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The Nam Theun 2 Hydropower Project, or simply NT2, is a
hydroelectric dam Hydroelectricity, or hydroelectric power, is electricity generated from hydropower (water power). Hydropower supplies one sixth of the world's electricity, almost 4500 TWh in 2020, which is more than all other renewable sources combined and ...
on the
Nam Theun Nam Theun (also known as ''Khading''), is a river in Laos, in Khammouane Province, Khammouane and Bolikhamsai Provinces. Together with its tributaries Nam One, Nam Noy, and Nam Theun it has total length of and drains an area of . "Nam Theun" is ...
River in
Laos Laos (, ''Lāo'' )), officially the Lao People's Democratic Republic ( Lao: ສາທາລະນະລັດ ປະຊາທິປະໄຕ ປະຊາຊົນລາວ, French: République démocratique populaire lao), is a socialist ...
. Commercial operation of the plant began in April 2010. The scheme diverts water from the Nam Theun, a
tributary A tributary, or affluent, is a stream or river that flows into a larger stream or main stem (or parent) river or a lake. A tributary does not flow directly into a sea or ocean. Tributaries and the main stem river drain the surrounding drainage ...
of the
Mekong River The Mekong or Mekong River is a trans-boundary river in East Asia and Southeast Asia. It is the world's twelfth longest river and the third longest in Asia. Its estimated length is , and it drains an area of , discharging of water annuall ...
, to the
Xe Bang Fai River The Xe Bang Fai River (''Nam Xebangfai'') is a river in Laos. It originates in the Annamite Range The Annamite Range or the Annamese Mountains (french: Chaîne annamitique; lo, ພູ ຫລວງ ''Phou Luang''; vi, Dãy (núi) Trường ...
, enabling a generation capacity of , from a difference in elevation between the
reservoir A reservoir (; from French ''réservoir'' ) is an enlarged lake behind a dam. Such a dam may be either artificial, built to store fresh water or it may be a natural formation. Reservoirs can be created in a number of ways, including contro ...
and the
power station A power station, also referred to as a power plant and sometimes generating station or generating plant, is an industrial facility for the generation of electric power. Power stations are generally connected to an electrical grid. Many p ...
. It is the largest hydroelectric project so far in Laos, exporting power to
Thailand Thailand ( ), historically known as Siam () and officially the Kingdom of Thailand, is a country in Southeast Asia, located at the centre of the Indochinese Peninsula, spanning , with a population of almost 70 million. The country is bo ...
and supplying the local area with electricity. At the time of signing in 2005, NT2 was the largest foreign investment in Laos, the world's largest private sector cross-border power project financing, the largest private sector hydroelectric project financing, and one of the largest internationally financed IPP projects in Southeast Asia. The dam also marked a return by the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...
to funding large-scale infrastructure, after a decade-long hiatus. According to the government of Laos, "the project is an essential part of the country's development framework and the project's implementation is likely to be the first real possibility for (Laos) to reduce gradually its dependence on
Official Development Assistance Official development assistance (ODA) is a category used by the Development Assistance Committee (DAC) of the OECD, Organisation for Economic Co-operation and Development (OECD) to measure aid, foreign aid. The DAC first adopted the concept in ...
". The project has significant
environmental A biophysical environment is a biotic and abiotic surrounding of an organism or population, and consequently includes the factors that have an influence in their survival, development, and evolution. A biophysical environment can vary in scale f ...
and social impacts, and comprehensive measures have been designed to mitigate these. According to a group of social and environmental experts who advise on the project, these measures could become a global model. Although ''
Newsweek ''Newsweek'' is an American weekly online news magazine co-owned 50 percent each by Dev Pragad, its president and CEO, and Johnathan Davis (businessman), Johnathan Davis, who has no operational role at ''Newsweek''. Founded as a weekly print m ...
'' referred to it as a "kinder and gentler dam",World Bank September 2007
/ref> the project also attracted criticism. By 2015, it was possible to see the effect of the dam and criticism mounted. A group of non-governmental organisations said: "Ten years after the start of the construction of the Nam Theun 2 Dam in Central Laos, it is clear that this mega project has disastrous impacts on people and their environment."


