Nam Theun 2 Trip Report and Project Update - BankTrack Nam Theun 2 Power Company ... Nam Theun 2 Trip Report and Project Update 2 Nam Theun 2 is another two-speed large infrastruc-ture

Nam Theun 2 Trip Report and Project Update

May 2007

Written by Shannon Lawrence

Published by International Rivers Network1847 Berkeley Way, Berkeley CA 94702, USATel: +1 510 848 1155, Fax: +1 510 848 [email protected]

www.irn.org

May 2007

Design by Design Action Collective

Cover photo by Henrik Lindholm, SwedWatch

International Rivers Network

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TABLE OF CONTENTS

Executive Summary ..................................................................................................2

Introduction ..............................................................................................................8

Xe Bang Fai Downstream Program ......................................................................11

Biomass Clearance and Water Quality..................................................................17

Project Lands Compensation ................................................................................19

Nakai Plateau Resettlement ..................................................................................23

Conclusion ..............................................................................................................29

Endnotes ................................................................................................................30

Appendix 1: Trip Itinerary ......................................................................................32

Appendix 2: Violations of the Concession Agreement, World Bank and ADB Policies ..........................................................33

ADB Asian Development Bank

EAMP Environmental Assessment and

Management Plan

GoL Government of Laos

IRN International Rivers Network

MAF Ministry of Agriculture and Forestry

NGO Non-governmental organization

NT2 Nam Theun 2

NTPC Nam Theun 2 Power Company

PoE Panel of Experts

RAP Resettlement Action Plan

RMU Resettlement Management Unit

SDP Social Development Plan

VFA Village Forestry Association

Abbreviations


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Nam Theun 2 is anothertwo-speed large infrastruc-ture project, where con-struction proceeds apacewhile social and environ-mental programs lagbehind. Livelihood restora-tion programs for resettled villagers on the NakaiPlateau, villagers along the Xe Bang Fai, and villagesaffected by downstream channel construction are all atrisk. Many NT2-affected villagers with whom IRNspoke were increasingly open in expressing their frus-trations and concerns about the future.

The NT2 Panel of Experts(PoE) warns in its February2007 report:

… the overall emphasis inproject planning and imple-mentation continues, as in

other large dam projects, to be on the relatively simplefunctions of civil works, physical relocation and build-ing social infrastructure. A better balance in timingand more emphasis on livelihood development areessential now (PoE 11th Report, p. 9).

EXECUTIVE SUMMARY

An International Rivers Network (IRN) staff member visited the Nam Theun 2 hydropower project(NT2) in early March 2007 to gather first-hand information regarding NT2’s implementation. Thisreport summarizes information gathered on that visit from interviews with villagers and representatives

of the Government of Laos, (GoL), the Nam Theun 2 Power Company (NTPC), the Asian Development Bank(ADB) and the World Bank. Information from the field was verified and supplemented by a review of recentproject documents.

The World Bank’s and the ADB’s

“model” hydropower project is dan-

gerously close to becoming a replica

of past dam mistakes.

Waiting for new houses in Sop Hia resettlement village. Photo by Shannon Lawrence, IRN.


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The World Bank’s and the ADB’s “model” hydropowerproject is dangerously close to becoming a replica ofpast dam mistakes. Despite the stacks of NT2 studiesand the multitude of assurances, the gaps in planning,budget and political will surrounding NT2 are now evi-dent. Prior to project approval, NGOs warned that theagricultural plans for the Nakai Plateau were inappro-priate, the downstream program plans were inadequate,and the community forestry component was unrealistic.Regrettably, it seems these warnings have come true.

In belated recognition of the plans’ shortcomings, someare being re-drafted midstream, while others—such asirrigation for downstream channel villagers—appear tohave been abandoned, as time runs short before reser-voir filling and power generation begin. NTPC’s Socialand Environmental Division seems to be understaffed,

overworked, and unequipped with the resources andhigh-level buy-in necessary to address NT2’s massiveimpacts on affected villagers.

Two years before power production begins, there havealready been numerous violations of NT2’s legal frame-work, including the Concession Agreement and WorldBank and ADB policies. The failure of NTPC, theGoL, the World Bank, the ADB, and other projectbackers to take action on these issues calls into ques-tion the accountability of all parties and the enforce-ability of these agreements.

Urgent action is required if the GoL, NTPC, and theinternational financial institutions are to meet theircommitments to more than 100,000 affected Laotians,and to their shareholders.

Livelihood restoration programs are in jeopardy in allproject-affected areas. In their latest report, the Panelof Experts states that income targets for resettlers onthe Nakai Plateau are unlikely to be met. Livelihoodrestoration programs for Project Lands’ and Xe BangFai villagers have yet to effectively begin and face sig-nificant time and budget constraints.

Both the GoL and NTPC are backtracking on com-mitments they made at project approval. The viola-tions include failing to provide irrigation for down-stream channel villagers, ensuring biomass clearance ofthe reservoir, guaranteeing Nakai villagers’ rights totheir forest resources, and protecting the Nakai-NamTheun National Protected Area from logging andmining.1

Neither the GoL nor NTPC has committed to clearbiomass from the reservoir area before it is flooded,despite the Environmental Assessment and

Management Plan assertion that “Vegetation will beremoved before flooding the reservoir...”2 Time is run-ning out, with only one dry season left to take action.Leaving biomass to decompose in the reservoir willlikely lead to fish kills in both the reservoir area anddownstream, and result in water that is unsuitable fordomestic use and irrigation in the downstream channeland along the Xe Bang Fai. Biomass clearance hasmajor implications for the success of mitigation andlivelihood restoration programs in all project-affectedareas.

NTPC has failed to disclose resettlement plans inviolation of World Bank and Asian DevelopmentBank policies, as well as other key social and environ-mental documents, such as wildlife surveys and man-agement plans. IRN has repeatedly requested thesedocuments from NTPC, the World Bank and theADB.

