensive strategic environmental assessments of hydropower.
• This will include technical assistance to build up the capacity for sustainable, integrated resource management of river basins where hydropower projects have been carried out or are planned.

Why does ADB continue to fund hydropower projects?

Lao PDR's vast water resources favor hydropower development.

• Hydropower provides a clean, stable, and inexpensive supply of electricity.
• It contributes far fewer greenhouse gases than conventional power plants using fossil fuels.
• 800 million people in developing Asia have no access to electricity.
• Access to electricity promotes social and economic development and is key to the fight against poverty.
• ADB believes that hydropower can make an important contribution to a country's development if projects are developed in a responsible and sustainable manner, adhering to the highest international standards for social and environmental safeguards, and if revenues are used to invest in the future development of the country.

What makes the Lao PDR so special that other countries like Thailand can't harness their own energy, but must depend on exports from the Lao PDR?

• The Lao PDR has huge untapped potential for hydropower (18,000 MW) and has harnessed only 14% of that so far.
• Meanwhile other countries like Thailand have much less hydropower potential but want to diversify their energy sources away from fossil fuels to both avoid greenhouse gas emissions and to bolster their energy security.