The World Bank and Asian Development Bank respectively approved up to $270 million and $120 million in loans and risk guarantees for the 1,070 megawatt Nam Theun 2 Hydropower Project in Laos, following nearly a decade of discussion. This came despite a number of concerns raised by various civil society groups relating to the significant environmental and social costs, lack of revenue management oversight, and presence of other least-cost options.
Nam Theun 2 is the first major dam to be supported by the World Bank since it announced its intention to ramp up lending for large dams and other “high-risk” infrastructure projects. Construction has already begun but is expected to increase pace after the Project’s financial closing in May 2005.
While the NT2 revenues will account for only 3 to 5 percent of total revenues for Laos from 2010 to 2020, the project is expected to displace 6,200 indigenous people and impact more than 100,000 villagers who depend on the Xe Bang Fai River for fish, agriculture and other aspects of their livelihood.
NGOs such as the International Rivers Network have said they will closely monitor Nam Theun 2 to ensure that affected communities get adequately compensated for their losses.