Lao People's Democratic Republic: Greater Mekong Subregion Nam Ngum 3 Hydropower Project

Sovereign Project | 41385-013

Summary

The Nam Ngum 3 Hydropower Project (NN3) is a 440-megawatt (MW) hydropower plant that will be located on the Nam Ngum River, a tributary of the Mekong River in the Lao People's Democratic Republic, 130 kilometers from the capital city of Vientiane and 260 km upstream of the confluence with the Mekong River. It will export 2,072 gigawatt-hours of energy every year to Thailand, generating export revenues for Lao PDR, boosting clean energy supply in Thailand and displacing the emission of 1 million tons of carbon dioxide annually.

Under the 41385-013: Greater Mekong Subregion Nam Ngum 3 Hydropower Project, ADB will provide $115 million in loans to the Government of Lao PDR for its equity contribution in the Nam Ngum 3 Power Company (NN3PC), which will build, own, and run the hydropower plant for a 27-year concession period; and for the development of dedicated transmission facilities needed to export electricity to Thailand.

Latest Project Documents


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Project Name Greater Mekong Subregion Nam Ngum 3 Hydropower Project
Project Number 41385-013
Country Lao People's Democratic Republic
Project Status Dropped / Terminated
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 2818-LAO: Greater Mekong Subregion Nam Ngum 3 Hydropower Project
Ordinary capital resources US$ 98.20 million
Loan 2819-LAO: Greater Mekong Subregion Nam Ngum 3 Hydropower Project
Asian Development Fund US$ 16.92 million
TA 7937-LAO: Strengthening Biodiversity Protection and Management in the Nam Ngum 3 Hydropower Project
Technical Assistance Special Fund US$ 500,000.00
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Regional integration
Drivers of Change Private sector development
Sector / Subsector Energy - Large hydropower generation
Gender Equity and Mainstreaming
Description

The Nam Ngum 3 Hydropower Project (NN3) is a 440-megawatt (MW) hydropower plant that will be located on the Nam Ngum River, a tributary of the Mekong River in the Lao People's Democratic Republic, 130 kilometers from the capital city of Vientiane and 260 km upstream of the confluence with the Mekong River. It will export 2,072 gigawatt-hours of energy every year to Thailand, generating export revenues for Lao PDR, boosting clean energy supply in Thailand and displacing the emission of 1 million tons of carbon dioxide annually.

Under the 41385-013: Greater Mekong Subregion Nam Ngum 3 Hydropower Project, ADB will provide $115 million in loans to the Government of Lao PDR for its equity contribution in the Nam Ngum 3 Power Company (NN3PC), which will build, own, and run the hydropower plant for a 27-year concession period; and for the development of dedicated transmission facilities needed to export electricity to Thailand.

Under a separate arrangement, ADB is also providing $350 million in private sector (nonsovereign) financing for the NN3 project, which will construct a 220-meter-high concrete-faced rock-fill dam, an underground power station, a gated spillway to release water from the dam especially during the rainy season, an underground 10.6-km headrace tunnel to channel water from the reservoir to the power station, and a 99-km 500-kV transmission line.

The build-own-operate-transfer project will (i) generate an estimated $770 million in taxes, royalties, and dividends for the Lao PDR government over the concession period; (ii) promote economic growth in the Lao PDR through private sector investment, technology transfer, employment generation, and local infrastructure development; (iii) promote sustainable development in northeast Thailand by improving energy security and reducing greenhouse gas emissions; and (iv) increase regional cooperation in the Greater Mekong Subregion (GMS).

The NN3 project is the second large-scale hydropower plant to receive ADB financing in the Lao PDR, following Nam Theun 2 Hydroelectric Project, which was approved in 2005.

