Nam Theun 2: Sustainable Energyfor South East Asia

Abstract

The Nam Theun 2 hydroelectric project (the ?Project?) has been identified by the WorldBank as a key project for the economic and social development of the Lao PDR and is being developedby the Government of the Lao PDR alongside a consortium of private sector developers comprisingElectricit? de France, Electricity Generating Public Company Limited and Italian-Thai DevelopmentPublic Company Limited of Thailand.In the mid 90s, the Project was nominated by the Governments of Lao PDR and Thailand asa potential supplier of electricity to the Electricity Generating Authority of Thailand (?EGAT?)under the 3,000 MW bilateral agreement between the two countries. The Power Purchase Agreementbetween EGAT and the Project was signed on 8 November 2003 and the electricity from the Projectis expected to be fully on line by the end of 2009. Some small quantity of electricity from the Projectwill be sold into the Lao PDR in the framework of a Power Purchase Agreement with Electricit? duLaos (EDL) that was also signed on 8 November 2003.The Project is a 1,070 MW (net capacity) trans-basin scheme benefiting from a 348 maverage net head to drive generating units capable of producing on the average 5,936 GWh peryear. The Project has a unique geographical location that optimises the topography of the region toallow a high average net head and high generating capacity without the requirement of a high dam.The maximum size of the reservoir is 450 km2 with an active storage of 3,530 million m3, a volumeapproximately half the average annual flow of the Nam Theun. Given the location, design andanticipated cost, the Project will be one of the cheapest suppliers of long-term, sustainable electricityinto Thailand.However, the Project is not simply a very attractive economic asset. It is far more than that.Indeed, its long period of development has been used to accurately prepare all environmental andsocial safeguards while understanding and integrating the Project in the long-term economicaldevelopment of the Lao PDR and the region.In respect of the Project?s environmental benefits, the Project will support the funding of anenvironmental protection agency to manage the conservation of the world heritage Nakai-NamTheun National Biodiversity Conservation Area (?NBCA?), a unique area of pristine primaryrainforest that also constitutes the Project watershed. According to the Panel of Environmental andSocial Experts ?the project will by way of direct funding help to preserve a vast primary forest ofgreat international significance which makes up the catchment, and which is presently at risk.?Similar committed efforts have been undertaken by all parties to ensure that any negativesocial impacts of the Project at the local level are fully mitigated. These efforts have meant that theProject is regarded by many as setting new benchmarks for high standard environmental and socialplanning, with all parties active encouraging the participation of the local population, officials,and various independent experts in order to fully address and mitigate the negative social andenvironmental concerns that such parties may have.