History and current status

The Nam Theun 2 project was identified in the 1980s and a concession was awarded in 1993. It was subjected to a long anti-dam campaign. The project was frozen after the
1997 Asian financial crisis The Asian financial crisis was a period of financial crisis that gripped much of East Asia and Southeast Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion. However, the recovery in 1998–1 ...
, but preparation resumed in 1999. In October 2002 a concession contract between the
Nam Theun 2 Power Company The Nam Theun 2 Power Company Limited (NTPC) is a company set up to build and operate the Nam Theun 2 Multi-Purpose Project in Khammouane Province in Laos. Ownership It is owned by a consortium comprising: * Electricité de France International ...
(NTPC) and the government of Laos was signed, followed by the signing of
power purchase agreement A power purchase agreement (PPA), or electricity power agreement, is a contract between two parties, one which generates electricity (the seller) and one which is looking to purchase electricity (the buyer). The PPA defines all of the commercial te ...
s (PPA) in November 2003 between NTPC on the one hand and,
Electricity Generating Authority of Thailand The Electricity Generating Authority of Thailand (EGAT) ( th, การไฟฟ้าฝ่ายผลิตแห่งประเทศไทย; ) is a state enterprise, managed by the Ministry of Energy, responsible for electric power ge ...
(EGAT) and the Laotian state-owned power company Electricite du Laos (EDL) on the other. Financial closing was reached in June 2005. The Nam Theun River diversion was begun in March 2006 and then closed in April 2008 following completion of the Nakai Dam wall. Impoundment of the Nakai Reservoir occurred over the 2008 wet season and the reservoir was close to full supply level by the end of 2008. Test hydro power generation began in mid-2009 and the commercial operation date was achieved in April 2010.


Technical features

NT2 enables Laos to export of electrical energy to the
EGAT The Electricity Generating Authority of Thailand (EGAT) ( th, การไฟฟ้าฝ่ายผลิตแห่งประเทศไทย; ) is a state enterprise, managed by the Ministry of Energy, responsible for electric power ge ...
. The project also supplies of capacity for domestic use in Laos. Nam Theun 2 is a trans-basin diversion power plant that uses water from the Nam Theun River and releases the water into the Xe Bang Fai River. The project site is in Khammouane and Bolikhamxay Provinces in central Laos, about 250 kilometers east of Vientiane. It stretches from the Nakai Plateau to the lower Xe Bang Fai River
confluence In geography, a confluence (also: ''conflux'') occurs where two or more flowing bodies of water join to form a single channel. A confluence can occur in several configurations: at the point where a tributary joins a larger river (main stem); o ...
with the
Mekong The Mekong or Mekong River is a trans-boundary river in East Asia and Southeast Asia. It is the world's List of rivers by length, twelfth longest river and List of longest rivers of Asia, the third longest in Asia. Its estimated length is , ...
. The main features of the project include: * high
gravity dam A gravity dam is a dam constructed from concrete or stone masonry and designed to hold back water by using only the weight of the material and its resistance against the foundation to oppose the horizontal pressure of water pushing against it. ...
* reservoir * Pressure shaft,
pressure tunnel Pressure (symbol: ''p'' or ''P'') is the force applied perpendicular to the surface of an object per unit area over which that force is distributed. Gauge pressure (also spelled ''gage'' pressure)The preferred spelling varies by country and e ...
and a powerhouse * artificial regulating pond, and a artificial downstream channel leading to the
Xe Bang Fai River The Xe Bang Fai River (''Nam Xebangfai'') is a river in Laos. It originates in the Annamite Range The Annamite Range or the Annamese Mountains (french: Chaîne annamitique; lo, ພູ ຫລວງ ''Phou Luang''; vi, Dãy (núi) Trường ...
* long, double-circuit
transmission line In electrical engineering, a transmission line is a specialized cable or other structure designed to conduct electromagnetic waves in a contained manner. The term applies when the conductors are long enough that the wave nature of the transmis ...
to the Thai grid * long, single-circuit transmission line to the Lao domestic grid.


