Nam Theun 2 Investigation Exposes Project Failings

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“Model” Project Leaves Lao Villagers in the Lurch

The Nam Theun 2 (NT2) hydropower project in central Laos, touted by the World Bank and others as a “model” dam and development project, is in danger of becoming yet another failed effort, according to a report released today by International Rivers.The report, based on a recent site visit by International Rivers staff, shows that as Nam Theun 2’s construction hits the halfway point, the dam’s social and environmental programs lag critically behind.

The failures revealed by International Rivers are in three impact areas: the resettlement of 6,200 indigenous peoples on the Nakai Plateau; the program to mitigate NT2’s impact on tens of thousands of downstream villagers; and compensation for villagers who have lost land and resources as a result of project construction.

“Prior to project approval, International Rivers warned that livelihood restoration plans were unworkable,” said Shannon Lawrence, Lao Program Director at International Rivers. “These warnings have come true and the company is now trying to rewrite plans mid-stream. If the World Bank and the Asian Development Bank want to avoid another dam disaster in Laos, they must ensure that interim compensation schemes are developed, guarantee that sufficient funding is available to compensate all villagers, and release all relevant documents.”

Plans to restore the livelihoods of tens of thousands of villagers who will lose rice paddy land, fisheries, and other natural resources to Nam Theun 2 are in jeopardy. The NT2 Panel of Experts – the official project monitors – say income targets for resettled villagers are unlikely to be met. The Nam Theun 2 Power Company (NTPC) and the Lao government are backtracking on important commitments, including to clear biomass before the reservoir is flooded to protect water quality downstream. NTPC and the Lao government have also violated provisions of the Concession Agreement, and World Bank and Asian Development Bank policies.

“Nam Theun 2’s planning failures and broken promises are leaving Lao villagers in the lurch,” said Lawrence. “More resources are needed to ensure that villagers are adequately compensated for a lifetime of losses caused by NT2.”

The Nam Theun 2 hydropower project will export more than 90% of its 1,070 MW of electricity to Thailand. More than 1 in 50 Laotians will be negatively affected by Nam Theun 2. The project’s lead developer and Head Construction Contractor is Electricité de France. Nam Theun 2 is supported with loans, grants and guarantees from the World Bank, the Asian Development Bank, the European Investment Bank and other public and private funders.