Dow Jones Newswire

April 1, 2005

Environmental groups say the Laotian government isn’t equipped to manage revenue from the Nam Theun 2 dam or look after the rights of its people. Washington: The World Bank approved financing support for a controversial $1.2 billion dam project in Laos.

Power from the Nam Theun 2 dam will be sold to Thailand, with proceeds earmarked for
health, education, and other antipoverty initiatives. Backers say the dam will generate needed revenue for one of the poorest countries in Asia. But the dam has drawn significant opposition in the years since it was proposed. Environmental groups say the Laotian government isn’t equipped to manage dam revenue or look after the rights of its people.
World Bank President James Wolfensohn said the dam will provide needed income in a country where most people earn less than a dollar a day.

World Bank approval comes at a critical time for the project. The consortium of companies building the dam has until May to secure financing before a series of penalties kick in. The project requires $855 million in loans, accompanied by $330 million of equity from shareholders, including French and Thai companies and the government of Laos. World Bank support comes in the form of a $20 million grant, a $50 million loan partial risk guarantee, and a $200 million Multilateral Investment Guarantee Agency loan guarantee. Other multilateral organizations also are expected to assist the project.