Institutional arrangements

The project is structured as a build-operate-transfer (BOT) project. It has a concession period of 31 years, of which the operating period is 25 years. At the end of the concession period, the project facilities will be transferred to the government free of charge. The project was developed by NTPC, which is owned by a consortium composed of
EDF EDF may refer to: Organisations * Eclaireurs de France, a French Scouting association * Education for Development Foundation, a Thai charity * Électricité de France, a French energy company ** EDF Energy, their British subsidiary ** EDF Luminus, ...
(40%), Electricity Generating PCL (EGCO) of Thailand (35%), and the Government of Laos (25%). Governments and government-owned enterprises own a majority of NTPC. This arrangement is atypical of an IPP. Normally the power generating company is privately owned. Laos is a People's Democratic Republic (PDR) with a one-party system under the
Lao People's Revolutionary Party The Lao People's Revolutionary Party (LPRP) is the founding and sole ruling party of the Lao People's Democratic Republic. The party's monopoly on state power is guaranteed by Article 3 of the Constitution of Laos, and it maintains a unitary ...
. It is one of the few
communist state A communist state, also known as a Marxist–Leninist state, is a one-party state that is administered and governed by a communist party guided by Marxism–Leninism. Marxism–Leninism was the state ideology of the Soviet Union, the Comint ...
s in the world. The government has multiple roles related to NT2, some of which may be conflicting: It partially owns NTPC and thus has an interest in the financial profitability of the project; it is supposed to monitor compliance with environmental and social safeguards under the concession contract; and it buys some of the electricity generated from the project through the state-owned power company EDL and thus has an interest in low electricity prices. Some of the owners of NTPC are also contractors engaged in the construction of the dam. For example, EDF International is the lead contractor for the project under a turnkey contract. It has engaged various sub-contractors for specific parts of the project.