Summary of Major Concerns


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Detailed Concerns and Recommendations

Xe Bang Fai Downstream Program

n Implementation of NTPC’s Downstream Livelihood and Asset Restoration Pilot Program has only recentlybeen initiated in 21 villages, which constitutes less than 10% of the downstream villages that will be affectedwhen NT2 operations begin in 2009.

n The Downstream Program plan has not been disclosed to the public, despite World Bank and ADB policyrequirements.

n NTPC says it is planning for the worst-case scenarioalong the Xe Bang Fai, which means 85% fish losses,increased high frequency floods, erosion, major waterquality problems, and transportation difficulties fordownstream villages. However, the DownstreamProgram budget is only $16 million, of which more than$1 million will be spent on consultants.3 Using NTPC’sfigure of 75,000 affected people (versus the 120,000affected people identified by independent experts4), only$200 per person is available to compensate and mitigatefor all these long-term livelihood impacts. Villagers toldIRN that their main priorities were flood protection andirrigation, but NTPC has reportedly told villagers thereis not enough money for these measures.

n The primary livelihood restoration pilot projects—live-stock raising, fish ponds and cash crops using a micro-credit village savings fund, as well as water and sanita-tion improvements—are inadequate to deal with thescale of impacts that villagers will face. Some peoplewere having trouble selling their vegetables, the pigsthey purchased had died, and they couldn’t pay backtheir loans to the village savings fund. The reliance onthe micro-credit scheme to deliver compensation createsa cycle of debt if projects fail.

Recommendations:

n NTPC should commit to develop andimplement an interim compensationscheme to address the impacts of NT2operations on downstream villagersuntil livelihood restoration programsyield sustainable results. Additionalfunding will be required, as the $16million budget is likely to be inade-quate to deal with the scale of antici-pated downstream impacts.

n The GoL, World Bank and ADB shouldwork with villagers and donor partnersto develop an integrated rural develop-ment plan for the Xe Bang Fai region.

n NTPC, the GoL, the World Bank and theADB should ensure disclosure of: 1) theDownstream Livelihood and AssetRestoration Program Phase 1 in itsentirety; 2) marketing surveys for theXe Bang Fai; 3) biomass clearance plansand for the Nakai Plateau; and 4)hydraulics and water quality studies forthe downstream areas.


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Biomass Clearance and Water Quality

n Failure to clear biomass from the reservoir area will resultin water quality problems and fish kills in the reservoirand downstream. The Concession Agreement requires thata biomass survey be conducted and used to propose meansfor “maximising removal of biomass in high biomass areasof the Nakai Reservoir. The priority shall be to clear thevegetation in areas which will be permanently flooded”(Schedule 4, Part 2, Section 3a). The ConcessionAgreement also requires that “... water in the DownstreamChannel must at least be suitable for irrigation purposes”(Schedule 4, Part 2, Section 9.1f ).

n Despite these commitments, approved by the World Bank,the ADB and NT2’s other funders, neither the GoL norNTPC have plans to remove or ensure the maximum removal of biomass from the reservoir. NTPC is onlynow conducting a study on water quality optimization during reservoir impoundment and says that “biomassclearance may be part of the answer.”

Project (Construction) Lands Compensation

n Compensation payments to Project Lands villagers havebeen unequal and insufficient, failing to compensate forthe full production value of land, fisheries losses and waterquality problems caused by project construction. Many vil-lagers do not understand what they are entitled to, whythey have received what they have, and if they will bereceiving more in the future. Compensation paymentsstarted a year after villagers’ land was taken and impactswere first felt, in violation of the Concession Agreementand World Bank policy.

n Resettlement Action Plans for Project Lands have notbeen disclosed, nearly two years after villagers lost landand assets, in violation of World Bank and ADB policies.

Recommendations:

n NTPC and the GoL should commit toclear biomass from at least all perma-nently flooded areas of the NT2 reservoir.

n NTPC and the GoL should implement anindependently reviewed clearance planand impoundment strategy to minimizedownstream water quality problems inthe first years of NT2 operations.

Recommendations:

n The Independent Monitoring Agencyfor the Resettlement ManagementUnit (RMU) should urgently undertakea comprehensive review of ProjectLands compensation and mitigationmeasures and publicly disclose its findings.

n NTPC and the GoL should: 1) urgentlyfind comparable replacement land forProject Lands villagers, and 2) detailthe livelihood restoration options thatwill replace irrigation for significantlyaffected Project Lands villagers.


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Villagers along the upper Xe Bang Fai. Photo by Henrik Lindholm, SwedWatch.

n The livelihood restoration program for the downstreamchannel area has come undone. It is unclear if replace-ment land is available for villagers who lost more than10% of their incomes as a result of NT2, despite therequirements of the Concession Agreement and WorldBank policy. Similarly, using the downstream channel toprovide irrigation for affected villagers, as promised in the2005 NT2 Social Development Plan, no longer seems tobe a viable option.

Recommendations, continued

n NTPC, the GoL, the World Bank andthe ADB should ensure immediate dis-closure of the Resettlement ActionPlans (RAPs) for Project Lands.5


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Nakai Plateau Resettlement

n Livelihood programs for Nakai Plateau resettlers are beingre-written and/or coming undone halfway through theresettlement process. Agriculture plans in the 2005 NT2Social Development Plan are considered unworkable, soNTPC is experimenting with new approaches. It is nowclear that there is not enough land for all of villagers’ buf-falo and cattle, and families with large numbers will haveto sell some of their buffalo.

n The Village Forestry Association (VFA) is in jeopardy.The 2005 NT2 Social Development Plan assigns respon-sibility to the VFA for harvesting, selling and processingtimber from the resettlement area (such as housing plotsand agricultural land). The VFA is now being run by aformer Ministry of Agriculture and Forestry (MAF) offi-cial and several VFA positions have apparently been givento district government representatives. This appears tohave resulted in the government agencies taking responsi-bility for harvesting the timber. Revenues from timberharvesting on resettlement lands have reportedly not goneinto VFA accounts. Illegal logging in the community for-est area has reportedly removed all the big, valuable treesthat were supposed to provide each resettled family withdividend payments in the future.

n Resettled villagers on the Nakai Plateau are still in tempo-rary houses on their permanent sites. Villagers’ houses arefalling apart and some people report water shortages.Many villagers with whom IRN spoke are increasinglyconcerned about their future and about finding food “afterthe flood”. Some people in the demonstration villagereported selling buffalo to buy rice, as they are no longerreceiving rice support from NTPC.

