Nam Theun 2 Hydroelectric Project

Event:

Nam Theun 2 Hydroelectric Project

31 March 2016

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The Nam Theun 2 (NT2) Hydroelectric Power Project in the Lao People’s Democratric Republic (Lao PDR) is considered by then deputy prime minister Somsavat Lengsavad as the most powerful in Lao PDR, and a worldwide model of social and environmental responsibility. As previous chair of the NT2 Steering Committee, Lengsavad was convinced that a controlled exploitation of hydropower constitutes one of the less harmful ways, regarding climate change for instance, to produce the energy that the world needs. 

Hydropower provides benefits to Lao PDR, but there are accompanying social and environmental impacts, with involuntary resettlement and disruption of livelihoods and ecosystems, as some of them. This case describes the environmental and social impacts forecast in the design of the project, as well as the mitigation measures and compensation programs put in place by project holders. 

While a Resettlement Implementation Period was put in place by Nam Theun 2 Power Company Limited, the project implementer, a two-year extension was recommended from May 2015 for the company not only to fully comply with its contractual obligations under the concession agreement, but also to fulfill the responsibility of restoring the livelihoods of resettled indigenous communities in the uplands of central Lao PDR. NT2 may not quite have changed the paradigm for improving environmental and social standards for large dam projects in developing countries like Lao PDR, as the international financial institutions had hoped, but surely there are other lessons to be learned from this experience.

This case study was developed by the Asian Institute of Management for the Asian Development Bank.

Geographical Focus: 
Lao PDR
Type of Content: 
Project Stories

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