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Frequently Asked Questions

www.worldbank.org/laont2/faqs 

(Updated July 15, 2010)
This material is provided in response to frequently asked questions raised in the course of project implementation by project-affected people, civil-society organizations, the media, and other interested parties.

Archived FAQs 

Engineering and Construction | Nakai Resettlement and Project Lands | NT2 Watershed | Downstream Areas | Revenue Management | Project Arrangements / Consultation and Disclosure | Archives 

Engineering and Construction

1. What is the current status of the NT2 Project?

The NT2 hydropower facility has commenced commercial operations and is now selling electricity to Thailand and Laos. The NT2 environment and social program and revenue management arrangements operate on a longer timeframe and will continue through the operations phase of the hydropower facility. The 25-year concession period of the project extends till 2035. The concession agreement remains valid until then and commits the Government and developers to achieving the project’s environmental and social outcomes. Progress on these outcomes will continue to be monitored.

2. What is Commercial Operations Date (COD)?

This date is defined in the Concession Agreement between the Government of Lao PDR and the project developer: Nam Theun 2 Power Company (NTPC). This signifies the commencement of commercial operations when the company starts selling electricity and signifies the completion of civil and electro-mechanical works of the project. The COD took place on April 30, 2010. During the testing and pre-commissioning stages of the turbines, NTPC was legally allowed to sell electricity to the Thai grid under a pre-generation agreement it had with Electricity Generating Authority of Thailand (EGAT). Many other future events of the project are also benchmarked with COD as a milestone. 
Nakai Resettlement and Project Lands

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Nakai Resettlement and Project Lands

3. How are resettled people doing after resettlement?

All resettled families are living in their new homes complete with the needed infrastructure like access roads, water supply and sanitation, electricity, schools and clinics. 

According to recent socioeconomic monitoring surveys, a majority of resettler households (over 80 percent) report that life is now “much better” than before resettlement. People report being satisfied with the resettlement process and their new living conditions and environment. Yearly incomes have almost doubled, rising from a baseline of about US$140 a year in 1998 to about US$260 a year. The villagers are taking advantage of improved education, health and transportation facilities. Many are investing in improving their homes and buying new assets such as televisions and motorbikes.  The median value of household assets increased from $US120 in August 2006 to $480 by May 2009.

4. What progress are they making in building new livelihoods and earning a living?

The livelihood activities supported by the project consist of agriculture, livestock, fisheries, forestry and non-farm opportunities. Steady progress continues on livelihood activities since physical resettlement began in 2006. In 2009, fisheries (44%) and agriculture (22%) contributed two thirds of the resettler livelihoods while forestry (17%), livestock (9%) and non-farm (8%) made up the remaining one third.

Sources of income and livelihoods for the resettlers have evolved over the three years of the project. Fisheries have grown in importance following the creation of the reservoir.  The share of agriculture and livestock largely remains unchanged. Forestry (for timber products) has nearly halved as a source of income, while non-farm income has also declined following a temporary high in 2006 when the project was paying wages to work on the resettlement sites.

5. Community forestry, through the Village Forestry Association (VFA), is a key livelihood pillar. How is this progressing?

VFA is still a nascent organization, facing similar challenges as other new community-led institutions. This was anticipated during project design which was why a capacity building program was put in place. Considerable progress has been made in strengthening the VFA and improving resettlers’ knowledge of how organizations function.

The following institutional issues are receiving priority attention:

(i) the need to have a multi-year logging quota, which would increase VFA’s ability to plan and operate effectively;
(ii) closing down of non-VFA sawmills on the Nakai Plateau, that would strengthen  resettlers’ exclusive right to benefit from forestry resources on the Plateau;
(iii) curbing unauthorized extraction of timber belonging to the VFA; and
(iv) rationalizing the tax regime to align it more with the grading of VFA timber, and reducing overpayment of taxes as seen in 2009.

A resolution of these issues, and further VFA organizational strengthening would increase the share of forestry in livelihood outcomes.

6. What is the Participatory Land Use Process (PLUP) and how is it progressing?

PLUP is a method of creating shared understanding of land use rights and responsibilities. It is being undertaken by the provincial and district staff under an agreed policy framework.

