Nam Theun 2 Social And Environmental Impacts Discussed At Stakeholders Workshop In Paris

September 7, 2004

PARIS, September 7, 2004 - More than 100 people from government, civil society, the donor community, the private sector, and the media in France and other European countries gathered in Paris today to discuss the proposed Nam Theun 2 (NT2) hydroelectric project and its potential to promote development in Lao PDR. More than 70% of the population in Lao PDR lives on less than US$2 a day, and the country's health and social indicators are among the lowest in East Asia. 

"We don’t have many alternatives to promote the kind of growth we need to reduce poverty,” saidH.E. Somdy Douangdy, Lao PDR's Vice Minister of Finance. As a mountainous, land-locked and sparsely populated country, he said, Lao PDR cannot easily develop large-scale agriculture or labour-intensive industries.  Nor would it be sustainable to rely on logging its forests.  “We rely too much on ODA (Official Development Assistance).  We, as a country, want to stand on our own feet, generate our own revenues, have our own source of income which we could use for our development priorities.” 

Dr. Somboune Manolom, Permanent Secretary, Ministry of Industry and Handicrafts added that 80% of Lao citizens live in rural areas; 40% of villages practice slash-and-burn agriculture; 70% of the labour force has no education or did not finish primary school; life expectancy is 59 years; 1 in 10 children dies by the age of five; and one in four adults dies by the age of 40. Dr. Somboune said:“These are sobering statistics. Rural development and poverty reduction programs are key priorities to my government. Nam Theun 2 has the potential to deliver a significant and predictable stream of revenue that would have a very clear positive impact on national development.”

Representative of international financial institutions, including the World Bank and the Asian Development Bank, said that they were considering requests to provide partial risk guarantees for the proposed project, given its potential to help reduce poverty and promote conservation in Lao PDR. The involvement of these institutions would increase standards of transparency and accountability in the preparation of the project, and help expand the framework of a broader reform agenda in Lao PDR.

Yet, representatives of these institutions were aware of the potential impacts of the NT2 project, and were carefully reviewing the project's social and environmental safeguard documents before deciding whether or not to support NT2. “This is not a project that the international financial institutions are taking lightly,” said Mr. Christian Delvoie, Director of Infrastructure in East Asia at the World Bank“We have learned from the past and are applying a more comprehensive approach to project preparation and implementation, and integrating environmental and social aspects into the overall project costs and implementation schedule.” 

Workshop participants raised over 80 questions about the proposed project, mainly about social and environmental issues related to the project -- resettlement, livelihood options, downstream impacts, fisheries, and natural habitats. Questions were raised about the economic rationale and viability of the proposed project, the broader economic governance framework in Lao PDR, human rights, and the process of consulting with local communities and engaging with international stakeholders.

Civil society groups also reiterated requests for the disclosure of key economic documents. The financial institutions said they remain committed to transparency and to ongoing dialogue with stakeholders, as documents are released for public review. “We regard this dialogue as a way for a wider community of stakeholders to cast their light on these issues and thus inform our thinking about the proposed project,” said Mr. Delvoie.

Concluding the day’s discussions, the independent moderator, former Environment Minister of France Madame Corinne Lepage, thanked the workshop sponsors and participants for their candid comments and openness, which she said contributed to a constructive debate. “If, indeed, the project goes forward, it should be with the same attention to transparency,” she said, noting that “transparency in the use of public funds is the key to democracy.”

Mr. Urooj Malik, Director for Infrastructure at the Asian Development Bank, noted that the workshop reflected the “excellent participatory approach that the government and the project developer have taken in formulating the project.”

The gathering in Paris, which followed similar meetings in Bangkok and Tokyo last week, was one of an international series of workshops organized by the World Bank and the Asian Development Bank to allow interested parties to exchange views and comment on the safeguard documents that are being prepared by the government of Lao PDR and the Nam Theun 2 Power Company (NT2) to address the social and environmental impacts of the proposed project. The workshops will continue in Washington DC on September 10 and in Vientiane on September 24, where the Lao PDR government will host a wrap-up workshop.