Lao People's Democratic Republic: Greater Mekong Subregion - Nam Theun 2 Hydroelectric Project

Evaluation Document | 21 December 2020

The Greater Mekong Subregion—Nam Theun 2 Hydroelectric Project in the Lao People’s Democratic Republic (Lao PDR) supported construction of a dam and associated hydropower generation facilities with installed capacity of 1,070 megawatts (MW) on the Nakai Plateau in the central region of Lao PDR, as well as mitigation and management of the project’s social and environmental impacts. The project aimed to help Lao PDR achieve sustainable growth and poverty reduction.

This evaluation assesses the project successful for both sovereign and nonsovereign operations, concurring with the assessments of the project completion report and the extended annual review report. The evaluation rates the preliminary development impact, ADB performance, and performance of the borrower and executing agency satisfactory. 

The evaluation highlights the following lessons for consideration in future projects: (i) international financial institution collaboration can yield a major developmental contribution with a high-risk project in a limited-capacity country; (ii) quality project sponsors are essential for success, but their limitations also need to be considered; (iii) a large and complex development project requires a commensurate and substantive long-term commitment; (iv) It is important to avoid overly ambitious objectives in project design; (v) Overly prescriptive approaches limit the scope for adaptive management of livelihood restoration programs for project-affected people; (vi) a more inclusive approach is required for biodiversity conservation, whereby “conservation forest” is balanced with “production forest” as a source of income for affected people; and (vii) It is essential to carefully study and consider less socially and environmentally disruptive options in investment decision making in hydropower.