In the NT2 Resettlement Area, PLUP will demarcate village boundaries, clarify what land resources are available within these boundaries, and reach village-by-village agreements. The PLUP started in the southern resettlement villages and is working its way north village-by-village.

Through this process, the resettlers will have permanent legal rights over their land-based resources for the long-term. The process will also clarify public and private responsibilities with regard to those resources..

7. How will the drawdown zone be available to resettlers, and how can they ensure secure access to this zone?

As water in the Nakai Reservoir is used to generate power during the dry season months, the water line (surface of the reservoir) drops lower, exposing the drawdown zone (land at the edge of the reservoir). Supported by the PLUP, resettlers will be able to integrate the exposed drawdown zone land into their livelihood planning and activities. Through this process, the resettlers will have access to an additional five hectares of cultivable land during the dry season.

8. Irrigation facilities for the resettler’s 0.66 Hectare plots were supposed to be provided by Commercial Operations Date (COD). What is the current status?

Irrigation facilities for the resettler’s 0.66 Hectare plots were supposed to be provided by Commercial Operations Date (COD). What is the current status?

This target date has not been met as yet due to changed circumstances of project implementation and the need to take an adaptive management approach. There are two reasons for this:

(i) the need to redesign the approach - drawing on practical experiences from pilot village schemes - to better meet community needs and to enable farmers to take an integrated approach to agriculture across their 0.66ha plots and the drawdown zone of the reservoir; and
(ii) the need for a full drawdown of the reservoir to be able to complete the redesigned systems (e.g., need lower water levels to be able to dig related wells).

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NT2 Watershed

9. What is the progress with managing the NT2 Watershed area?

What is the progress with managing the NT2 Watershed area?
The Watershed Management and Protection Authority (WMPA) was established to promote the protection and management of the NT2 watershed and the Nakai Nam-Theun National Protected Area within it.

Protecting this 4000km2 area of globally significant biodiversity is a key environmental benefit of the NT2 project. Ensuring effective protection of valuable natural resources while providing basic services to the 31 villages inside the watershed area are continuing challenges.

The WMPA has been making progress since its establishment, including acting on a number of recommendations made by the Panel of Experts, Independent Monitoring Agency and the International Financial Institutions. Recent progress includes:

(i) Strengthening the mandate of the WMPA Board and Secretariat;
(ii) accessing technical experts from a range of Government agencies to do specific work, such as irrigation and livestock management for the enclave villages’ livelihood development;
(iii) producing an illustrated Handbook of Regulations and Penalties related to NT2 Watershed protection;
(iv) creating a Priority Patrolling Plan, which will increase spatial and temporal patrolling presence; and
(v) drafting a new 5-year Management Plan which draws on the first operational plan for the watershed (provided in the Social and Environment Management Framework and First Operational Plan, or SEMFOP document, publicly available) and includes macro-zoning to identify respective zones for total protection, controlled use, and tourism.

10. Is the watershed being adequately protected against logging and mining activities?

External threats to the watershed from logging and mining interests continue to be a serious problem. This prompted the Government to take determined action in an effort to arrest the problem over the past year. One mining operator who had been conducting exploration activities within the watershed boundary has left the area following the Government’s closure of the operation. Some of the salvage logging operations that breached the boundaries of the watershed from the reservoir were also suspended by the Government. 

To strengthen the authorizing environment and operating regulations of the WMPA, the Government has begun revising the Prime Minister’s Decree #39 of 2004 which set up the WMPA. This is being done in consultation with project stakeholders and expected to be finalized shortly.  

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Downstream Areas

11. Now that commercial operations have started, what are the downstream impacts to date?

The natural flow of the Xe Bang Fai (XBF) River varies from between 10-20 cubic meters per second (m3/sec) during the dry season to over 2000 m3/sec during the peak of the wet season. When all six turbines operate, up to 330 m3/sec is released from the regulating pond along  the downstream channel and into the Xe Bang Fai river. This increased flow causes the water level to rise between a minimum of 0.2 meters and a maximum of 4 meters during the dry season (November to May). 