Financial aspects


Project costs and financing

Construction costs were initially estimated at US$1,250 million plus US$331.5 million for
contingencies The American Academy of Actuaries, also known as the Academy, is the body that represents and unites United States actuaries in all practice areas. Established in 1965, the Academy serves as the profession's voice on public policy and professional ...
. More recently construction costs have been given as US$1.3 billion. The project base cost is funded through US$330 million of
equity Equity may refer to: Finance, accounting and ownership * Equity (finance), ownership of assets that have liabilities attached to them ** Stock, equity based on original contributions of cash or other value to a business ** Home equity, the dif ...
and US$920 million of
debt Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The ...
. It is financed through equity,
loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations, etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that d ...
s and guarantees from 26
financial institution Financial institutions, sometimes called banking institutions, are business entities that provide services as intermediaries for different types of financial monetary transactions. Broadly speaking, there are three major types of financial insti ...
s, including * four
multilateral development bank An international financial institution (IFI) is a financial institution that has been established (or chartered) by more than one country, and hence is subject to international law. Its owners or shareholders are generally national governments, al ...
s (the
World Bank Group The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. It is the largest and best-known development bank in the world and an observer at the United Nations Development Grou ...
, the
Asian Development Bank The Asian Development Bank (ADB) is a regional development bank established on 19 December 1966, which is headquartered in the Ortigas Center located in the city of Mandaluyong, Metro Manila, Philippines. The bank also maintains 31 field office ...
(ADB), the
European Investment Bank The European Investment Bank (EIB) is the European Union's investment bank and is owned by the EU Member States. It is one of the largest supranational lenders in the world. The EIB finances and invests both through equity and debt solutions ...
(EIB), and the
Nordic Investment Bank The Nordic Investment Bank (NIB) is an international financial institution founded in 1975 by the five Nordic countries (Denmark, Finland, Iceland, Norway, and Sweden). In 2005, the three Baltic states (Estonia, Latvia, and Lithuania) also becam ...
), * three
export credit agencies An export credit agency (known in trade finance as an ECA) or investment insurance agency is a private or quasi-governmental institution that acts as an intermediary between national governments and exporters to issue export insurance solutions ...
( Coface of France, EKN of Sweden, and GIEK of Norway), * three bilateral financing agencies (
French Development Agency The French Development Agency (french: Agence française de développement, AFD) is a public financial institution that implements the policy defined by the French Government. It works to fight poverty and promote sustainable development. This pub ...
, PROPARCO, and the Export-Import Bank of Thailand), * nine international commercial banks providing finance in hard currencies (grouped together in a "lead arrangers group" including
BNP Paribas BNP Paribas is a French international banking group, founded in 2000 from the merger between Banque Nationale de Paris (BNP, "National Bank of Paris") and Paribas, formerly known as the Banque de Paris et des Pays-Bas. The full name of the grou ...
, Crédit Agricole Indosuez,
ANZ ANZ may refer to: People * Anz (musician), a British DJ and electronic musician Banks * ANZ (bank), Australia and New Zealand Banking Group Limited, the fourth-largest bank in Australia ** ANZ Bank New Zealand, the largest bank in New Zealand ** ...
from Australia,
Société Générale Société Générale S.A. (), colloquially known in English as SocGen (), is a French-based multinational financial services company founded in 1864, registered in downtown Paris and headquartered nearby in La Défense. Société Générale ...
,
Fortis Bank BNP Paribas Fortis is an international bank based in Belgium and is a subsidiary of BNP Paribas. It was formerly, together with Fortis Bank Nederland, the banking arm of the financial institution Fortis. After the ultimately unsuccessful ABN-AMR ...
, and
Bank of Tokyo-Mitsubishi is the largest bank in Japan. It was established on January 1, 2006, following the merger of the Bank of Tokyo-Mitsubishi, Ltd. and UFJ Bank Ltd. MUFG is one of the three so-called Japanese "megabanks" (along with SMBC and Mizuho). As such, ...
), and * seven Thai commercial banks providing finance in
Thai baht The baht (; th, บาท, ; currency sign, sign: ฿; ISO 4217, code: THB) is the official currency of Thailand. It is divided into 100 ''satang'' (, ). The issuance of currency is the responsibility of the Bank of Thailand. Society for Worldw ...
. All financing in hard currencies is guaranteed through
political risk insurance Political risk insurance is a type of insurance that can be taken out by businesses, of any size, against political risk—the risk that revolution or other political conditions will result in a loss. Political risk insurance is available for sever ...
provided by the above-mentioned three export credit agencies, the ADB (US$50 million), the
International Development Association The International Development Association (IDA) (french: link=no, Association internationale de développement) is an international financial institution which offers concessional loans and grants to the world's poorest developing countries. Th ...
(IDA) of the World Bank Group (US$50 million), and the
Multilateral Investment Guarantee Agency The Multilateral Investment Guarantee Agency (MIGA) is an international financial institution which offers political risk insurance and credit enhancement guarantees. These guarantees help investors protect foreign direct investments against ...
(MIGA) of the World Bank Group (US$91 million). Specifically, MIGA has provided a US$86 million guarantee to
Fortis Bank BNP Paribas Fortis is an international bank based in Belgium and is a subsidiary of BNP Paribas. It was formerly, together with Fortis Bank Nederland, the banking arm of the financial institution Fortis. After the ultimately unsuccessful ABN-AMR ...
of Belgium against the risks of
expropriation Nationalization (nationalisation in British English) is the process of transforming privately-owned assets into public assets by bringing them under the public ownership of a national government or state. Nationalization usually refers to pri ...
,
breach of contract Breach of contract is a legal cause of action and a type of civil wrong, in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party ...
, war and
civil disturbance Civil disorder, also known as civil disturbance, civil unrest, or social unrest is a situation arising from a mass act of civil disobedience (such as a demonstration, riot, strike, or unlawful assembly) in which law enforcement has difficulty m ...
, as well as transfer inconvertibility in both Laos and Thailand. According to MIGA, its guarantee "was key to lowering the project's risk profile, which in turn enabled the government and developers to attract commercial financing at better rates and gave the investor the assurance needed to go ahead with the deal". The government's initial equity contribution of US$83 million (25%) was largely funded by donors, including a US$20 million grant from the
International Development Association The International Development Association (IDA) (french: link=no, Association internationale de développement) is an international financial institution which offers concessional loans and grants to the world's poorest developing countries. Th ...
of the World Bank Group, the ADB (US$20 million), France, and the EIB.