Project Rationale and Linkage to Country/Regional Strategy

The midterm review of ADB's country strategy and program, 2007-2011, for Lao PDR notes that developing hydropower for export can generate foreign currency revenues, which can be channeled into education, rural infrastructure, healthcare, and environmental protection programs. Since the government does not have the financial resources to build hydropower plants on its own, it has decided to hold minority shares in export-oriented projects to boost the revenues it will receive and ensure that any adverse social and environmental impacts of these projects are mitigated effectively and sustainably. The government has opted to raise funds through a public-private partnership (PPP), encouraged by the success of, the Nam Theun 2 project in attracting private financing.

Power projects structured as PPPs are typically based on the build-operate-transfer model with the off-taker entering into long-term power purchase agreements that guarantee power purchase cost recovery.

The public sector loan for the NN3 was listed in ADB's 2011 country operations and business plan for Lao PDR. The project also helps achieve the objectives of the 2010-2012 regional cooperation business plan for the GMS which stresses integrating national markets to promote economic efficiency and private sector development and managing the environment and shared natural resources to help ensure sustainable development and the conservation of natural resources. The foreign exchange revenues generated by the project will provide funds for the Lao PDR government to meet its poverty-reduction goals. It will also provide low-cost and renewable energy to meet rising demand in Thailand.

Thailand's electricity is generated mainly by thermal power plants that burn the fossil fuels natural gas and lignite. The country has limited hydropower resources and does not have enough renewable energy to meet its growing energy demand. The Thailand Power Development Plan 2010 estimates that the country will need an additional 21,564 MW of electricity-generating capacity by 2020 to maintain economic growth. The 20-year plan envisions sourcing more than 5 GW from neighboring countries.

Impact

For the Lao PDR, increased financial resources for the government to allocate to socioeconomic development.

For Thailand, increased access to environmentally sustainable renewable energy

Project Outcome
Description of Outcome Increased regional cooperation between Lao PDR and Thailand through the trade of clean energy
Progress Toward Outcome --Suspended until further notice
Implementation Progress
Description of Project Outputs

Nam Ngum 3 hydropower plant and the associated 500 kV transmission line constructed in the Lao PDR as a public-private partnership in an environmentally sustainable and socially inclusive manner

Revenues provided to the Government of the Lao PDR in the form of taxes, royalties, and dividends

Biodiversity protection and management capacity strengthened at MNRE

Status of Implementation Progress (Outputs, Activities, and Issues) --Suspended until further notice
Geographical Location
Safeguard Categories
Environment A
Involuntary Resettlement A
Indigenous Peoples A
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services Various design and supervision consulting firms and monitoring agencies, and dam safety review panel to be recuited by Nam Ngum3 Power Company and the Government, and financed by the Company
Procurement To be done by Nam Ngum 3 Power Company in accordance with ADB provate sector procurement policies
Responsible ADB Officer Duy-Thanh Bui
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Energy Division, SERD
Executing Agencies
Lao Holding State Enterprise (LHSE)Nong Bone Road
Bane Fai Xaysettha District
Vientiane, LAO PDR
Timetable
Concept Clearance 26 Apr 2011
Fact Finding 31 Mar 2011 to 09 Apr 2011
MRM 06 Jun 2011
Approval 03 Nov 2011
Last Review Mission -
Last PDS Update 17 Sep 2013

Loan 2818-LAO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
03 Nov 2011 - - 30 Jun 2019 - 13 Sep 2013
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 98.20 Cumulative Contract Awards
ADB 98.20 03 Nov 2011 0.00 0.00 0%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 03 Nov 2011 0.00 0.00 0%

Loan 2819-LAO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
03 Nov 2011 - - 30 Jun 2019 - 13 Sep 2013
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 16.95 Cumulative Contract Awards
ADB 16.92 03 Nov 2011 0.00 0.00 0%
Counterpart 0.03 Cumulative Disbursements
Cofinancing 0.00 03 Nov 2011 0.00 0.00 0%

TA 7937-LAO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
03 Nov 2011 09 Jan 2012 09 Jan 2012 31 Dec 2017 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
500,000.00 0.00 0.00 0.00 0.00 0.00 500,000.00 03 Nov 2011 0.00

Evaluation Documents

See also: Independent Evaluation

No documents found.


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