Proposed Nam Theun 2 Hydroelectric Project in Lao PDR:
World Bank Appraisal and Negotiations Concluded, Board Decision Sought
BANGKOK March 16, 2005 -- Following completion of project appraisal and the subsequent negotiation of the required legal agreements for the proposed Nam Theun 2 Hydroelectric Project (including the Nam Theun 2 Social and Environmental Project) in Lao PDR, the World Bank Group has now submitted the project documents for the IDA operations and the MIGA operations for review by the Board of Executive Directors of the International Development Association (IDA) and the Board of Directors of the Multilateral Investment Guarantee Agency (MIGA), respectively.
In preparing the project documents for the Boards’ review, World Bank Group staff undertook a final systematic review of the project preparation work by the Government of Lao PDR and the project developers, the Nam Theun 2 Power Company (NTPC), to ensure that Nam Theun 2 meets the criteria laid out in its ‘Decision Framework’. This Framework 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.
During appraisal, Bank staff were satisfied that the project had been prepared in a way that would allow these criteria to be met fully. In particular, they were satisfied that:
- There is a sound framework for managing NT2 revenues transparently and directing them towards priority poverty-reduction and environmental conservation programs;
- The project design is robust, with sound provisions to mitigate social and environmental risks, informed by extensive local consultations and feedback from international stakeholders, and girded by a strong economic rationale; and
- The proposed implementation arrangements, which include a continuous process for involving local communities in project implementation and informing international stakeholders, are sound.
These arrangements have been confirmed with the Government, NTPC, and other potential providers of financing for the project. The World Bank Group management is comfortable with the level of preparation and analysis undertaken for the project and is forwarding the Project Appraisal Document (PAD), to the Board of Executive Directors of IDA and the Board of Directors of MIGA. The Board of each institution is composed of 24 Directors representing all member nations. The respective Boards of IDA and MIGA are responsible for making the decisions on whether IDA should provide a partial risk guarantee of a syndicated commercial loan and a development grant for social and environmental measures for the project and whether MIGA should provide guarantees to investors and lenders to the project. Should the Boards of IDA and MIGA approve and concur, respectively, with support for the project, the PAD will be made available for public review.
The Boards of Executive Directors of IDA and of MIGA are due to consider their respective operations in support of the project on March 31, 2005.