Recommendations:

n NTPC and the GoL should addressresettled villagers’ concerns by ensur-ing adequate food support until liveli-hood programs prove sustainable, fix-ing temporary houses, repairing ordeveloping water supply systems, pay-ing villagers for land clearance andspraying roads.

n NTPC and the GoL should ensure thatthe VFA has received all the revenueit is due from timber sales in theResettlement Area, and that illegallogging in the community forest areais stopped immediately.

n NTPC, the GoL, the World Bank andthe ADB should ensure disclosure of:1) studies and plans regarding thenew agriculture approach; 2) market-ing surveys; 3) the buffalo reductionstrategy; 4) wetlands, terrestrial, ele-phant and fish surveys and manage-ment programs for the Nakai Plateauand other project areas; 5) the com-munity forestry plan; 6) the salvagelogging plan and 7) the forthcomingreservoir impoundment strategy,upon its completion.


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Nam Theun 2 dam site March 2007. Photo by Shannon Lawrence, IRN.

NT2 is a trans-basin diversion which means it willdramatically alter not one, but two river basins. A 39-meter high dam will block the Nam Theun river toform the reservoir. Once the reservoir has been filled,water will be directed down a 350-meter drop to thepower station, before being transferred to the Xe BangFai. Both the Nam Theun and the Xe Bang Fai aretributaries of the Mekong River.

In 2005, NT2 and its project developers, the NamTheun 2 Power Company (NTPC), which includesElectricité de France International, the ElectricityGenerating Company of Thailand, Ital-Thai

Development and the Lao government, got the goahead in the form of loans and guarantees from theWorld Bank and the Asian Development Bank (ADB).

The World Bank and the ADB asserted that the proj-ect would reduce poverty in Laos. They vowed notonly that the social and environmental risks could bemanaged, but that NT2 would jumpstart the smallcountry’s development. Following the World Bank andADB’s endorsement, other public and private financialsupport was offered from the European InvestmentBank, the Nordic investment Bank, COFACE, andother export credit agencies and private banks.

INTRODUCTION

About Nam Theun 2

Nam Theun 2 (NT2) is a US$1.45 billion hydropower project currently under construction in centralLaos. When it begins operations in December 2009, NT2 will export most of its 1,070 MW of powerto Thailand. The project will also forcibly displace more than 6,200 indigenous peoples to make way

for its 450-square kilometer reservoir, and impact more than 120,000 Lao farmers and fishers downstream.


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Nam Theun 2 is governed by a variety of legal docu-ments that outline the obligations of NTPC and theGoL. The NT2 legal framework includes theConcession Agreement between the Government ofLaos (GoL) and NTPC, and loan agreements withproject financiers, such as the World Bank and theADB. The World Bank and ADB loan and guaranteeagreements with the GoL and NTPC in turn requirecompliance with these institutions’ own policies.Essentially, these legal agreements constitute thepromises made to Lao villagers regarding compensa-tion and mitigation measures, and the allocation ofresponsibility amongst NTPC and the GoL.

About IRN

International Rivers Network (IRN) is a non-govern-mental organization that protects rivers and defendsthe rights of communities that depend on them. IRNhas been monitoring the Nam Theun 2 hydropowerproject and other dams in Laos for over a decade,opposing destructive projects and advocating for bettercompensation and mitigation measures for affectedcommunities. IRN staff members visit the Nam Theun2 project site regularly.

IRN was opposed to World Bank and ADB supportfor Nam Theun 2 because: a) the dam does not meetWorld Commission on Dams guidelines; b) NT2’srisks to affected communities far outweigh its potentialbenefits; and c) dams have not contributed to povertyreduction in Laos. IRN continues to monitor NT2’sdevelopment to ensure that commitments made byNTPC, the GoL and the international financial insti-tutions to affected communities and on the environ-ment are met.

IRN’s March 2007 Visit

An IRN staff member visited the NT2 project site inearly March 2007, accompanied by a colleague from aSwedish NGO and an interpreter. The purpose of thetrip was to gather first-hand information regarding the

implementation of the NT2 project. Over a period ofeight days, the team traveled to the Nakai Plateau, thedownstream channel area of Gnommalat District, andthe Xe Bang Fai area to speak with villagers. Followingthe field visit, IRN met with representatives of theGoL, NTPC, the ADB, the World Bank and non-governmental organizations (NGOs) in Vientiane.

Although the project area is open to the public, IRNinformed NTPC and the GoL of its intentions to visitthe area before the trip. The team was not accompa-nied by GoL or NTPC representatives.

The information in this report was primarily collectedthrough field interviews with local people and formalmeeting discussions. To obtain as comprehensive anunderstanding of the situation as possible, IRN tried tovisit many villages and to interview more than onefamily representative in a given village. Informationfrom the field was verified and supplemented by areview of recent project documents. The responsesfrom NTPC, the World Bank and the ADB highlight-ed in the trip report were obtained during meetings onthe Nakai Plateau and in Vientiane the week of March5, 2007, as well as from subsequent email communica-tion with NTPC.

The trip report does not provide a comprehensiveoverview of the dam nor of its current or futureimpacts across all project areas. IRN primarily seeks tomonitor and report on NT2’ s environmental andsocial impacts and the implementation of mitigationand compensation programs. The trip report is dividedinto sections that correspond to the three main impactareas of the Nam Theun 2 project: the Xe Bang Faidownstream area, project construction lands, and theNakai Plateau resettlement area. A fourth sectionaddresses biomass clearance and water quality implica-tions, which is a critical cross-cutting issue. The tripitinerary and a selected list of violations of NT2’sConcession Agreement and World Bank and ADBpolicies are included as appendices to the report.


