Based on both formal meetings and informal conversations with representatives of international financial institutions, project developers, as well as international and Thai NGOs, consultants, this report assesses the proposed Nam Theun 2 Hydroelectric Project in Lao PDR.
The observations made by the report include:
- the developmental impact of resettlement on villagers living in the Pilot Village and the Experimental Farm generally appears to be positive, at least at this initial stage
- the Pilot Village and the Experimental Farm are both heavily subsidised with villagers receiving free water supply, electricity and agricultural inputs, raising concern that without a clear strategy for a gradual reduction in external support, alongside measures to generate local income, resettlement of this nature would create dependency and be unsustainable in the long run
- amongst the villagers, it was difficult to find anyone who thought that resettlement was a bad idea, which applied both to those already resettled as well as those due to be resettled
- it is clear, however, that the many promises of material benefits made by the project developers have created a strong incentive for villagers to agree to the project
- consultations have clearly begun very and only one round of consultations has been held to date
- conversations indicated that multilateral development banks are fairly comfortable with the financial aspects of the project, but are less happy with the social and environmental aspects.
Based on these observations the report also offers a number of recommendations, which include:
- questions should be asked about the sustainability of the current resettlement model, both in terms of the danger of creating dependency and strategies for creating a market mechanism
- questions should be asked about the planned pace of resettlement which may be too ambitious
- questions should be raised about the current lack of specific anti-erosion measures, as well as the potential for and effects of increased inundation during the wet season as a result of higher water levels in the Xe Bang Fai
- conditionality in multilateral development bank financing should be demanded. If approved, financing agreements should stipulate measures to address non-fulfilment of mitigation measures including measures of penalisation
- the project should continue to be seen in its regional context and in the light of the political forces driving forward projects of this type: large-scale hydropower projects are on the table in Burma, Cambodia and China; Nam Theun 2 has a crucial role to play in drawing attention to the broader controversies related to these developments.