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IRN Visit to Nam Theun 2 Hydropower Project in the Lao PDR Trip Report and Project Update

Executive Summary
September 19, 2006

IRN Visit to Nam Theun 2 Hydropower Project in the Lao PDR

Trip Report and Project Update

Nam Theun 2 Trip Report by IRN

Download the full report (PDF)

Three IRN staff members visited the Nam Theun 2 hydropower project (NT2) in June 2006. During our visit, IRN met with representatives from the Government of Laos (GoL), the Nam Theun 2 Power Company (NTPC), the Asian Development Bank (ADB), the World Bank (WB) and CARE International.  Over a period of six days we traveled to the Nakai Plateau, the downstream channel area in Gnommalat District, and visited villages along the Xe Bang Fai. We also met with relevant officials in Vientiane and at ADB headquarters in Manila.

Our main purpose was to gather first-hand information regarding implementation of the NT2 project.  We interviewed construction workers, local officials and those affected by the dam project, and observed various construction and resettlement activities. The information we received during our field visit was supplemented and updated with information from recent project documents. IRN also wrote to NTPC after the field trip to raise questions and give NTPC the opportunity to respond to our findings. NTPC’s responses have been incorporated into this field report to the extent possible.

Key Concerns and Recommendations

IRN has identified the following key concerns regarding implementation of the Nam Theun 2 Hydropower Project:

  1. Downstream Channel Compensation Inadequate
  2. According to interviews with villagers in three villages located along the upper part of the downstream channel, provisional cash compensation for loss of rice fields and common property resources has been wholly inadequate to compensate for the lost production values of their land. Many families lost part or all of their rice fields due to downstream channel construction.

    The amounts of provisional compensation given to families are insufficient and inconsistent. For example, three families in Ban Keovilay lost most of their rice fields and received only 600,000 Kip (US$60) in compensation for lost production value. Other families in Ban Keovilay received 800,000 and 1.8 million Kip in compensation, still insufficient to compensate for lost production value. There seemed to be no explanation for why some families received more compensation than others. The lack of adequate compensation is leading to rice shortages in some families.

    In addition, some villagers report that although they used to practice double cropping on their rice fields, they were only compensated for the lost production value of one crop. People have also received inadequate compensation for loss of common property resources, such as fisheries, vegetable gardens, fruit trees, access to bamboo forests and non timber forest products.

    NTPC denies these problems and claims that the grievance mechanism is working well. Despite this, IRN believes that serious problems remain with calculation of provisional compensation. We believe that the problems can be attributed to the following factors:

    • poor planning for project lands (which includes downstream channel) compensation;
    • the lack of a publicly available plan for permanent livelihood restoration for project lands affected communities;
    • the involvement of the district government in disbursing compensation, leading to a high likelihood of mismanagement;
    • inadequate baseline surveys; and
    • inadequate monitoring measures for project lands communities.

    IRN recommends that an independent team be commissioned to carry out systematic and thorough consultations with all project-affected people living along the downstream channel and to review all relevant NTPC documentation to determine where problems continue to exist and to make recommendations for rectifying these problems as soon as possible.

  3. Xe Bang Fai Livelihood Restoration Program
  4. A total of 159 villages living in the Xe Bang Fai River basin will be affected by increased water flows as a result of NT2.  The initial study outlining the measures to be undertaken during the downstream livelihood and asset restoration program was due to be completed in early 2006, but the report has still not been disclosed.

    IRN is concerned about the viability of implementing an extensive livelihood restoration program in so many villages in such a short period of time. There are only three years left until commercial operation, and the livelihood restoration program is only now being piloted in just 20 villages. NTPC should develop a provisional compensation scheme to ensure that people are adequately compensated until livelihood restoration measures yield benefits as promised.

    The livelihood restoration program places a heavy emphasis on dry season vegetable cultivation. Farmers are willing to switch from rice cultivation to planting vegetables during the dry season if there is a market for their produce. If all 159 Xe Bang Fai villages, as well as those on the Nakai Plateau, start to produce dry season vegetables, villagers are concerned that the local market will be flooded and they will be without a buyer. A successful marketing strategy is clearly needed for Xe Bang Fai villages.

  5. Nakai Plateau Resettlement
  6. At the time of our visit, 330 families were going through transitional resettlement on the Nakai Plateau. As NTPC decided to move people at the beginning of the rainy season, before any of the new infrastructure was in place, villagers were living in temporary housing and will have to spend a few months clearing their agricultural land and establishing their new lives. At most of the sites, people were moved before wells or boreholes had been dug, causing water shortages in some villages. Villagers are receiving food subsidies over the next six months. 

    IRN is concerned that the rains will impede access to all the transitional villages during the rainy season, making food and water deliveries difficult. The situation will need to be closely monitored throughout the rainy season to ensure that people are getting what was promised.

    IRN continues to be concerned about whether or not Nakai Plateau villagers will be able to keep their buffalo when they move to the new resettlement area due to a shortage of land and forage. NTPC claims that no villager will be forced to sell their buffalo, but villages with large numbers of buffalo will be encouraged to sell them and seek alternative investment models that are less land intensive. Villagers are also concerned about whether they will be able to grow rice in their new plots. NTPC states that they are experimenting with varieties of rice and with agro forestry systems, but few details have been released about these systems and their effectiveness.

    A major part of villagers’ livelihood in the new resettlement areas is supposed to come from the cultivation and sale of cash crops. Villagers are concerned about where they will sell their vegetables once the project is completed. NTPC has reportedly conducted a marketing study, but the study has not been released to the public. It is critically important that the marketing study is disclosed in its entirety, and that its findings are discussed with Nakai Plateau villagers.