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LOCATION:

Central Laos, primarily inKhammouane province

STRUCTURE:

• 39 meter high dam onthe Nam Theun

• 450 square kilometerreservoir on the NakaiPlateau

• After passing througha powerhouse belowthe Nakai Plateau,water from the reser-voir is diverted to theXe Bang Fai via a 27kilometer downstreamchannel

OUTPUT:

• 1070 MW of power,more than 90% export-ed to Thailand

• Power productionscheduled to begin inDecember 2009

SPONSORS:

Nam Theun 2 Power Company (NTPC): Electricitéde France International (35%), the ElectricityGenerating Company of Thailand (25%), LaoHolding State Enterprise (25%) and Ital-ThaiDevelopment (15%)

HEAD CONSTRUCTION CONTRACTOR:

Electricité de France

MAIN SOCIAL AND ENVIRONMENTAL IMPACTS:

> 6,200 indigenous peoples forcibly resettledfrom reservoir area on Nakai Plateau; elephantand other wildlife and wetlands habitat flooded

> 120,000 downstream villagers affected byincreased water flows in Xe Bang Fai, and dra-matically decreased flows in Nam Theun; majorfisheries and aquatic resources losses, erosion,flooding, sedimentation along the Xe Bang Fai

> 2,000 households affected by NT2 constructionactivities, losing land, assets, access to resources;water quality impacts, erosion, sedimentation,logging in construction areas

TheunHinbounDam Nam

Theun 2Dam

power station

downstreamchannel

Nakai Plateaureservoir

XeBa

ngFa

i

NamHinboun

NamKading

Nam Theun

Mekong Rivero Thakek

THAILAND

LAO PDR

VIETNAM

0 10 20 30 40 50km

NAM THEUN 2: At a Glance


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IRN visited 10 villages in the lower, middle and upperXe Bang Fai, six of which are part of NTPC’sDownstream Livelihood and Asset Restoration pilotprogram. As detailed in the 2001 independent study,The People and their River, villagers’ lives are intimatelyintertwined with the Xe Bang Fai and its wet and dryseason cycles.

Most villagers with whom IRN spoke said that XeBang Fai fish and aquatic products are a critical sourceof food and income, despite the fact that fish catcheshad declined in recent years. A woman in Ban BouengXe explained, “We depend very much on fish. We go to

paddy fields during the day and come back to fish everyevening.” In Vernsananh, villagers said they dependmostly on fish, snails, small crabs and vegetables fromthe river as their main source of food and income.

Villagers have learned to anticipate the Xe Bang Fai’sflood cycles, moving their small livestock and otherassets to higher ground when possible. But Ban DongKa Sinh villagers said their buffalo still die after eatingthe grass that has been submerged under floodwaters.

The main flood-related concern of Xe Bang Fai vil-lagers is their wet season paddy. Villagers told IRN

XE BANG FAI DOWNSTREAM PROGRAM

The Xe Bang Fai river will receive large amounts of additional water from the Nakai Plateau reservoirafter it passes through the power station and the downstream channel.6 More than 120,000 people7 inthe Xe Bang Fai area will be negatively impacted by the Nam Theun 2 project. NTPC says8 it is plan-

ning for the worst-case scenario along the Xe Bang Fai, which means 85% fish losses, increased high frequencyfloods in the Xe Bang Fai and its tributaries, erosion of riverbanks and loss of riverbank gardens, major waterquality problems, and transportation difficulties for downstream villages.

Fish from the Xe Bang Fai, caught by a hinterlands' villager. Photo by Shannon Lawrence, IRN.


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they lose most or all of their rice crop every few yearswhen it is submerged by floodwaters before it can beharvested.

The Xe Bang Fai and its tributaries are also an impor-tant means of transportation and major source of watersupply. A villager in Ban Hat Xaisung Neua said thecompany told them that after the dam is built therewill be more flooding and that travel along the riverwill be different. “But the company told us not toworry. They promised bank protection and fish pondsfor us. Sometimes we are worried and sometimes weare not because the company told us not to be scared.”

Downstream program shortcomings

In an attempt to mitigate NT2’s impacts and compen-sate Xe Bang Fai villagers, NTPC has developed aDownstream Livelihood and Asset RestorationProgram. The Downstream Program report was final-ized in 2006, although NTPC says it is still awaitingGoL endorsement.

In violation of World Bank and ADB involuntaryresettlement and information disclosure policies,10 theDownstream Program report has not been publicly disclosed.

IRN is concerned that the $16 million DownstreamProgram budget and the proposed compensation andmitigation measures are inadequate to deal with thescale and severity of NT2’s downstream impacts.Additionally, the short time remaining before damoperation means that villagers are likely to experience asignificant drop in their incomes and major impactsbefore new livelihood programs yield any results.

According to NTPC, the Downstream Program focus-es on micro-credit funds to support agriculture, aqua-culture and livestock projects, water and sanitationimprovements, and mini-polder flood protection. Pilotlivelihood restoration projects were initiated in adownstream demonstration village, Boeung Xe, in2005. NTPC is now implementing the program in 20additional pilot villages in the upper, lower and middleXe Bang Fai.