Increase in government revenue and contribution to poverty alleviation

According to the government "the Project is an essential part of the country's development framework and the Project's implementation is likely to be the first real possibility for (Laos) to reduce gradually its dependence on Official Development Assistance." In the same vein, the then Managing Director of the World Bank, Shengman Zhang, said in 2003 "We see Nam Theun 2 not as a project ''per se'', but as a vehicle through which to make a considerable progress in the effort of poverty reduction." The project generates three forms of revenue: *
dividend A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-in ...
s *
tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...
es *
royalties A royalty payment is a payment made by one party to another that owns a particular asset, for the right to ongoing use of that asset. Royalties are typically agreed upon as a percentage of gross or net revenues derived from the use of an asset o ...
, i.e., concession fees. Government revenue is estimated at US$1.9bn to US$2bn in nominal terms over 25 years. It has been estimated that at a 10% discount rate the net present value of the revenues will be six times higher than the net present value from the debt service, if all government equity was funded through concessionary lending. Revenues are expected to increase progressively from approximately US$10M in 2009 to US$110 to 150M per year at the end of the concession period in 2033. Thereafter the government will receive all revenues accruing to the project. The
power purchase agreement A power purchase agreement (PPA), or electricity power agreement, is a contract between two parties, one which generates electricity (the seller) and one which is looking to purchase electricity (the buyer). The PPA defines all of the commercial te ...
(PPA) between EGAT and NTPC was designed as to stabilize the
cash flow A cash flow is a real or virtual movement of money: *a cash flow in its narrow sense is a payment (in a currency), especially from one central bank account to another; the term 'cash flow' is mostly used to describe payments that are expected ...
despite hydrological variation and consequently variation in power output. Revenues will be partially in
USD The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
and partially in
Thai baht The baht (; th, บาท, ; currency sign, sign: ฿; ISO 4217, code: THB) is the official currency of Thailand. It is divided into 100 ''satang'' (, ). The issuance of currency is the responsibility of the Bank of Thailand. Society for Worldw ...
. Power demand from Thailand is expected to be strong. In December 2007, Thailand and Laos signed an agreement increasing the total power to be supplied by Laos to Thailand from all sources in 2015 from 5,000 MW to 7,000 MW. The World Bank works with the Lao government to improve public financial management practices and increase transparency in order to increase the likelihood that revenues will be used to benefit the poor, including through investment in health and education. The government has agreed with the World Bank to implement a Poverty Reduction Fund that is being initially sourced from
International Development Association The International Development Association (IDA) (french: link=no, Association internationale de développement) is an international financial institution which offers concessional loans and grants to the world's poorest developing countries. Th ...
funds, and then from the government's taxes, royalties, and dividends once the project commences operation. Special administrative units are being established to deal with the effective management and allocation of the funds earned by the project. In 2007 Laos was ranked on the
Corruption Perception Index The Corruption Perceptions Index (CPI) is an index which ranks countries "by their perceived levels of public sector corruption, as determined by expert assessments and opinion surveys." The CPI generally defines corruption as an "abuse of entr ...
by
Transparency International Transparency International e.V. (TI) is a German registered association founded in 1993 by former employees of the World Bank. Based in Berlin, its nonprofit and non-governmental purpose is to take action to combat global corruption with civil ...
168 out of 179 countries assessed, making it one of the most corrupt countries on the index.


Environmental and social impacts

Environmental and social impacts of the project include downstream impacts, impacts on
biodiversity Biodiversity or biological diversity is the variety and variability of life on Earth. Biodiversity is a measure of variation at the genetic (''genetic variability''), species (''species diversity''), and ecosystem (''ecosystem diversity'') l ...
, resettlement, and reservoir
sedimentation Sedimentation is the deposition of sediments. It takes place when particles in suspension settle out of the fluid in which they are entrained and come to rest against a barrier. This is due to their motion through the fluid in response to the ...
. More details can be found in the Environmental and Social Impact assessment, and in the summary provided for the various impacts below. Monitoring and Evaluation NT2 has a multi-layer environmental and social monitoring and evaluation mechanism consisting of the following elements: *
The Panel of Environmental and Social Experts The Panel of Environmental and Social Experts (POE) is an advisory body made up of western academics which reports on the social and environmental costs of the Nam Theun 2 Dam, a hydroelectric project on the Nam Theun River in Laos. In its yearly ...
) (POE) reports to the government. The POE normally visits Laos at least once per year. * An International Advisory Group (IAG), advising the World Bank. The IAG normally visits Laos at least once per year. * Independent Monitoring Agencies, reporting to the government. The Independent Monitoring Agencies were in the process of being assembled in December 2006. * The Lenders' Engineer The comprehensive environmental and social measures designed to mitigate potential environmental and social impacts could become a "global model", according to a group of social and environmental experts who advise on the project. According to the
NGO A non-governmental organization (NGO) or non-governmental organisation (see spelling differences) is an organization that generally is formed independent from government. They are typically nonprofit entities, and many of them are active in h ...
International Rivers International Rivers is a non-profit, non-governmental, environmental, and human rights organization. Founded in 1985 by social and environmental activists, International Rivers works with policy and financial analysts, scientists, journalists, ...
, there have been substantial shortcomings in the mitigation of impacts. According to the organization, compensation payments and replacement land for villagers affected by construction activities have been "inadequate, unfair or non-existent". Poor resettlement planning has led to housing and infrastructure delays. Plans to restore the livelihoods of villagers on the Nakai Plateau and along the Xe Bang Fai have yet to be finalized. And the budget for the downstream program in particular is said to be inadequate. Bruce Shoemaker, editor of ''Dead in the Water'', claims that the scientific consensus is that the dam's costs outweigh its benefits and that the dam represents a "complete failure of water governance in heMekong region." According to data in the World Bank publication "Good dams, bad dams", the ratio of area flooded and people resettled per megawatt of installed electricity generating capacity (flooded area of 41
hectare The hectare (; SI symbol: ha) is a non-SI metric unit of area equal to a square with 100-metre sides (1 hm2), or 10,000 m2, and is primarily used in the measurement of land. There are 100 hectares in one square kilometre. An acre is a ...
per MW and five persons resettled per MW) is neither very high nor very low, compared to 48 other large dams analyzed. Using this specific analytical framework, Nam Theun 2 could neither be considered a "good" or a "bad" dam.


