Terry O’Leary

November 2, 1999

Thank you for copying me on your October 6th letter to the Bank regarding the Nam Theun 2 Hydroelectric project in Lao PDR.

While I apologize for the delay in responding to your concerns, we wanted to get a full and current update from the Bank on the project. I believe your letter raises very legitimate questions regarding the cost of the project to the Thai consumers. In this respect, let me assure you that the Bank will be following closely the developments related to the Power Purchase Agreement (PPA) negotiations between the Lao PDR and the Electricity Generating Authority of Thailand (EGAT). We have been reassured that the Bank will not reach a final decision until it is satisfied that all aspects of the project comply with the Operational Directives and that the project is financially and economically viable.

At this important stage your letter provides some critical input that we very much welcome. Accordingly, it is clearly understood that, if the Bank is to support the Nam Theun 2 project, the latter would need to be in full compliance with the Bank’s environmental and social policies and that higher standards would need to be applied.

Thank you again for raising this important matter with me and I encourage you to continue to provide our office with any concerns or relevant information you believe we should know about with regards to the project.

Sincerely

Terry O’Leary
Executive Director