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World Bank Issues Nam Theun 2 Appraisal Statement

January 28, 2005


Vientiane, January 28, 2005—Following nearly a decade of discussion and project preparation work, the World Bank announced today that it is beginning appraisal of the proposed Nam Theun 2 Hydroelectric Project (NT2) in Lao PDR and the associated Nam Theun 2 Social and Environmental Project (NTSEP).  As part of the ongoing due diligence process for the project, the appraisal phase will constitute a further review of the extensive preparatory work undertaken by the Government of Lao PDR and the Nam Theun 2 Power Company (NTPC).

During appraisal, the Bank will review whether the NT2 project meets the criteria laid out in the “Decision Framework” for project processing which states that the project must be embedded in a development framework aimed at poverty reduction and environmental conservation; must be technically, financially, managerially and economically sound and adhere to the Bank’s environmental and social safeguard policies; and must have greater understanding and wider support within the international donor community and civil society.

Specifically, Bank staff will focus on:

The robustness of the project design, including the economic rationale, as well as environmental and social mitigation measures that have been developed through numerous assessments and extensive local consultations, and informed by feedback from recent international workshops;

The soundness of proposed implementation arrangements, including a continuous process for including local communities in implementation and informing international stakeholders; and

The adequacy of the proposed framework for managing NT2 revenues in a transparent way to direct revenues towards priority poverty-reduction and environmental conservation efforts.

If the appraisal is successful, the next step would be to negotiate the terms of the financial instruments with the Lao government and the sponsors and prepare information for the World Bank’s Board of Executive Directors. The Board would then use that documentation to make the final decision on whether or not the World Bank would support the project.