Downstream impacts in Xe Bang Fai River

The flow of water in the Xe Bang Fai (XBF), which received the water diverted through NT2, increased significantly, thus affecting the population living downstream of the release point. The exact number of people affected is disputed. While NTPC speaks of 40,000 affected people, the NGO
Environmental Defense Environmental Defense Fund or EDF (formerly known as Environmental Defense) is a United States-based nonprofit environmental advocacy group. The group is known for its work on issues including global warming, ecosystem restoration, oceans, and hu ...
speaks of up to 150,000 people. The impacts have been widely studied and have been discussed with local communities. Negative impacts on the downstream population include the washing away of river bank gardens, changes in
water quality Water quality refers to the chemical, physical, and biological characteristics of water based on the standards of its usage. It is most frequently used by reference to a set of standards against which compliance, generally achieved through tr ...
, and impacts on
fisheries Fishery can mean either the enterprise of raising or harvesting fish and other aquatic life; or more commonly, the site where such enterprise takes place ( a.k.a. fishing ground). Commercial fisheries include wild fisheries and fish farms, both ...
. NTPC promised to stop power production when floods occur on the Xe Bang Fai. However, it is as yet unknown exactly how long this flooding period will last for each year. The length of the period affects the project's profitability. Water quality is negatively impacted through fouling of
biomass Biomass is plant-based material used as a fuel for heat or electricity production. It can be in the form of wood, wood residues, energy crops, agricultural residues, and waste from industry, farms, and households. Some people use the terms bi ...
in the reservoir. Because the impacts are unknown, monitoring systems are included and a commitment has been made to "adaptive management". Livelihood development programs were put in place for the villagers living downstream on the Xe Bang Fai, in districts such as Mahaxai. The programs are focused on
agriculture Agriculture or farming is the practice of cultivating plants and livestock. Agriculture was the key development in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that enabled people to ...
,
fish pond A fish pond or fishpond is a controlled pond, small artificial lake or retention basin that is stocked with fish and is used in aquaculture for fish farming, for recreational fishing, or for ornamental purposes. Fish ponds are a classical g ...
s, and
handicrafts A handicraft, sometimes more precisely expressed as artisanal handicraft or handmade, is any of a wide variety of types of work where useful and decorative objects are made completely by one’s hand or by using only simple, non-automated re ...
to help them generate income beyond that derived from
fishing Fishing is the activity of trying to catch fish. Fish are often caught as wildlife from the natural environment, but may also be caught from stocked bodies of water such as ponds, canals, park wetlands and reservoirs. Fishing techniques inclu ...
. The objective is to help villagers generate money from a variety of different sources to compensate for any changes in fishing catches after the river diversion. Affected communities receive
irrigation Irrigation (also referred to as watering) is the practice of applying controlled amounts of water to land to help grow Crop, crops, Landscape plant, landscape plants, and Lawn, lawns. Irrigation has been a key aspect of agriculture for over 5,00 ...
systems to allow for a second,
dry season The dry season is a yearly period of low rainfall, especially in the tropics. The weather in the tropics is dominated by the tropical rain belt, which moves from the northern to the southern tropics and back over the course of the year. The te ...
rice Rice is the seed of the grass species ''Oryza sativa'' (Asian rice) or less commonly ''Oryza glaberrima ''Oryza glaberrima'', commonly known as African rice, is one of the two domesticated rice species. It was first domesticated and grown i ...
crop,
drinking water Drinking water is water that is used in drink or food preparation; potable water is water that is safe to be used as drinking water. The amount of drinking water required to maintain good health varies, and depends on physical activity level, a ...
systems, and access to electricity. The provision of this infrastructure is not the responsibility of NTPC, but of the government. According to a joint progress report issued by the World Bank and the ADB in December 2007, implementation of the downstream program – particularly on implementing livelihood programs – was a challenge. Lessons from the 20 villages where the programs have been piloted in a participatory manner are being applied as other villages were included. Micro-credit schemes that are being developed were not yet on a sustainable financial footing.


