The Nam Theun 2 (NT2) hydroelectric power project was under consideration by the Lao government and various developers since the late 1980s. If properly implemented, the project will generate electricity mainly for export to Thailand, and project revenues will be used by the Government of Lao PDR to finance for poverty reduction and environmental protection activities. The project thus has the potential—if properly prepared, implemented and managed—to significantly benefit the Lao people.
That said, it is a large and complex project and entails considerable risks, including environmental and social ones. NT2 triggers all of the safeguard policies of the World Bank and the ADB, which are designed to prevent and mitigate undue harm to people and their environment in the development process. The safeguard policies have often provided a platform for the participation of stakeholders in project design, and have been instrumental in building ownership among local populations.
To provide independent assessments on the project throughout the project preparation and due diligence cycle, the services of international experts in dams, environment, and social protection have been engaged. The World Bank has engaged the International Advisory Group (IAG) and the Government of Lao PDR has engaged the Environment and Social Panel of Experts (POE). Their reports and assessments are shared between the Government and the World Bank, and with members of the public.
The Panel of Experts (POE) was established in 1997, with primary responsibility "to provide independent review of and guidance on the treatment of environmental and social issues associated with a project under preparation." While the POE's findings and recommendations are to be submitted directly to the Government of Lao PDR, it is free to make its own determination on which environmental and social issues it should focus.
In the Nam Theun 2 case, the POE interprets its purview to include the entire Nam Theun River basin from the border of Vietnam to the Mekong River, interbasin transfers from the Nam Theun to the Xe Bang Fai and Nam Hinboun rivers, the NT2 transmission line, and whatever enhancement and other projects are impacted upon by water releases from the Nam Theun reservoir. The Panel is also obligated to assess the extent to which planning for the NT2 project meets World Bank environmental, indigenous people, resettlement with development and other guidelines.
Against the backdrop of an active and ongoing global debate about the results of investments in large dams around the world, the World Bank established the International Advisory Group (IAG) in 1997, to inform the decision making process around the Nam Theun 2 hydroelectric project and provide an independent perspective. The NT2- IAG's mandate is to provide guidance to the World Bank on how it can improve its handling of environmental and social issues, inter alia, in the Nam Theun 2 project and to make specific recommendations on addressing these issues.