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Nam Theun Moves Forward; Livelihood Activities Require Acceleration

VIENTIANE, December 14
– The Nam Theun 2 (NT2) Hydropower Project in Lao PDR is continuing to manage social and environmental impacts as construction works advance, according to the latest semi-annual progress report by the World Bank (WB) and Asian Development Bank (ADB), two of 27 financing parties. Construction, based on a 5-year timeline, is on schedule while the social and environmental programs that are based on a longer timeline of up to 12 years are continuing to make progress but some areas require increased attention.

The project is the centerpiece of Lao PDR’s plan to reduce poverty among its six million people. Safe and sustainable development of its vast water resources offers a unique opportunity for the country -- one of the poorest in East Asia -- to raise income for investment in health, education, infrastructure and environmental protection. The country aims to earn money from the sustainable use of hydropower to contribute to its goal of lifting itself out of poverty by the year 2020.

According to the joint WB/ADB report, significant progress has been made in ensuring the proper resettlement of 6,200 villagers in 17 villages who have had to move from the area that will eventually be the reservoir in the Nakai Plateau. A third of the new houses are complete, with new roads, water pumps, toilets, schools and electricity all in place. Construction of the remaining houses and facilities is well advanced and expected to be completed before May 2008. Extensive consultations on house design, location and even construction materials were held and continue to ensure the outcomes reflect the wishes of the local people.

Improve Living Conditions, Health

About 75% of more than 6,000 persons employed on the project are from the two provinces involved in the project which is contributing to the local economy and building marketable skills.

In Ban Bounma -- one of the first villages to have been resettled -- the 200 villagers have electricity in their homes for the first time, as well as new, all-weather roads that connect them to towns and villages nearby. The full relocation process will be completed before impoundment can begin in June 2008.

Villagers being resettled are also in the process of developing new livelihood activities with a focus on agriculture, livestock, forestry and fishery from the future reservoir. Activities include rice production, seasonal crops, fruit trees, pig and frog raising, livestock, forest products and subsistence fishing in the future reservoir, among others.

Clean water supply and Education

The health of villagers has also significantly improved due to better water and sanitation, regular health check-ups and the provision of mosquito nets, as documented by various assessments.

The company developing the dam, the Nam Theun 2 Power Company (NTPC) and the Lao Government, have committed to double the income of resettled villagers, through the livelihood programs, five years after they have been relocated. This means that people living in villages such as Ban Sophia, who used to make US$410 per household a year in 2005, will be making at least US$820 per household a year by 2012 (relocated in 2007).

Various experts are helping the resettlers to adopt improved practices to increase agricultural and income productivity. However the report stresses that the pace of the development of these livelihood activities must be accelerated including engaging additional technical assistance to help villagers develop the most effective cropping systems possible.

According to the report, the start of implementation of the downstream program, well before the dam begins operating, aims to make sure the villagers living downstream of the dam have improved safe water supply and protection from floods. Under the project, a portion of the Nam Theun River is being diverted into the Xe Bang Fai River, which will mean increased water flows particularly during the dry season.

The villagers living downstream, in districts such as Mahaxai, have also been taking part in new livelihood development programs focused on agriculture, fish ponds and handicrafts, among others, to help them generate income beyond that derived from river fishing. The objective is to help villagers generate money from a variety of different sources to compensate for any changes in fishing catches after the river diversion.

Downstream Livelihood Programs Still a Challenge

According to the report, implementation of the downstream program – particularly on implementing livelihood programs – remains a challenge and it will require considerable attention going forward to ensure that villagers are adapting and benefiting from the new livelihood opportunities. Significantly, the report notes that lessons from the 20 villages where the programs have been piloted in a participatory manner are being applied as other villages are included. The report notes that it will be important for the micro-credit schemes that are being developed to be on a sustainable financial footing.

DownstreamWith regard to compensation payments to villagers losing land to the project, the report discusses progress on disclosure of key documents, such as the Resettlement Action Plans, but highlights the need to resolve some outstanding payments.

The report also notes that there has been progress in dealing with illegal mining, wildlife poaching, and logging threats to the Nakai-Nam Theun National Protected Area, as well as continued progress on wildlife monitoring. The 4,000 square kilometer protected area, the largest in mainland Southeast Asia, is rich in biodiversity and its protection is a major cornerstone of the project to compensate for the inevitable environmental effects caused by the construction of the dam.

As reservoir impoundment nears in June 2008, the report stresses the importance of completing additional biomass clearance, putting in place the management of fisheries in the reservoir, completing outstanding payment of compensation to households losing land and continuing to make progress in livelihood activities throughout the project areas.

With regard to Lao PDR’s economy and the readiness to manage revenues once NT2 starts operating, the report recognizes the country’s strong macroeconomic performance and notable progress in public financial management reforms. These will allow the Government to manage NT2 revenues with greater transparency and accountability and ensure they are targeted for poverty reduction and environmental protection programs.

The next joint WB/ADB report is expected to be issued ahead of reservoir impoundment in June 2008.

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