Concerns of Xe Bang Fai villagers

n Villagers would like flood protection,

improved irrigation and a drinking water sys-

tem, but the company has reportedly said

there is not enough money to provide these

n Pig farming failed last year in some villages

and villagers still have to pay loans back to vil-

lage savings funds

n Village savings fund is not accessible to the

poorest villagers and the interest rate is too

high

n Some people were not able to pay back loans

and have had to sell their assets

n Some villagers do not understand how deci-

sions are taken on what projects the village

savings fund will support

n There is a lack of easily accessible markets for

their vegetables/fruits

n Prices decline when more people are growing

and selling the same vegetables/fruits

Benefits noted by Xe Bang Fai villagers

n NTPC will provide 2 million to 2.5 million kip

(US$200 to US$250) per family to the village

savings fund

n NTPC will develop a sanitation program

n NTPC provides technical assistance for aqua-

culture, pig raising, agriculture and weaving

n NTPC initially provides fish fry for fish pond

and fertilizer for growing corn and other

vegetables

n NTPC has promised some flood protection

Detailed notes from village visits are available at:http://www.irn.org/programs/mekong/namtheun.html.


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Reliance on village savings fundsIn the pilot villages, NTPC has deposited between 2and 2.5 million kip (approximately US$200 to $250)per household into village savings funds to use for vari-ous livelihood projects, including pig farming, water-melon and corn cultivation, and fish ponds. Familiesare expected to contribute 5,000 kip per month to bemembers. Villagers did not know how the 2 millionkip figure was determined, and NTPC has not yetclarified why that amount was chosen and if morecompensation will be forthcoming.

NTPC says it is “paying the initial funds, but [it is] nottelling villagers what to do” with those funds. NTPC isproviding villagers with technical assistance and certaininputs, such as fertilizer and fish seed, for some of theprojects mentioned above. According to NTPC, thecommunity analyzes the proposals and decides foritself which projects to support with loans from the vil-lage savings fund.

In Mahaxai Tai and Boueng Xe, villagers expressedconcerns about the rate of interest charged for villagesavings fund loans (between 1 and 3% per month).NTPC says the rate is very low compared to locallenders, but villagers in Mahaxai Tai said they had dif-ficulty making the interest payments and paying backthe loans in six months, as required. When projectsfailed, villagers complained that they still had to paythe money back, and some said they were unable to doso. In Mahaxai Tai, it was reported that certain vil-lagers had to sell land or their motorbike to repay theloans. Mahaxai Tai villagers also objected to therequirement that collateral be provided in order toreceive loans from the village savings fund, whichexcludes the participation of the poorest villagers.People in other villages reported general confusionabout how the fund works, which prevented some ofthem from becoming members.

It is not clear how the terms of the village savings fundsare being set and by whom (the communities and/orNTPC). However, the current NTPC contribution tovillage savings fund is inadequate to compensate for thelong-term loss of fisheries, assets and other impactsfrom Nam Theun 2. Furthermore, the reliance on a

micro-credit scheme to deliver compensation creates acycle of debt if projects fail or if re-payment terms aretoo demanding.

Villagers bearing risk In most of the pilot villages, livelihood projects sup-ported by village savings fund loans were only just get-ting underway and had yet to deliver results. But somepeople in the Boeung Xe demonstration village, whohave had the most experience with these schemes,expressed frustration with the agriculture and livestockprojects. For example, families bought approximatelytwo to three pigs each to raise, but most of the pigsdied within a couple of months. Now the families haveto pay back money for the pigs and find this very diffi-

Villager along the upper Xe Bang Fai showing last year's flood level. Photo by Shannon Lawrence, IRN.


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cult to manage. As one villagerexplained, “Maybe it wouldhave worked if we had donelike the company told us, butwe don’t have the time becausewe are working in the fields allday.”

One Boueng Xe watermelon farmer complained thatthe price had dropped this year now that so many peo-ple were growing watermelon. She also had troublefinding a market for the watermelon, and getting herharvest there before it rotted. As a result, she wasunable to repay the loan to the village savings fund.

Aquaculture ponds were also starting in some villages.While some villagers were enthusiastic about fishponds, there was also confusion amongst villagersabout how to culture fish. At present, villagers use nat-ural fish ponds in which fish are trapped from the XeBang Fai and harvested at the end of the wet season.Villagers have little to no experience with NTPC’ssuggested aquaculture activities which require inputssuch as fish seed and fertilizer.

Mahaxai Tai villagers said the company told them theycould develop a fish pond using a loan from the villagesavings fund. Villagers said they did not like the ideabecause now they get fish for free from the river.NTPC said they would provide fish seed, but the vil-lagers would have to purchase the fish feed for onemillion kip. NTPC promised to buy the fish from vil-lagers in six months. The project has just started, sovillagers still do not know if it will work.

One woman in Ban Boueng Xe says she would like toask the company, “What compensation will you give usfor flooding if we stay in the village?” She said villagershave to buy seed, fertilizer and everything [using thevillage savings funds, which they have to pay back] andthat nothing is given to them by NTPC.

NTPC notes, “Some programs work and others don’t.This is largely trial and error which is why we have arange of options. Results so far indicate that aquacul-ture is promising, horticulture is promising, but live-

stock can be problematic.”Aquaculture is a new activityfor most Xe Bang Fai villages,and NTPC has not disclosedany information about how pro-ductive and sustainable fishponds are likely to be. NTPChas also failed to identify mar-

kets for the fruit and vegetables that Xe Bang Fai vil-lagers would grow and sell as part of the DownstreamProgram. Furthermore, as more villages begin growingand supplying the same markets with the same pro-duce, prices will continue to fall, hurting the producersthe program is designed to help. NTPC has notexplained how it plans to address this problem.

Villagers request flood protection and irrigationIn almost every Xe Bang Fai village that IRN visited,people expressed their strong desire for flood protec-tion and irrigation systems as the primary mitigationand compensation measure. According to people in atleast three villages, the company said it did not havethe budget to support the flood protection or irrigationsystems villagers were requesting.

Some villagers reported that the company had prom-ised to build mini-polders or flood protection dikes,and villagers were waiting for that work to begin.NTPC explained that three mini-polders covering fivevillages are currently under construction. The companyhopes to have them at least partially constructed beforethe wet season to see how they work.

