Nam Theun 2 Workshop in Washington DC Concludes

September 12, 2004

Washington, DC, September 12. More than 80 people gathered in Washington, DC Friday to discuss the proposed Nam Theun 2 (NT2) hydroelectric project in Lao PDR, against the broader context of the Southeast Asian nation’s challenges as one of the world’s poorest countries.

The meeting allowed participants to exchange views with the Government of Lao PDR, the project’s private sector developers, and the international financial institutions which have been asked to support the proposed project, on the project, its risks, and potential benefits.

“We are well aware that this project is controversial,”   said Christian Delvoie, Director for Infrastructure in East Asia at the World Bank. “But we cannot simply set aside the Government’s request for us to support it.”   He noted that Lao PDR is a poor country with few options, so it is important to choose options which would provide a good return for the economy, support efforts to reduce poverty, and promote conservation.  If the proceeds from a project like Nam Theun 2 were used for improvements in education and health, it could be of tremendous benefit to the people of Lao PDR, where 70 percent of the labor force has little or no education. This is the reason why the World Bank and the Asian Development Bank (ADB) have been carefully considering requests to provide partial risk guarantees for the proposed project. 

Dr. Somboune Manolom, Permanent Secretary in the Ministry of Industry and Handicrafts of Lao PDR, pointed out that 80 percent of Lao citizens live in rural areas; 40 percent of villages practice slash-and-burn agriculture; life expectancy is 59 years; one in 10 children dies by the age of five; and one in four adults dies by the age of 40.  “These are sobering statistics.  Rural development and poverty reduction programs are key priorities for 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.”

Delvoie noted, however, that the World Bank and the other potential guarantors are proceeding cautiously as they consider whether or not to support NT2, as they are aware of the social and environmental impacts that the proposed project would have. “This is not a project that we are taking lightly,” he said. “We have learned from the past and are applying a more comprehensive approach to the way we are reviewing this project and the measures being designed to ensure it delivers its intended benefits.” 

Because the project triggers all of the safeguard policies of the World Bank and the ADB, the Government and the project developers, the Nam Theun 2 Power Company, have undertaken extensive analysis and research and developed a number of plans to mitigate social and environmental risks. The draft safeguard documents outlining these plans are now well-advanced, and Delvoie noted that “although we have not yet made a decision on whether or not to support the project, our confidence in the due-diligence process is such that we feel it is time to seek the views of international stakeholders to inform our thinking. We view these workshops as an important opportunity to have a substantive and well-informed dialogue on Nam Theun 2.”

Workshop participants raised questions about the proposed project, mainly on social and environmental issues related to the project -- resettlement, livelihood options, downstream impacts, and fisheries -- as well as on the economic rationale for and viability of the proposed project, the broader judicial and economic governance framework in Lao PDR, the process of consulting with local communities, the role of independent experts and analysis in the due-diligence process, and the recommendations of the World Commission on Dams. Participants also urged the project sponsors to clarify remaining ambiguities in the risk-mitigation plans, such as how the livelihoods of project-affected communities would be restored or improved under different scenarios. The project sponsors noted that although some financing issues were still under discussion, the project’s private sector developer was legally responsible for implementing the resettlement plans and contractually liable for addressing contingencies.

A summary of the discussion will be provided by David Hale of the Worldwatch Institute, who served as independent moderator of the discussions. Thanking workshop participants for their contributions to the substantive debate, Urooj Malik, Director for Infrastructure at the ADB, said, “We will do our best to reflect your concerns, many of which we share, as we think about the project.” He also thanked the Government and NTPC for the “excellent participatory approach they have taken in formulating the project.”

The discussion in Washington followed similar meetings in Bangkok, Tokyo, and Paris as part of an international series of workshops organized by the World Bank and the ADB 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 Government will host a wrap-up workshop in Vientiane on September 24.

Media Contacts
In Washington, DC
Melissa Fossberg
Tel : 202-458-4145