The Nam Theun 2 Hydropower Project, or simply NT2, is a hydroelectric dam on the Nam Theun River in Laos. Commercial operation of the plant began in April 2010. The scheme diverts water from the Nam Theun, a tributary of the Mekong River, to the Xe Bang Fai River, enabling a generation capacity of 1,075 MW, from a 350 m (1,148 ft) difference in elevation between the reservoir and the power station. It is the 2nd largest hydroelectric project so far in Laos after Xayaburi Dam, exporting power to Thailand as well as supplying the local area with electricity. At the time of signing in 2005, NT2 was the largest foreign investment in Laos, the world's largest private sector cross-border power project financing, the largest private sector hydroelectric project financing, and one of the largest internationally financed IPP projects in Southeast Asia. The dam also marked a return by the World Bank to funding large-scale infrastructure, after a decade-long hiatus. According to the government of Laos, "the project is an essential part of the country's development framework and the project's implementation is likely to be the first real possibility for (Laos) to reduce gradually its dependence on Official Development Assistance". The project has significant environmental and social impacts, and comprehensive measures have been designed to mitigate these. According to a group of social and environmental experts who advise on the project, these measures could become a global model. Although Newsweek referred to it as a "kinder and gentler dam", the project has also attracted criticism. By 2015, it was possible to see the effect of the dam and criticism mounted. A group of non-governmental organisations said: "Ten years after the start of the construction of the Nam Theun 2 Dam in Central Laos, it is clear that this mega project has disastrous impacts on people and their environment."
History and current status The Nam Theun 2 project was identified in the 1980s and a concession was awarded in 1993. It was subjected to a long anti-dam campaign. The project was frozen after the 1997 Asian financial crisis, but preparation resumed in 1999. In October 2002 a concession contract between the Nam Theun 2 Power Company (NTPC) and the government of Laos was signed, followed by the signing of power purchase agreements (PPA) in November 2003 between NTPC on the one hand and, Electricity Generating Authority of Thailand (EGAT) and the Laotian state-owned power company Electricite du Laos (EDL) on the other. Financial closing was reached in June 2005. The Nam Theun River diversion was begun in March 2006 and then closed in April 2008 following completion of the Nakai Dam wall. Impoundment of the Nakai Reservoir occurred over the 2008 wet season and the reservoir was close to full supply level by the end of 2008. Test hydro power generation began in mid-2009 and the commercial operation date was achieved in April 2010.
Technical features NT2 enables Laos to export 995 MW of electrical energy to the EGAT. The project also supplies 75 MW of capacity for domestic use in Laos. Nam Theun 2 is a trans-basin diversion power plant that uses water from the Nam Theun River and releases the water into the Xe Bang Fai River. The project site is in Khammouane and Bolikhamxay Provinces in central Laos, about 250 kilometers east of Vientiane. It stretches from the Nakai Plateau to the lower Xe Bang Fai River confluence with the Mekong. The main features of the project include:
39 m (128 ft) high gravity dam 450 km2 (170 mi2) reservoir Pressure shaft, pressure tunnel and a powerhouse 8,000,000 m3 (280,000,000 ft3) artificial regulating pond, and a 27 km (17 mi) artificial downstream channel leading to the Xe Bang Fai River 130 km (81 mi) long, double-circuit 500 kV transmission line to the Thai grid 70 km (43 mi) long, single-circuit 115 kV transmission line to the Lao domestic grid.
Institutional arrangements The project is structured as a build-operate-transfer (BOT) project. It has a concession period of 31 years, of which the operating period is 25 years. At the end of the concession period, the project facilities will be transferred to the government free of charge. The project was developed by NTPC, which is owned by a consortium composed of EDF (40%), Electricity Generating PCL (EGCO) of Thailand (35%), and the Government of Laos (25%). Governments and government-owned enterprises own a majority of NTPC. This arrangement is atypical of an IPP. Normally the power generating company is privately owned. Laos is a People's Democratic Republic (PDR) with a one-party system under the Lao People's Revolutionary Party. It is one of the few communist states in the world. The government has multiple roles related to NT2, some of which may be conflicting: It partially owns NTPC and thus has an interest in the financial profitability of the project; it is supposed to monitor compliance with environmental and social safeguards under the concession contract; and it buys some of the electricity generated from the project through the state-owned power company EDL and thus has an interest in low electricity prices. Some of the owners of NTPC are also contractors engaged in the construction of the dam. For example, EDF International is the lead contractor for the project under a turnkey contract. It has engaged various sub-contractors for specific parts of the project.
Financial aspects
Project costs and financing Construction costs were initially estimated at US$1,250 million plus US$331.5 million for contingencies. More recently construction costs have been given as US$1.3 billion. The project base cost is funded through US$330 million of equity and US$920 million of debt. It is financed through equity, loans and guarantees from 26 financial institutions, including
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