027-i. Advice: Nam Theun 2 hydropower project - Lao PDR

The NCEA contributed to the International Advisory Group which was established to assess the World Bank's handling of environmental and social issues in hydropower projects. Three advisory reports were issued on the case of the Nam Theun 2 hydropower project.

Advisory reports and other documents

Significant details

Lao PDR approached the World Bank to request financial support for the Nam Theun 2 hydropower project. The hydropower plant would be situated on the Nakai plateau, thereby inundating part of the plateau and affecting its rich biodiversity. Moreover, health risks were expected and about 4,400 people would have to be resettled.

In order to facilitate the decision-making process, the World Bank established an International Advisory Group (IAG). The objective of this IAG was to support the World Bank in improving its handling of environmental and social issues in hydropower projects that it supports world-wide. As an initial phase of this activity, the IAG would evaluate the World Bank’s handling of these issues in the proposed Nam Theun 2 project in Lao PDR. The convenor of this IAG was Mr D. de Zeeuw, who was also a chairman at the NCEA.

The NCEA was asked to form a working group with two purposes:

• To support Mr D. de Zeeuw in carrying out his tasks as convenor of the IAG;
•  To advise the Dutch Ministry of Foreign Affairs on the process and substance of the IAG.

The IAG, supported by the NCEA's services, convened and issued its first report in 1997. The overall conclusion of the IAG was that the benefits of the Nam Theun 2 project outweigh its negative aspects. Comments and recommendations included a.o.:

• The substantial environmental impacts appear to be offset to a large degree by the planned protection of a biodiversity hot spot;
• The resettlement plan is comprehensive and appears feasible;
• Improved livelihood options and better social services for affected groups will be difficult to realise, but are crucial to the wider objectives of the project;
• The project should only proceed with integration of the several action plans into an integrated cross-sectoral approach and with binding, explicit long-term commitments from Lao PDR's political leaders;
• Monitoring and evaluation should be part of all aspects of the project.

The IAG reassembled in 1998 to assess developments since the previous visit and to check whether the recommendations of its first report had been addressed. In its report of this visit (the second document on this page), the IAG concluded a.o. that:

• The project is necessary to improve the economy of Lao PDR and also offers opportunities to ensure biodiversity protection;
• Progress has been made, particularly with the legislative framework for the project and the introduction of alternative livelihood options;
• Elements of concern are:
  • the slow pace of capacity building and decentralization;
  • the inability to translate high political commitment into concrete decisions and allocation of responsibility and resources;
  • the lack of progress in seeking World Heritage status for the areas;
  • the lack of a national forest resource management regime;
  • a number of unresolved environmental impact issues;
  • the potentially too high expectations of locals on the project's benefits.

In 2001, the IAG was again asked to issue an advice on the Nam Theun 2 project. For this third advisory report (the third document on this page), the main purpose - assessment of the World Bank's handling of social and environmental issues - was still the same. Additionally, however, the IAG was asked to give its opinion on the revised Resettlement Action Plan (RAP) and the Environmental Assessment and Management Plan (EAMP). In this third advice, some of the main conclusions and recommendations were:

• Local people are impatient over the delays of the project and lack of a timetable for decision-making;
• The World Bank's remaining apprehensions about the projects were largely resolved:
  • There are opportunities to reduce the leakage of trained people;
  • Public expenditure and fund management are improving;
  • Systems that are in place for monitoring and influencing allocative decisions are sufficient to ensure that project revenues will go into poverty alleviation;
• The major remaining social impacts relate to people in the area rather than those to be resettled;
• The revised RAP is a good basis for successful resettlement, if carried out faithfully and yet flexibly;
• The potential for dry-season rice will increase substantially through irrigation;
• Major environmental issues relating to the area include a.o. the lack of public education on nature conservation, the need for patrolling to counter cross-border hunting and wildlife trading.

In conclusion, the IAG recommended the project going to appraisal as soon as possible. It was very positive about the impressive project proceeding.

Parties involved

Members of the working group

Chair: Dick de Zeeuw
Technical secretary: Ineke Steinhauer

Proponent and Component Authority

Further details

Country: Lao PDR

Last modified: 02 Apr 2019