Nam Theun 2

The Nam Theun 2 Hydroelectric Project, is located in the Nakai Plateau, in Khammouane province, is the largest and most controversial hydroelectric project in Lao PDR. The US $1.3 billion dam, with a generation capacity of 1,070 megawatts (MW) is a trans-basin diversion project, in which a 48 metre-high dam would be built on the Nam Theun River, a tributary of the Mekong River, and reservoir water would be released from the project’s power station into another Mekong tributary, the Xe Bang Fai River. [map]

The project’s reservoir will flood an area of 450 km2 and degrade a further 500km2 of the Nakai Plateau, which is habitat to a number of species of global significance including the Asian elephant. In addition to forcibly resettling 6,200 indigenous people living on the Nakai Plateau, the project will adversely affect more than 100,000 people who currently derive significant and important livelihood benefits from the Xe Bang Fai River.

The project is structured as a BOOT (Build-Own-Operate-Transfer) scheme, in which the project developers, the Nam Theun 2 Power Company (NTPC), will transfer ownership of the dam to the Government of Lao PDR (GoL) after a 25-year concession period. The NTPC, established in August 2002 as a limited company to develop, finance and operate the Nam Theun 2 project comprises of: Electricite de France International (35 per cent ownership); Electricity Generating Public Company Limited (25 per cent) and Italian-Thai Development Public Company Limited (15 per cent), both of Thailand; and Lao Holding State Enterprises, a company fully owned by the GoL (25 per cent).

On 31 March 2005, the World Bank – which has provided financial and technical assistance for studies and planning, as well as consistent political support for Nam Theun 2, since the late 1980s – approved a US$20 million grant and loan guarantees worth US$250 million, paving the way for NTPC to secure financing from other commercial lenders and public institutions. The dam is expected to begin operation in 2009, upon which more than 90 per cent of its electricity output will be exported to Thailand.

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