Hydropower project in Laos
Lao PDR is a landlocked country of 5.4 million people in Southeast Asia, bordered by China to the north, Vietnam to the east, Myanmar to the west, and Thailand and Cambodia to the south. The combination of a tropical climate, low population density, and mountainous terrain has severely limited Lao PDR’s options for sustainable economic development. While the economy has historically relied on the large-scale export of tropical timber, concerns about environmnental degradation have prompted the government to re-focus on hydroelectric power, and its potential export to neighboring Thailand, as a potential engine for economic growth. In 1993, the govermnents of Lao PDR and Thailand signed a Memorandum of Understanding to support the development of power projects in Lao PDR and of infrastructure to support the export of electricity to Thailand.
Tha Nam Theun 2 project was originally conceived in 1994, and after years of planning and development, was initiated in earnest in 2003. The project is to be located on the Nam Theun River, a tributary of the Mekong. The natural geography of the Nakai Plateau makes it an extremely favorable location for a hydroelectric project, as it allows for a significant head of water without a corresponding requirement for a high dam.
REC’s involvement in the Nam Theun 2 project dates back to 2002, when we were retained by the Asian Development Bank (ADB) to draft a preliminary evaluation and assessment of the viability of the project. The main objective was to make the strategic and developmental case for ADB’s involvement and financial support for the project. REC was subsequently retained to engage in an exhaustive due diligence process covering all aspects of the project and to coordinate discussions with all stakeholders including the Government of Lao PDR, and major investors and commerecial lenders. The major emphasis was to ensure compliance with the safeguards and other relevant policies of the ADB, develop a social safety net in the project design (for those Lao citizens that would require resettlement), and promote a program for poverty reduction and for environmental protection in the country. The process involved meeting NGOs, including environmental and human rights groups, and addressing their issues and concerns with the project design. REC also assisted in the preparation of the final project loan documents that were presented to the ADB board in April 2005.
With construction now underway after the groundbreaking May 2005, REC’s recent involvement has shifted to implementation, monitoring, and project management, including maintaining communication with all releveant stakeholders.