A major selling point for the NT2 project was thathigher water levels in the Xe Bang Fai would improveirrigation potential and boost dry-season rice produc-tion. The 2005 NT2 Social Development Plan notes:“The NT2 project will improve the potential and eco-nomics of irrigated agriculture development throughthe provision of a reliable water source in the Xe BangFai during the dry season” (SDP, Volume 3, p. 9).NTPC now says that large-scale irrigation is not beingconsidered for Xe Bang Fai villagers because of costissues, arguing that villages will pay more to cover elec-tricity costs and inputs than they would earn from adry-season rice crop, as NGOs pointed out in 2005.

NTPC’s $16 million Downstream

Program budget leaves only $200

per affected person to compensate

for long-term fisheries losses,

flooding, and other impacts.


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Instead, NTPC is proposing small-scale irrigation tubewells shared by groups of families, presumably for dry-season vegetable production. The company plans toinstall approximately 175 to 200 tube wells by the endof 2009 in all riparian villages and some hinterlandsvillages. As the Downstream Program plan has notbeen disclosed, it is unclear how many families willshare these systems, how they will be managed, and ifthe number of tube wells is sufficient. NTPC has notprovided any information regarding how the waterwould be pumped from the wells to the farmers’ fields,and whether or not this would entail additional elec-tricity costs.

NTPC says that there are opportunities for a donor-funded development scheme to consider flood protec-

tion and irrigation systems for Xe Bang Fai villages.The GoL has reportedly expressed an interest in abroader Xe Bang Fai program and donors such as theWorld Bank and the ADB are evaluating variousoptions. The question remains, however, how muchflood protection and livelihood restoration should beNTPC’s direct responsibility to compensate for andmitigate NT2’s impacts.

Time running short for downstream programThe Downstream Livelihood and Asset RestorationProgram for the Xe Bang Fai is still being piloted inless than 10% of the affected villages with two yearsleft until commercial operations begin, with all thefisheries losses, flooding, erosion, and water qualityproblems that will accompany power production.NTPC’s aim is to scale up the programs to all 221affected villages before impacts from Nam Theun 2 arefelt in 2008 or 2009.11

Although NTPC has not disclosed an implementationplan for the Downstream Program, the time remainingbefore NT2 operation seems to be extremely short tolearn from the pilot projects, fix problems or introducenew approaches, and replicate initiatives in more than200 villages. As the Panel of Experts notes in itsFebruary 2007 report, “Where there are delays [indownstream program implementation], an undesirablegap will emerge between impacts and mitigation/com-pensation. Such delays seem likely at this point” (PoE,11th Report, p. 21).

The uptake of new and untested livelihood systems toreplace traditional fishing and farming activities is along-term venture. As noted above, there are a numberof shortcomings with the livelihood projects and moretime should have been allocated to learn from thesepilots before scaling them up across hundreds of vil-lages. NTPC should provide interim compensation todownstream villagers until livelihood projects restoretheir incomes to pre-NT2 levels.

Inadequate budget to mitigate and compensatefor downstream impactsNTPC has committed to providing $16 million toimplement the downstream program over eight years

The Xe Bang Fai near Mahaxai Tai. Photo by Henrik Lindholm, SwedWatch.


16

(2005-2014). It is not clear how that amount wasdetermined. According to the Panel of Experts11, morethan $1 million of the $16 million will be spent onconsultants. Using NTPC’s figure of 75,000 affectedpeople (versus the 120,000 affected people identifiedby independent experts12), that leaves only $200 perperson for compensation and mitigation.

Considering the scale of Nam Theun 2’s projectedimpacts on the Xe Bang Fai region and the number ofaffected villages, NTPC’s Downstream Program budg-et seems to be entirely inadequate to compensate morethan 120,000 villagers for a lifetime loss of the fisheriesthey depend on, let alone to provide livelihood alterna-tives and flood and erosion protection. Experience atthe nearby Theun-Hinboun Hydropower Project hasproven that fisheries declines, erosion, sedimentation,

and increased flooding cause major income losses forvillagers that multiply sometimes exponentially yearafter year.13

Recommendations:

n Because NTPC’s livelihood programs are not likelyto be successful for at least several years, NTPC mustprovide interim compensation to ensure that villagersare not left stranded once power production startsand their incomes plummet. NTPC should committo develop and implement an interim compensationscheme to address the impacts of NT2 operations ondownstream villagers until livelihood restoration pro-grams yield sustainable results. Additional fundingwill be required, as the $16 million budget is likely tobe inadequate to deal with the scale of anticipateddownstream impacts.

n The GoL, the World Bank and the ADB shouldwork with villagers and donor partners to develop anintegrated rural development plan for the Xe BangFai region.

n NTPC, the GoL, the World Bank and the ADBshould ensure disclosure of: 1) the DownstreamLivelihood and Asset Restoration Program Phase 1in its entirety; 2) marketing surveys for the Xe BangFai; 3) biomass clearance plans and for the NakaiPlateau; and 4) hydraulics and water quality studiesfor the downstream areas.

Boys fishing in the Xe Bang Fai. Photo by Shannon Lawrence, IRN.


17

BIOMASS CLEARANCE AND WATERQUALITY

One of the major threats to downstream villages once NT2 starts operation is the quality of water thatwill pass from the massive reservoir down through the power station, into the downstream channel andthen to the Xe Bang Fai, before eventually reaching the Mekong. Experience with tropical reservoirs,

including some in Laos and Thailand, indicates that biomass should be removed before the area is flooded toprevent the rotting vegetation from polluting the stored water. Without taking this preventative step, reservoirwaters become toxic and turn rivers into sewers downstream. The failure to address this issue will likely lead tofish kills in both the reservoir and downstream rivers, and result in water that is unsuitable for drinking and irri-gation in the downstream channel and along the Xe Bang Fai.15

As IRN noted in our previous trip report, the NT2Environmental Assessment and Management Planstates that:

To help improve water quality in the Nakai Reservoirin the initial years after inundation, NTPC willencourage the removal of biomass from the inundationarea prior to flooding through firewood collection andthe salvage of timber (EAMP, Chapter 3, p. 92).

