The Nam Theun 2 (NT2) hydropower project in Khammuan province is not in breach of its concession agreement, but is operating within the law and to the satisfaction of the government.
This statement was delivered by the Lao Energy Promotion and Development Department, Energy and Mines Ministry, last Friday, in response to recent allegations by International Rivers, an international NGO.
The group had claimed the project was operating illegally because it had been unable to provide the community that had been displaced and resettled with irrigated farmland before the plant began commercial operation.
In its statement, the department said the project, which is operated by the NT2 Power Company, is governed by a comprehensive concession agreement that is designed to ensure it will not only provide substantial monetary benefits to Laos, but will also improve living conditions for people in the project area.
The World Bank also issued a public statement last Wednesday confirming that the current operation of the project is consistent with the project's legal agreements and operating plans.
The project also offers additional protection for the local environment, and helps the country improve service delivery and implement social and environmental regulations for investment projects across the country, the department's statement said.
“The Lao government is a partner in the project and is working to ensure its compliance with the concession agreement through a range of methods.”
Throughout the construction period, which began in 2005, and since the beginning of its wide-reaching social and environmental programmes, the project has been closely monitored by governmental and independent agencies.
They include an independent panel of social and environmental experts, government engineers, the lenders' technical advisors, an independent monitoring agency, international financial institutions' management committee, a dam safety review panel, and an independent advisory group.
The department says the agencies regularly visit the project site to check on progress and report shortcomings to the government.The government's Resettlement Management Committee and Environmental Management Unit constantly observe and report on the situation in villages, areas and natural features affected by the project. Over the years, the Nam Theun 2 Power Company has been requested to modify or accelerate various activities to improve performance and ensure compliance with the concession agreement requirements.
The government and its advisors are satisfied with the performance of the company, which has consistently gone beyond its obligations in its efforts to improve livelihoods in communities in three provinces, and to secure the conservation of wild animals and ecosystems in the project area.
“Clean water has been provided to over 100 communities for the first time, and boreholes are checked regularly by a comprehensive water quality monitoring service,” the department stated.
The project's commercial operation makes it possible for the government to receive much-needed revenue for poverty alleviation efforts, and also accelerates the provision of irrigation on Nakai Plateau by drawing down the level of the reservoir to allow completion of tube well systems.
The dam is an important development in Laos' long-term ambitions. Over the next 25 years, it will generate nearly US$2 billion in revenue for pro-poor and environmental programmes across the country. Income levels, health and education services, environmental baseline data and monitoring systems, wildlife protection, as well as local and central government systems, have all improved dramatically due to the project, and the revenues it is now contributing will enable the government to extend such innovations.
Efforts are ongoing to ensure full compliance with all obligations as the commercial operation date approaches, and programmes will continue for several years to ensure the sustainability of the project.
