Nam Theun 2 Hydroelectric and Social and Environment Projects
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LAO PEOPLE’S DEMOCRATIC REPUBLIC Nam Theun 2 Hydroelectric and Social and Environment Projects Report No. 153963 DECEMBER 16, 2020 © 2021 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org Attribution—Please cite the work as follows: World Bank. 2021. Lao People’s Democratic Republic—Nam Theun 2 Hydroelectric and Social and Environment Projects. Independent Evaluation Group, Project Performance Assessment Report 153963. Washington, DC: World Bank. This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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Report No.: 153963 PROJECT PERFORMANCE ASSESSMENT REPORT LAO PEOPLE’S DEMOCRATIC REPUBLIC NAM THEUN 2 HYDROELECTRIC PROJECT (IDA GUARANTEE B-0080-LA) AND NAM THEUN 2 SOCIAL AND ENVIRONMENT PROJECT (IDA GRANT H155-LA) AND NAM THEUN 2 POWER COMPANY (MIGA GUARANTEE 5139) December 16, 2020 Financial, Private Sector, and Sustainable Development Independent Evaluation Group Abbreviations ADB Asian Development Bank CO2 carbon dioxide E&S environmental and social GDP gross domestic product GWh gigawatt-hour ICR Implementation Completion and Results Report IDA International Development Association IEG Independent Evaluation Group IFI international financial institution km kilometer kWh kilowatt-hour Lao PDR Lao People’s Democratic Republic M&E monitoring and evaluation MIGA Multilateral Investment Guarantee Agency MW megawatt NNT-NPA Nakai-Nam Theun National Protected Area NT2 HPP Nam Theun 2 Hydropower Project NTPC Nam Theun 2 Power Company PAD Project Appraisal Document PDO project development objective PPAR Project Performance Assessment Report PPP public-private partnership RIP resettlement implementation period WMPA Watershed Management and Protection Authority XBF Xe Bang Fai All dollar amounts are US dollars unless otherwise indicated. IEG Management and PPAR Team Director-General, Independent Evaluation Ms. Alison Evans Director, Financial, Private Sector, and Sustainable Development Mr. José C. Carbajo Manager, Infrastructure and Sustainable Development Project Evaluation Unit Mr. Christopher Nelson Manager, Finance and Private Sector Project Evaluation Unit Ms. Beata Lenard Task Manager Mr. Migara Jayawardena This report was prepared by a team led by Migara Jayawardena that included Ichiro Toda, Gurkan Kuntasal, Stan Peabody, Colin Rees, Andres Liebenthal, Peter Choynowski, Gangadhar P. Shukla, and Shenghui Feng. Richard Kraus, Vibhuti Khanna, Thongkham Chanthavong, and Singha Ounniyom provided administrative support. A World Bank Group and Asian Development Bank joint team carried out the evaluation because both institutions financed the project. Houqi Hong led the evaluation at Asian Development Bank. Based on institutional requirements and corresponding evaluation methodologies, each institution prepared its own report, applying the same underlying assessment. This report represents the Bank Group’s evaluation of the project’s performance. The joint Bank Group and Asian Development Bank team conducted a mission to the Lao People’s Democratic Republic and Thailand from September 19 to October 4, 2019. ii Contents Project Data ........................................................................................................................................................ v Summary ............................................................................................................................................................ vii 1. Background, Context, and Design ......................................................................................................... 1 Objective and Components ...................................................................................................................... 2 Costs and Financing .................................................................................................................................... 3 Design ..............................................................................................................................................................4 2. What Worked, What Didn’t Work, and Why? ................................................................................... 6 Key Results ..................................................................................................................................................... 6 Power Finance and Development ........................................................................................................................ 6 Environmental Aspects ........................................................................................................................................... 10 Social Development Aspects ................................................................................................................................ 17 Management of Revenues ..................................................................................................................... 22 Transformational Aspects ofthe NT2 HPP ...................................................................................................... 26 Design and Preparation .......................................................................................................................... 29 Implementation and Supervision .......................................................................................................... 31 3. Lessons from the NT2 HPP .................................................................................................................... 36 Strategic Lessons for Development Interventions ......................................................................... 36 Operational Lessons for Project Design and Implementation ................................................................ 38 Bibliography ..................................................................................................................................................... 48 Boxes Box 2.1. Key Principles of “Directions in Hydropower: Scaling Up for Development” .............. 30 Box 2.2. How Transformational was the NT2 HPP? ............................................................................. 34 Figures Figure 1.1. Theory of Change for the Nam Theun 2 Hydropower Project....................................... 5 Figure 2.1. Key Milestones in Developing the NT2 HPP ........................................................................ 8 Figure 2.2. Electricity Supply from the NT2 HPP to Thailand and Lao PDR ................................. 10 iii Maps Map 2.1. Nakai Plateau and the NNT-NPA Watershed ....................................................................... 13 Photos Photo 2.1. The Dam for the Nam Theun 2 Hydropower Project ........................................................ 6 Photo 2.2. Biomass Remaining in the Nam Theun 2 Reservoir ........................................................ 12 Photo 2.3. A Villager Accessing the NNT-NPA Watershed by Boat ............................................... 15 Photo 2.4. A Typical Resettled Dwelling in the Nakai Plateau .......................................................... 18 Photo 2.5. A Villager at Work ..................................................................................................................... 20 Photo 2.6. A Community Discussion in a Village in the Nakai Plateau .......................................... 21 Photo C.1. Nakai Plateau and Partial Nakai-Nam Theun National Protected Area ................... 81 Tables Table 2.1. Nakai Resettlers’ Mean Household Income by Source ................................................... 22 Table 2.2. Revenues Generated for the Government from the NT2 HPP ($, millions) ............. 24 Table 2.3. Estimated Allocation of Revenues (at the end of 2017) ................................................. 25 Appendixes Appendix A. Project Ratings ...................................................................................................................... 55 Appendix B. Methods and Evidence ....................................................................................................... 71 Appendix C. Fiduciary, Environmental, and Social Aspects ........................................................... 79 Appendix D. Economic and Financial Analyses ................................................................................ 115 Appendix E. Borrower Comment ..........................................................................................................