Re-settled Lao People Move Into Homes While New Income-Generating Activities Arise

August 3, 2008

VIENTIANE, August 3 – The relocation of 6,200 people in the Nakai Plateau is now complete. People are living in their new and improved households, with safe and reliable water supply, roads and electricity. This, according to the latest annual progress report from the World Bank (WB) and Asian Development Bank (ADB) on the Nam Theun 2 (NT2) hydroelectric project.

The reservoir is starting to form, following tunnel diversion closure in April and dam gate closure now imminent. The Nakai resettlers are working closely with the Nam Theun 2 Power Company (NTPC) and the Lao Government (GOL) to ensure they can maximize their new living opportunities and double their income in five years time as stipulated in the project’s Concession Agreement.

“The main aim of this project is to harness a natural resource that can bring great revenues to this country and help it eradicate poverty, while improving the environment and the lives of the people impacted by the project,” said Patchamuthu Illangovan, World Bank Country Manager in Laos.

As the annual update reports, livelihood development programs for the Nakai resettlers focus on agriculture, livestock raising, off-farm activities, forestry and fishing in the reservoir. Previously allocated plots of land to households are being cleared by villagers for agriculture activities. Meanwhile a GOL decree gives the ressetlers exclusive rights to fishery in the reservoir. Previous hunter-gatherers, the Nakai villagers now work on a daily basis with NTPC and Lao Government staff as they embrace the new programs with a greater focus on a market economy. Villagers are learning the required ‘know-how’ including how to increase efficiency in rice production, planting new crops, accessing new markets for products and fishing in the reservoir, among others.

Meanwhile in the areas around Gnommalath District, where villagers have lost land due to project construction, compensation payments have been completed either in cash or land. Around Khemkeut District, downstream of the Nam Theun river, villagers potentially impacted by the decreased flow of the river are being closely monitored to ensure prospective cases of protein deficiency are resolved. At the same time, these villagers are working on livelihood programs based on fish ponds and alternative crops, among others, that will help them maintain their living standards.

The people living downstream along the Xe Bang Fai river are also taking part in livelihood programs developed through village revolving funds. These funds are now targeting 42 villages and will be scaled up to others in the future, based on timing of impacts. The aim is to give communities a resource where they can draw money from to invest in activities ranging from a small business, to fish ponds, to livestock, so that they can prepare for potential impacts on fish that will result once the dam starts operating in December 2009. In addition, water and sanitation infrastructure is being provided by the project to increase villager’s health. The project’s approach has been to develop the programs ahead of time, so villagers can more easily transition and thereby maintain their living standards.

On environmental aspects, the WB/ADB report notes that 86 percent of the 80 kilometer square area of the reservoir that will be permanently filled with water has been cleared of vegetation. This clearance will allow for improved navigation in the reservoir, while also contributing to improving water quality. Newly formed reservoirs usually experience poor water quality in the beginning. The project also has in place additional measures to manage water quality including increasing aeration, adjusting the intake structure design and flushing water out of the dam after the initial filling. These are four globally recognized strategies for managing water quality in reservoirs.
Work in protection and conservation in the 4,000 kilometer square Nakai-Nam Theun Protected Area, the largest protected area in mainland Southeast Asia, also continues to make progress. This includes halting illegal logging and wildlife poaching. Work is also being undertaken with villagers living in the area to enhance their livelihoods while protecting their environment.

Once Nam Theun 2 starts generating electricity in December 2009, 95 percent of the energy will be sold to Thailand. Revenues for the Lao Government will be US$34 million annually for the first ten years as financing debts are repaid. The Lao government is committed to employing these funds for pro-poor and environment programs.

The Lao Government’s public financial management program, supported by the World Bank, is working to enhance the efficiency and transparency in managing funds, including through an enhanced budget law which was enacted in 2007. The Lao Government has made notable progress on these reform efforts since the programs began to be implemented in 2005. The Government is also working on choosing the priority programs where the money will be destined.

The report notes that a high level of project monitoring continues, with independent experts, monitoring agencies, financing institutions, academics, media and others continuously visiting the project and reporting and advising on its progress.

Main highlights from the July 2008 Update include:

  • Construction activities are on track for the project to begin generating electricity in December 2009. Spillway gates at the Nakai dam were closed on August 7.
  • Tunnel diverting the water away from the reservoir closed in April and gates of the dam will close imminently, allowing the reservoir to form.
  • Resettlement of 6,200 people in Nakai is completed with villagers living in their new and improved houses, with safe and reliable water supply, electricity, roads and schools.
  • Livelihood programs in Nakai aim to allow villagers to double their income in five years. Activities are focused on agriculture, forestry, fishing in the reservoir, livestock grazing and off-farm.
  • 86 percent of standing vegetation of the 80 kilometer square area of the reservoir that will be permanently filled with water has been cleared allowing for improved navigation for resettlers. While this clearance contributes to improving water quality, other globally recognized measures to improve water quality have been taken including increasing aeration, adjusting the intake structure design and flushing water out of the dam after the initial filling.
  • Protection of wildlife in the areas of the reservoir and the Nakai Plateau is ongoing with wildlife patrols and rescue teams in place as well as elephant management and turtle conservation programs.
  • Cash and land compensation payments have been largely completed to those households losing land for project construction, except on cases where grievances have been reported which are being solved.
  • Villagers along the Xe Bang Fai are being provided with infrastructure for safe water supply and sanitation, while also developing new livelihood opportunities ahead of time, to prepare them for potential fish losses in the river beginning in December 2009.
  • Villagers downstream of the Nam Theun are being closely monitored to ensure prospective cases of protein deficiency are resolved, while also taking part in alternative livelihood programs in case of impacts due to reduced flow in the river.
  • The work in protecting and conserving the Nakai-Nam Theun Protected Area continues to make progress on law enforcement, halting illegal logging, poaching and small-scale mining activities, while also achieving the right balance between the livelihoods of people in the area and conservation activities.
  • Project continues to be managed openly and transparently, with project documents available to the public, numerous site visits taking place by interested people and high-level of projectmonitoring by various experts and agencies.
  • Government progress on public financial management and revenue management also continues, as eligible programs are assessed to ensure project revenues are destined for poverty reduction and environmental protection programs.


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