Downstream impacts on the Nam Theun River

There is relatively little information on downstream impacts on the Nam Theun River, where water flows will be significantly reduced. No permanent villages lie along the Nam Theun some 50 km downstream below the dam.
Fishermen A fisher or fisherman is someone who captures fish and other animals from a body of water, or gathers shellfish. Worldwide, there are about 38 million commercial and subsistence fishers and fish farmers. Fishers may be professional or recreat ...
and
hunter Hunting is the human activity, human practice of seeking, pursuing, capturing, or killing wildlife or feral animals. The most common reasons for humans to hunt are to harvest food (i.e. meat) and useful animal products (fur/hide (skin), hide, ...
s, however, do use this stretch of the river. Fish diversity and abundance is expected to be affected by reduced water flows and
sediment Sediment is a naturally occurring material that is broken down by processes of weathering and erosion, and is subsequently transported by the action of wind, water, or ice or by the force of gravity acting on the particles. For example, sand an ...
content. Monitoring of the villages along the river conducted by NTPC has not yet detected any significant impacts to the fishery.


Biodiversity and forests

Three existing protected areas on the Nakai plateau (the Nakai-Nam Theun, the Hin Nam Nor, and the Phou Hin Poun
National Biodiversity Conservation Areas A National Biodiversity Conservation Area (NBCA) is an environmentally protected area in Laos. There are all together 21 different NBCAs in Laos, protecting 29,775 square kilometers. Another 10 NBCAs have been proposed, many of them being treated ...
), together nine times larger (4,106 km2) than the flooded area, are expected to be better managed through significant resources made available under the project – more than 60 times what the government has spent on its entire
national park A national park is a nature park, natural park in use for conservation (ethic), conservation purposes, created and protected by national governments. Often it is a reserve of natural, semi-natural, or developed land that a sovereign state dec ...
s system so far. The flooded areas are not considered critical natural habitat. Formerly there was significant
illegal logging Illegal logging is the harvest, transportation, purchase or sale of timber in violation of laws. The harvesting procedure itself may be illegal, including using corrupt means to gain access to forests; extraction without permission, or from a pro ...
in the protected areas, which the government claims has now been largely brought under control despite growing evidence that villagers are using logging to supplement falling incomes. Detailed fish surveys showed that there are no fish
species In biology, a species is the basic unit of classification and a taxonomic rank of an organism, as well as a unit of biodiversity. A species is often defined as the largest group of organisms in which any two individuals of the appropriate s ...
living only in the stretch of the river that will be inundated. A management plan for the
Asian elephant The Asian elephant (''Elephas maximus''), also known as the Asiatic elephant, is the only living species of the genus ''Elephas'' and is distributed throughout the Indian subcontinent and Southeast Asia, from India in the west, Nepal in the no ...
s in the area has been drawn up. A Watershed Management Protection Authority (WMPA) has been established with the specific purpose of protecting the
watershed Watershed is a hydrological term, which has been adopted in other fields in a more or less figurative sense. It may refer to: Hydrology * Drainage divide, the line that separates neighbouring drainage basins * Drainage basin, called a "watershe ...
of the reservoir and the protected areas in it. WPMA will receive US$1M annually from NTPC through the concession period.