The impacts of the increased water flows are documented in the Environmental Assessment and Management Plan, and Social Development Plan that were prepared as part of project preparation and disclosed in 2004. So far, the impacts have largely been consistent with the anticipated impacts reported in the two documents. The project will continue to monitor the impacts closely. .

12. There have been reports of some downstream residents experiencing a skin rash. What is the situation now?

In May 2010, some residents in the upper part of the Xe Bang Fai downstream area reported experiencing an itchy skin irritation. NTPC and Government health teams – supported by experts from Lao, Thailand and France consisting of dermatologists, microbiologists, limnologists and tropical medicine experts - were mobilized quickly to investigate the cause and incidence of the skin rash. The  condition results in itchy skin but no pain or infection. It does not prevent people from carrying on their day-to-day activities.

The World Bank task team has been working closely with the expert teams to monitor the skin rash and the investigations continue.

Latest information from the scientific team indicates that the rash has been diagnosed as allergic contact dermatitis. 

At the end of May, 3.3 percent of the people living along the Xe Bang Fai below the NT2 downstream channel – or around 1,585 cases – were reported. By mid July, the number of cases had decreased to 386 and a recent visit to five villages by the health team of NTPC indicated that while cases remained, incidence was estimated at less than 1 percent of the population.

Project authorities have been advising communities on ways to minimize their risks and have provided lotions and anti-histamine medications to affected people.

As for all rivers in Laos, communities are advised not to drink river water.  This message has been reinforced for communities in the Xe Bang Fai area since consultations began in 2003. The project has provided boreholes for drinking and bathing for many of the villages along the Xe Bang Fai. The project’s monitoring program continues to ensure this water quality meets international water quality standards and malfunctioning pumps are continually being repaired.

13. How are people being compensated for lost access to riverbank gardens now that the project is operating?

The detailed registration process for riverbank gardens was completed in June 2009. This found that 3,101 households were eligible for compensation because their gardens would be partially flooded.

Community consultations on the compensation program and process were undertaken between December 2009 and January 2010.  The process included agreeing and marking the high-water areas around project-affected households.  Villagers were advised not to plant below that level to avoid direct loss of crops as opposed to losing the opportunity to grow crops, which is compensated as described below. Villagers have largely restricted this season’s gardens to land above the new water level.

Compensation for lost use of riverbank gardens is being paid and implementation of the compensation program is being accelerated. The process includes having a final agreement signed by each project-affected household, local authorities and NTPC. A grievance procedure is in place, although no grievances related to riverbank gardens have been filed to date.

All affected households will be fully compensated before the beginning of the next dry season (October 2010).

14. How do NT2 commercial operations affect fishing, and how is the project monitoring and measuring this?

The commercial operations of NT2 bring an increased discharge of water into the Xe Bang Fai (XBF) River. It was anticipated during the project design phase that local fish catch would be impacted both by this increased flow, and potentially by different water quality.
Information to date suggests that while the water is deeper and faster (than pre-project), the villagers are still catching fish in XBF.

This is corroborated by field fisheries observations and discussions with villagers. 
Fish catch, however, is being impacted differently in different areas of the river; fish are generally harder to catch because of increased flow and water level but fishermen are adapting to the new situation by using wet season fishing gear or changing fishing grounds.

15. What is happening to water quality in the Xe Bang Fai now that the NT2 project is operational? Do villagers have access to safe water?

The water releases into the XBF downstream, to date, are having small impacts on the natural water quality in the river (compared to control stations upstream of the release). The key change for most villagers during the dry season is an increase in total suspended solids (TSS), resulting in TSS levels usually found during the wet season (June-November).

Access to safe water through improved water supply is in place for all riparian villages along the Xe Bang Fai. Over 500 boreholes, with pumps, have been installed in the Xe Bang Fai region since approval of the NT2 project in 2005. Most of these boreholes provide a reliable source of clean water suitable for domestic use.

Some boreholes have naturally occurring high levels of iron, turbidity or salinity due to geological conditions, and others have had occasional mechanical problems. A monitoring system is in place that samples water quality from the pumps and identifies mechanical problems, where they exist. Where groundwater quality is an ongoing problem, new boreholes are being constructed, and where pumps malfunction, they are repaired.

