Nam Theun 2 Making Steady Progress

August 12, 2009

VIENTIANE, August 12, 2009 – An annual report to the Executive Directors of the World Bank and the Asian Development Bank (ADB), updating them on progress on the project, was released today. The report notes that the project is making steady and commendable progress and highlights a range of challenges that need to be addressed as implementation progresses.

Expressing satisfaction at the progress, Mr. Patchamuthu Illangovan, Country Manager of the World Bank for Lao PDR, commended the Government and Nam Theun 2 Power Company for their solid commitment and strong efforts to ensure that this public-private partnership project lives up to the expectations of its numerous stakeholders. “Whereas commercial operations and commissioning are significant milestones, the overall success of the project will eventually be judged by its ability to achieve the longer-term environment, social and, revenue management outcomes and these will continue to be our focus”, he added.

Highlights of the report include:

  • The physical construction of the hydropower facility is over 98 percent complete, and the testing program is helping to identify and iron out any construction and electro-mechanical issues as they emerge.
  • The first power from the Nam Theun 2 (NT2) Hydropower Project in Lao PDR has been supplied to Thailand and Lao grids as part of the NT2 turbine testing process. 
  • The wildlife rescue program, designed to rescue wildlife trapped on islands during the reservoir’s inundation was successfully completed at the end of February 2009. Among others, significant numbers of Large Antlered Munjac, a rare species endemic to the area, were rescued and successfully released into appropriate areas. 
  • Water quality monitoring, data collection and analysis systems are in place and measuring the water quality in the reservoir and downstream Nam Theun and Xe Bang Fai rivers. Data so far suggests that water quality both in the reservoir and in the Nam Theun downstream is within acceptable norms. 
  • All resettled people in Nakai plateau have now settled down into their new surroundings and are being supported to develop new livelihoods for themselves for the long-term. The report notes the challenges the resettlers are facing as they continue to make their transition to new income generating opportunities. The progress remains mixed across the resettled population. They are enjoying a fishing bonanza from the new reservoir but some have way to go in their agriculture, forestry and livestock activities.  The existing project safety net continues to support those households that remain vulnerable. Ensuring better and sustainable livelihoods for the resettled people is a key commitment of the NT2 project, and will remain a medium-term focus of the government, NTPC, and of the World Bank and ADB teams monitoring the project. 
  • The report notes that downstream impacts on the Nam Theun (now felt since April 2008) are being closely monitored, and livelihood programs for affected villages are underway. The monitoring program to check impacts within the communities has so far meant that the 37 Villages downstream of the Nakai dam have not needed to activate the Emergency contingency protein replacement program to date. 
  • Impacts on the downstream Xe Bang Fai are just starting during the testing period, and will likely grow as progress towards commercial operations takes place. The mitigation and compensation program for the downstream villages has been underway for several years, and is being scaled up across villages. For example, registering assets that might be affected by increased water flows (such as river bank gardens) is complete; a savings and credit scheme is helping potentially affected people invest in adapting and improving their livelihoods; and rehabilitation of some flood gates is underway. 
  • The program to manage the NT2 watershed – largely made up the Nakai Nam Theun National Protected Area – is progressing. However, as the report notes, the protected area remains under pressure from poaching and logging activities despite the patrolling and enforcement efforts of the Watershed Management Protection Authority. 
  • The now paused salvage logging activities east of Nam Theun river and adjacent to the Watershed side of the Reservoir have emerged as a major challenge for the project, particularly for protection of the Watershed. The Government, NTPC and the International Financial Institutions are working together to find a lasting solution to ensure that the conservation integrity of the Watershed is not compromised. 
  • The Government has identified the poverty and environmentally focused programs that are eligible for NT2 revenues in the 2009/10 budget, and the money will flow to education (35 percent), rural roads (30 percent), health (20 percent) and environment (15 percent). Sector ministries are finalizing the list of specific programs and expenditures.

“The NT2 Project continues to generate valuable lessons for the country and for the hydropower industry. The policies, institutions, systems and practices that have emerged should shape the way future hydropower projects are sustainably developed in Lao PDR, and the benefits are equally shared by all Lao people,” concluded Mr. Illangovan.

The next WB/ADB report is expected around commercial operations date.



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