The EAMP goes on to state:

Vegetation will be removed before flooding the reser-voir... The priority shall be to clear the vegetation inareas which will be permanently flooded. The results ofthe ongoing biomass survey of the inundation area willbe used as a means for maximizing removal in areas ofhigh biomass (EAMP, Chapter 3, p. 107).

Villagers near the Xe Bang Fai. Photo by Shannon Lawrence, IRN.


18

The Concession Agreement signed by NTPC and theGoL requires that a biomass survey be conducted andused to propose means for “maximising removal of bio-mass in high biomass areas of the Nakai Reservoir. Thepriority shall be to clear the vegetation in areas whichwill be permanently flooded” (Schedule 4, Part 2,Section 3a). The Concession Agreement also requiresthat “... water in the Downstream Channel must atleast be suitable for irrigation purposes” (Schedule 4,Part 2, Section 9.1f ).

Despite thesecommitments,approved by theWorld Bank,the ADB andNT2’s otherfunders, neither the GoL nor NTPC has plans toremove or ensure the maximum removal of biomassfrom the reservoir. NTPC says it is conducting a studyon water quality optimization during reservoirimpoundment and that “biomass clearance may be part

of the answer.” According to NTPC, it has no obliga-tion to clear biomass except where it may impact itsprograms.

There is one dry season remaining before reservoirimpoundment and it is unclear what options are leftfor maximizing biomass clearance from such a largearea in such a short period of time. The time for stud-ies and debate is over, and action must be takenurgently to avoid downstream disaster.

Recommendations:

n NTPC and the GoL should commit to clear biomassfrom at least all permanently flooded areas of theNT2 reservoir.

n NTPC and the GoL should implement an inde-pendently reviewed clearance plan and impoundmentstrategy to minimize downstream water quality prob-lems in the first years of NT2 operations.

Failure to clear biomass

will cause water quality

problems downstream.

NT2 downstream channel. Photo by Henrik Lindholm, SwedWatch.


19

The downstream channel is27-kilometers long andapproximately 100-meterswide, with access roads oneither side, cutting throughsignificant areas of paddyfields and other village land.The channel also blocksaccess to the forest and villagers’ gardens and rice pad-dies on the other side. Villagers have lost paddy land,houses, gardens, fruit trees, fisheries, irrigation watersupply and other assets to varying degrees.

Disbursement of compensa-tion payments began only inmid-2006, a year after NT2construction activities start-ed to impact villagers’ landand resources, which violatesthe Concession Agreementand the World Bank invol-

untary resettlement policy. Two years after constructionactivities started to affect villagers, and also in violationof World Bank and ADB policies and the ConcessionAgreement, Resettlement Action Plans have still notbeen disclosed for Project Lands.

PROJECT LANDS COMPENSATION

More than 2,500 households are affected by Nam Theun 2 construction activities, including construc-tion of transmission lines, roads, and project facilities. Households in Gnommalat and Mahaxai nearthe NT2 power station, regulating pond and downstream channel are most severely affected, where

many households have lost more than 10% of their annual income as a result of land and assets taken by theproject.

Disbursement of compensation pay-

ments began only in mid-2006, a year

after NT2 construction activities start-

ed to impact villagers’ land and

resources.

Villagers along the NT2 downstream channel. Photo by Henrik Lindholm, SwedWatch.


20

Cash compensation confusing and inadequate

Project Lands villagers expressed significant confusionabout the compensation system, as they had duringIRN’s previous visit in June 2006. Villagers complainedthat compensation payments for the same lost assetsvaried significantly. In Tham Phuang, a villager said hereceived 7 million kip (US$700) for the four hectaresof paddy land he lost, whereas another villager received97 million kip (US$9,700) for less than four hectares.Some villagers said they were given this money to buyland in other areas, but the company had not providedassistance and they have not been able to find afford-able land on their own. None of the villagers withwhom IRN met understood the compensation systemenough to explain what they had received and why, forhow long compensation had been paid, and if moreassistance was forthcoming.

Another villager in Tham Phuang mentioned 30 hard-wood trees on her land for which she had not beencompensated, and others complained of fish losses inthe Houay Lok from construction activities. One vil-lager stated, “Don’t think about compensation for thefish. Even [the compensation] received for my land isnot enough.” Villagers in Sangkeo, Phone Lad Khuayand Nong Ping reported that the Nam Kathang andthe Nam Gnom have been polluted and diverted, caus-ing drinking water problems, irrigation water shortages

and fish losses. They have not received compensationfor these impacts. However, some village headmen(Sangkeo and Phone Lat Khuay) did report receivingcompensation for common property resources, such asforest products. In Sangkeo, $15 per person will beprovided.

Villagers wanted the company to address their com-pensation complaints, many of which had been sub-mitted to the Grievance Committee, and to help themfind affordable replacement land. They asked for morebridges across the channel to reach their land on theother side. And they urged the company to fulfill itspromises to provide drinking water systems, irrigationand electricity.

NTPC, the World Bank and the ADB note that theentitlement matrix for Project Lands villages isextremely complex and that even project and govern-ment staff have had difficulty understanding andimplementing it. They insist that the situation hasimproved since IRN’s last visit. The inclusion ofMakong team members to better communicate withvillagers was noted, and NTPC asserted that all cashpayments had been disbursed. Nonetheless, IRN’s vil-lage interviews indicate ongoing and widespread frus-tration with the compensation system and uncertaintyabout how villagers’ paddy fields, gardens, fish andother income sources will be replaced in the long term.Clearly, from the villagers’ perspectives, the situationhas not significantly improved.