16. Will the additional flows cause erosion in the Xe Bang Fai? What is being done to mitigate or compensate for this?

One of the anticipated impacts along the XBF River is possible increased erosion. Monitoring systems (to identify changes from the baseline situation) are in place to identify impacts as they emerge.  In addition site-specific monitoring is also undertaken at vulnerable locations where assets of high social, economic or cultural value are at risk. The Government, NTPC and the oversight agencies follow the results of the monitoring closely.

Also, actions to mitigate and/or address flooding and erosion have been planned during project preparation. In particular, project infrastructure design measures (e.g., a large regulating pond and a 27km-long downstream channel) have been put in place to reduce fluctuations in water levels and downstream erosion.

17. Is the project’s downstream program adequate to address the impacts?

The sizable downstream program was designed to respond to changing circumstances and new challenges as they arise. So far, the downstream impacts in the Xe Bang Fai are in line with those expected when the project was designed. These impacts were planned for, and mitigation measures to address them are fully described in the project’s Concession Agreement. The mitigation plans have been under implementation for several years now.

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Revenue Management

18. Are the Revenue Management Agreements in place?

Yes. The reforms achieved through the Government’s Public Financial Management Strengthening Program are improving fiduciary capacity and have facilitated development of the NT2 Revenue Management Arrangements (NT2-RMA). The implementation of the NT2-RMA has helped put in place tools for transparent and accountable management of public resources and allowed the government to implement a budget classification and monitoring system capable of reporting expenditures on budgetary outlays.

Sector ministries have put in place systems for reporting physical progress of expenditures, and the State Audit Organization is building capacity to conduct performance audits.

19. How much revenue is expected to flow to the Government during 2010 and what will it be used for?

The Government of Lao PDR will receive about US$6.5 million in the current fiscal year (FY2009/10), which ends in September 2010.  Consistent with the RMA, the Government has allocated the projected US$6.5 million (equivalent to 50 billion kips) for this fiscal year through the budget process for:

  • primary education (17.5 billion kips)
  • rural electrification (6 billion kips)
  • basic health (10bn kips)
  • rural roads (15bn kips), and
  • environmental protection (1.5 bn kips).

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Project Arrangements / Consultation and Disclosure

20. How is information about the NT2 project publically disclosed?

The World Bank, on behalf of the International Financial Institutions,  makes available to the public a broad range of information on the project as well as disclosing information through its website (http://www.worldbank.org/laont2).

The project developers, NTPC and the Government of Lao PDR, disclose (mainly through their respective websites: http://www.namtheun2.com and http://www.poweringprogress.org ) a broad array of project documents which are reflective of their role as developers and implementers.

21. What is “adaptive management” and how does the project address changing circumstances or unexpected impacts ?

It was explicitly recognized during project preparation that adaptive management (a process of adjusting project implementation to shifting realities on the ground) would be an important feature during implementation – to ensure sufficient flexibility in implementation (as opposed to changing objectives) to deal with changing circumstances and evolving impacts.

The notion of adaptive management is defined in the Concession Agreement and referred to in several places. For example, on page 126 of Part 1 of Schedule 4 there is a section that reads: “16.7 Adaptive Implementation. Both the GOL and the Company acknowledge that due flexibility is needed when implementing the Resettlement Works described in the Part, and acknowledge that, upon agreement between the GOL and the Company, the budgets for those items included in this Part identified as “Limited by Scope” may be reallocated to purchase other materials or equipment as needed.”

Adaptive management is the result of dialog between NTPC, Government and the various oversight agencies, taking into account changing situations on the ground. Given that adaptive management is a necessary and ongoing part of meeting the objectives outlined in the CA, it is expected to continue within the NT2 context.

For an overview of the project please click here 

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ARCHIVES:

bullet-blue Frequently Asked Questions June 2009 (73kb pdf)

bullet-blue Frequently Asked Questions March 2007 (44kb pdf)

bullet-blue Frequently Asked Questions February 2007 (59kb pdf)

bullet-blue Frequently Asked Questions October 2006 (80kb pdf)

bullet-blue Frequently Asked Questions June 2005  |  PDF Format (65kb)

 

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