Resettlement

Seventeen villages and their 6,300 inhabitants moved from the area that became the NT2 reservoir on the Nakai Plateau to custom-built villages built in consultation with the resettled communities. NTPC and the Lao Government have committed to doubling the income of resettled villagers, through livelihood programs, five years after they have been relocated. This means that people who used to make US$410 per household a year in 2005 should make at least US$820 per household a year by 2012. Construction of the villages and major facilities (new roads, water pumps, toilets, schools, mills, and electricity) was completed by mid-2008. Consultations on house design, location, and construction materials were held and continue to ensure the outcomes reflect the needs of the local people. According to a World Bank report, the health of villagers who have already been resettled has significantly improved due to better water and
sanitation Sanitation refers to public health conditions related to clean drinking water and treatment and disposal of human excreta and sewage. Preventing human contact with feces is part of sanitation, as is hand washing with soap. Sanitation systems ...
, regular health check-ups and the provision of
mosquito net A mosquito net is a type of meshed curtain that is circumferentially draped over a bed or a sleeping area, to offer the sleeper barrier protection against bites and stings from mosquitos, flies, and other pest insects, and thus against the di ...
s, as documented by various assessments. Experts are helping the resettled villagers to adopt improved practices to increase agricultural and income
productivity Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production proces ...
. The report stresses that the pace of the development of the livelihood activities must be accelerated including engaging additional technical assistance to help villagers develop the most effective cropping systems possible.


Reservoir sedimentation

At current sedimentation rates, the reservoir has a lifetime of more than five centuries. If substantial
logging Logging is the process of cutting, processing, and moving trees to a location for transport. It may include skidding, on-site processing, and loading of trees or logs onto trucks or skeleton cars. Logging is the beginning of a supply chain ...
occurred in the upstream basin, the lifetime would be accordingly reduced and could affect the financial and economic viability of the project. This would especially be the case if sediments remained in the active storage area in the upper part of the reservoir instead of being washed into the dead storage area closer to the dam in the lower part of the reservoir. The establishment of the relatively well-funded Watershed Management Protection Authority is expected to protect forest cover and thus limit
erosion Erosion is the action of surface processes (such as water flow or wind) that removes soil, rock, or dissolved material from one location on the Earth's crust, and then transports it to another location where it is deposited. Erosion is distin ...
in the watershed of the reservoir.


See also

*
Environmental impacts of dams The environmental impact of reservoirs comes under ever-increasing scrutiny as the global demand for water and energy increases and the number and size of reservoirs increases. Dams and reservoirs can be used to supply drinking water, generate hy ...
*
Energy Industry Liberalization and Privatization (Thailand) Energy in Thailand refers to the production, storage, import and export, and use of energy in the Southeast Asia, Southeast Asian nation of Thailand. Thailand's energy resources are modest and being depleted. The nation imports most of its Petrol ...
* Wildlife of Laos *
Economy of Laos The economy of Laos is a lower-middle income developing economy. Being one of the socialist states (along with China, Cuba, Vietnam and North Korea), the Lao economic model resembles the Chinese socialist market and/or Vietnamese socialist-o ...


References


Further reading

*The World Bank (2006
''Update on the Lao PDR Nam Theun 2 (NT2) Hydroelectric Project''
The World Bank in Lao P.D.R., October 2006 *Ryder, G. (2004
''Ten Reasons Why the World Bank Should Not Finance the Nam Theun 2 Power Company in Lao PDR''
Probe International Energy Probe is a non-governmental social, economic, and environmental policy organization based in Toronto, Canada known for climate change denial, denying man-made climate change. It was founded in 1970 as a sister project of Pollution Probe. In ...
, Toronto * Ian C. Porter and Jayasankar Shivakuma
Doing a Dam Better : The Lao People's Democratic Republic and the Story of Nam Theun 2
The World Bank, 2010


External links

*
Laos:Ministry of Energy and Mines, Department of Energy Promotion and Development

Electricité du Laos
*
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...
br>The Nam Theun 2 Hydroelectric Project (NT2)
*
Asian Development Bank The Asian Development Bank (ADB) is a regional development bank established on 19 December 1966, which is headquartered in the Ortigas Center located in the city of Mandaluyong, Metro Manila, Philippines. The bank also maintains 31 field office ...
br>Nam Theun 2 Hydroelectric Project
*
International Rivers International Rivers is a non-profit, non-governmental, environmental, and human rights organization. Founded in 1985 by social and environmental activists, International Rivers works with policy and financial analysts, scientists, journalists, ...
br>Nam Theun 2
*
Environmental Defense Fund Environmental Defense Fund or EDF (formerly known as Environmental Defense) is a United States-based nonprofit environmental advocacy group. The group is known for its work on issues including global warming, ecosystem restoration, oceans, and hu ...
br>Laos: Nam Theun 2 Project
15 March 2006 {{Authority control Hydroelectric power stations in Laos Interbasin transfer Buildings and structures in Bolikhamsai province