Marguerita Choy
Reuters
April 6, 2005

Electricite de France said on Tuesday the financing for the controversial $1.25 billion Nam Theun 2 hydroelectric dam in Laos will be completed by the end of May, allowing construction to begin in June.

“The financing should be completed by the end of May and the 54-month long construction will begin immediately in June,” Claude Jeandron, EDF’s sustainable development and environment vice president said in an interview after a news briefing.

Since its launch a decade ago, the project to build Indochina’s largest dam cleared its final hurdles over the last week when the Asian Development Bank and the World Bank agreed to back it to spur development in one of the world’s poorest countries.

“These decisions demonstrate the confidence that these financial institutions bestow on the Nam Theun 2 project and its essential contribution to sustainable development in Laos,” said Jeandron.

EDF, the project leader and majority shareholder, and its partners two Thai firms and the Lao government, needed risk guarantees from the ADB and World Bank for the project in the secretive communist state before loans could be secured from commercial lenders.

The ADB and World Bank have respectively approved up to $120 million and $270 million in loans and risk guarantees for the 1,070 megawatt project that will export 95 percent of its output to Thailand.

Jeandron said the partners of the Nam Theun Power Company (NTPC) were expected to finalise agreements with about 25 financial institutions, including French and Thai banks.

Initial production tests on the dam were scheduled for 2008 with the start-up slated for the end of 2009.

Huge environmental and social costs

EDF said about $180 million or 13 percent of the project costs will be spent over the 25-year concession to protect the wildlife and improve the livelihood of about 75,000 people affected by the 450 square kilometre (174 sq mile) dam.

“This (13 percent) is exceptional for an industrial project of this type,” said Jeandron.

Environmentalists have opposed the dam on the Nam Theun River in central Laos, saying it will threaten wildlife on the Nakai Plateau that will be flooded, and the livelihood of tens of thousands of people downstream.

EDF said NTPC will set up and spend $1 million a year for 30 years to manage a 4,000 sq km wildlife reserve in the reservoir’s basin, home to the largest diversity of freshwater tortoises and the newly discovered species of the saola ox.

It will also compensate and relocate from the flooded area some 6,000 people, mainly hunters and small subsistence farmers who employ slash and burn methods, who will be resettled in villages with farms.

Downstream, NTPC will manage the river’s flow and reintroduce fish stock to the over-fished river, Jeandron said. He said the dam would in the first five years emit nearly a tenth less greenhouse gases compared with the latest gas or coal-fired turbines. After the initial period, methane gas emissions, mainly caused by flora decomposing in the reservoir, would significantly drop.