Why is the World Bank financing the Nam Theun 2 (NT2) project?
The Nam Theun 2Project has the potential to have a positive impact in the lives of people in Lao PDR. The US$1.45 billion Nam Theun 2 is the biggest single project undertaken in the East-Asian country and is expected to provide Lao PDR with up to $US110 million in additional annual revenue, to be used for priority poverty-reduction and environment protection programs. Thus, NT2 revenues can have a significant impact on expenditures if properly targeted, and the Government has previously identified five eligible programs based on the country's priorities in health, infrastructure, poverty-reduction, environment and education. The Bank believes that a sound approach to selling hydroelectricity, supported by improved government policies, can help Lao PDR achieve its goal of overcoming poverty and improving people's lives. Prior to World Bank project approval in March 2005, the Bank spent the best part of a decade studying the project and evaluating the risks-which the Bank believes can be managed through appropriate social and environmental mitigation measures. As well as construction of the dam, the project will provide for increased environment protection in Lao PDR, with the setting aside of a valuable biodiversity area nine times the size of the area to be flooded; as well as improved housing, livelihoods and higher incomes for the 6,200 villagers who are being resettled, and livelihood restoration programs for those living downstream of the project. The Bank is committed to continuing to monitor the project closely to ensure implementation continues to progress in synch with social and environment standards.
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