    IRN has heard that the amount of usable hardwood timber on the Nakai Plateau has been overestimated, and that there is a shortage of wood for building the houses and other structures for the resettlement sites. This could seriously delay the resettlement process and should be investigated and rectified immediately. Lower than expected timber stocks in the community forest areas will also affect the long-term viability of the resettlement program.

  7. Salvage Logging Delayed
  8. The Government of Laos is expected to earn as much as US$70 million from salvage logging of the Nakai Plateau. As of June 2006, no contract had been awarded to carry out the salvage logging operations. In August 2006, NTPC stated that the GoL had contracted a company and that logging would commence this coming dry season. Meanwhile, no clear plan for managing the logging operations has been released to the public. Careful planning is critical given the proximity of the Nakai Plateau to the Nakai Nam Theun NBCA, the potential impacts to endangered species in the area, and the impacts that logging will have on access to non-timber forest products for Nakai Plateau villagers. The salvage logging management plan should be released as soon as possible, and the logging operations should be carefully monitored over the coming two years.

  9. No Plans for Biomass Clearance
  10. IRN is concerned that if most of the biomass is not cleared from the reservoir before impoundment, the decomposing vegetation will cause serious water quality problems in the new reservoir, resulting in massive fish kills in both the reservoir area and downstream along the Xe Bang Fai. NTPC has informed IRN that “there are no agreed plans for biomass clearance at present.” This will affect the viability of the livelihood restoration programs in both areas. To avoid serious water quality issues, all biomass should be cleared from the reservoir areas that will be permanently flooded. NTPC should immediately commission a study to investigate the best method for clearing the vegetation, and put in place plans to clear all biomass from the reservoir area during the 2007-2008 dry season. The biomass should not be burned, but cut and carried out of the reservoir.

  11. Excessive Dust in Roadside Villages
  12. Many villagers on the Nakai Plateau and in Gnommalat District complained about the excessive dust from project vehicles. While NTPC and the head contractor have stated that roads are being sprayed several times a day to minimize dust, villagers informed us that spraying occurred sometimes only once a week, and sometimes even less than that. Villagers complained of respiratory illnesses arising from the dust. IRN recommends that at the beginning of the coming dry season all roads passing through villages that are subjected to project-related traffic be sealed as a matter of priority.

  13. Road Construction in the NT2 Corridor
  14. The Nakai Plateau is surrounded by two important National Biodiversity Conservations Areas (NBCAs). The Phou Hin Poun – Nakai Nam Theun Corridor (the Nam Theun 2 Corridor) links these two NBCAs and is an important migration route for many wild animals, including a herd of wild Asian elephants.  The dam site and the new road from Ban Phonsa-ad to the dam site are located in the Nam Theun 2 Corridor.

    During our visit, we observed that the shoulders of the new road to the dam site were logged well beyond the allotted width. In some areas, a swathe of at least 100 meters was cut through pristine forest. As is often the case in Laos, we believe that  construction of the road was used as a pretext for logging the surrounding area. IRN is concerned about the impacts of the road construction on the ecological integrity of the corridor, and the hindrance this might cause to animal migrations.

  15. Fisheries Already Affected by Construction Activities
  16. A study on fisheries on the Nam Theun and Xe Bang Fai was conducted by Dr. Maurice Kottelat. This study was supposed to collect baseline data on fisheries, but the surveys took place in May 2006, long after construction had begun. Under these circumstances, the study cannot be considered a baseline. Indeed, IRN has heard reports that Dr. Kottelat found unusually low fish diversity downstream of the dam site, and in the Xe Bang Fai downstream of the Nam Kathang/Nam Gnom confluence, which are likely related to excessive sedimentation in the rivers as a result of dam construction.

  17. Excessive Sedimentation as a Result of Construction Activities
  18. Numerous monitoring missions have pointed out the excessive sedimentation that is occurring in the Nam Theun and the Nam Kathang as a result of poor management of construction activities. The Head Contractor is finally using flocculating agents (chemicals which bind the fine particles together and prevent them from flowing into the rivers) in two locations downstream of the powerhouse tunneling works. However, IRN understands that at all other sediment basins no flocculation is occurring. Also there are many diffuse sources of turbid discharges where there is no sediment removal, such as from all the large roads and newly cleared areas. This excessive sedimentation is likely already impacting fisheries and other aquatic biodiversity in the main impacted rivers.

  19. Delays in Release of Information and Monitoring
  20. Many studies relating to social and environmental aspects of the project have not been disclosed, and continue to be delayed. IRN is concerned that although construction is proceeding rapidly, key social and environmental management plans have not been completed and key monitoring arrangements are not yet in place. In addition, NTPC states that they will disclose only executive summaries of key documents such as the marketing study for the Nakai Plateau and Xe Bang Fai areas, the Xe Bang Fai Livelihood Asset and Restoration Program and the baseline study on fisheries on the Nam Theun and Xe Bang Fai. This is not in line with the standards of transparency that the project developers and financial institutions claim to adhere to.

  21. Lao National Hydropower Policy
  22. In June 2005, the Lao government enacted a National Policy on Environmental and Social Sustainability of the Hydropower Sector in Lao PDR. The policy was enacted as a precondition for World Bank support for Nam Theun 2  During our visit to Laos it became clear that the policy was not being implemented, nor did it appear that any steps were being taken to implement it. For example, several hydropower projects are moving forward, yet Environmental Impact Assessments and Social Development Plans have not been disclosed as required by the policy.As implementation of the National Hydropower Policy was a precondition for World Bank support for Nam Theun 2, the World Bank should take immediate steps to ensure that the GOL is implementing the policy.

Additional Information

For further information, please contact:

    Aviva Imhof, International Rivers Network
    E–mail: aviva@irn.org
    Phone: +1 510–848–1155