Primary concerns of Project Lands villagers:

• Unequal compensation for land and confusing compensation system

• Not able to find affordable replacement land

• No compensation for fish losses (Houay Lok, Nam Kathang, Nam Gnom rivers)

• Water quality problems in the Nam Kathang and Nam Gnom leading to shortage of drinking water,

livestock sickness/death, and skin problems from bathing in the river for which no compensation has

been provided

• Lack of access to paddy land and gardens on the opposite side of the downstream channel

• Less irrigation water as a result of a canal blocked by the project

• Delayed construction of replacement houses and promised electricity

IRN visited five Project Lands villages affected by NT2 downstream channel or transmission line construction. Detailed notes fromvillage visits are available at: http://www.irn.org/programs/mekong/namtheun.html.


21

Livelihood restoration failures

NTPC and the GoL are failing to meet commitmentsmade in the Concession Agreement and the 2005 NT2Social Development Plan concerning replacement landand irrigation for Project Lands villagers. No alterna-tive strategies to restore the livelihoods of significantlyaffected villagers have been disclosed. Once again, amajor mid-stream change to project plans has leftaffected people in the lurch.

According to the Concession Agreement, ProjectLands villagers who lose 10% or more of their produc-tive land assets are entitled to replacement land of thesame type and of at least equal productivity unless noreplacement land is available. The World Bank’s invol-untary resettlement policy requires:

Preference should be given to land-based resettlementstrategies for displaced persons whose livelihoods areland-based…. If land is not the preferred option of thedisplaced person… or sufficient land is not available ata reasonable price, non-land-based options builtaround opportunities for employment or self-employ-ment should be provided in addition to cash compensa-tion for land and other assets lost. The lack of adequateland must be demonstrated and documented to the sat-isfaction of the Bank (World Bank InvoluntaryResettlement Policy, OP 4.12).

NTPC said that “livelihood restoration is in progress,but it cannot always be land-for-land.” The WorldBank said that many people preferred cash and hesitat-ed with land replacement. It is not clear if any replace-ment land has been provided to villagers who desire it,or what alternative livelihood restoration measures arebeing implemented in other cases.

The Panel of Experts reported that there was a “dearthof land and water available for conversion to [paddyfield] to replace the considerable acreage absorbed bythe building of the large downstream channel in par-ticular” (PoE, 11th Report, p. 23). Land-for-landreplacement is critical, especially given the importanceof paddy to villagers’ livelihoods. The GoL and NTPCshould document and publicly report any cases in

Project Lands CompensationEntitlements

According to the Concession Agreement,

Project Lands affected people are entitled to

cash or replacement land for loss of residential

or business land, compensation for temporary

impacts during construction, compensation for

fixed structures, fruit trees, timber trees, fish

ponds, garden and field crops, common prop-

erty structures (electricity, roads, irrigation

channels, water supply, school, etc.) and com-

mon property resources (loss of forest products

and firewood gathering areas and loss of fish

and aquatic products). For permanent losses of

land that constitute less than 10% of a per-

son’s productive assets, affected people are

entitled to cash compensation for the market

value of the land, the cash equivalent of seven

years’ gross production or the actual replace-

ment cost of the land.

For permanent losses of agricultural land, sig-

nificantly affected farmers (those who lose

10% or more of their productive land assets)

are entitled to land of the same type and pro-

ductivity of the land that was lost, as well as

production assistance for at least two years. If

no replacement land is available, NTPC must

provide assistance to develop alternative non-

land based livelihood activities that generate

at least as much income. If villagers prefer a

lump sum cash payout, the amount is based on

the market value of the land, the cash equiva-

lent of seven years’ gross production or the

actual replacement cost of the land.

Significantly affected villagers are also entitled

to disturbance allowance, transitional food

assistance and transitional income assistance.


22

which they determine that no replacement land isavailable for Project Lands villagers.

Additionally, the 2005 NT2 Social Development Planincludes seven pages that detail plans for using thedownstream channel and regulating pond to provideirrigation to affected villages in the area. Downstreamchannel irrigation was a key benefit of the Nam Theun2 project touted at the time of its approval by funderssuch as the World Bank and the ADB. The SocialDevelopment Plan states:

The primary compensation strategy in and aroundthe Gnommalath Plain is the provision of replace-

ment land by using the Regulating Pond andDownstream Channel as the source of irrigationwater for: (i) transforming rainfed paddy into irrigat-ed paddy; (ii) bringing new land into irrigated pro-duction; (iii) resorting irrigation facilities directlyimpacted by the project; and (iv) the development offish ponds (SDP, Vol 4, Ch. 7, p.16, emphasis added).

In its October 2006 report, the Panel of Experts citedthe 2006 Resettlement Action Plan’s belated conclu-sion that NT2’s power production regime results in anunpredictable downstream channel flow, “making plan-ning for irrigation difficult and unreliable” (PoE, 10thReport, p. 28).

Furthermore, considering the absence of any biomassclearance plans for the reservoir area, the water in thedownstream channel is likely to be of extremely poorquality and unsuitable for irrigation for at least severalyears beyond 2009. As mentioned previously, this vio-lates the Concession Agreement which requires that“... water in the Downstream Channel must at least besuitable for irrigation purposes” (Schedule 4, Part 2,Section 9.1f ).

Recommendations:

n The Independent Monitoring Agency for theResettlement Management Unit (RMU) shouldurgently undertake a comprehensive review ofProject Lands compensation and mitigation meas-ures and publicly disclose its findings.

n NTPC and the GoL should: 1) urgently find com-parable replacement land for Project Lands villagers,and 2) detail the livelihood restoration options thatwill replace irrigation for significantly affectedProject Lands villagers.

n NTPC, the GoL, the World Bank and the ADBshould ensure immediate disclosure of theResettlement Action Plans (RAPs) for ProjectLands.15

NT2 transmission lines. Photo by Shannon Lawrence, IRN.


23

Resettled villagers discussing their concerns on the Nakai Plateau. Photo by Henrik Lindholm, SwedWatch.

Problems with transitional resettlement

Seventeen villages of more than 6,200 indigenous peoples on the Nakai Plateau are being resettled to makeway for the Nam Theun 2 reservoir. In May 2008, the NT2 dam is supposed to be closed so that reservoirfilling can begin, and all villagers must be established in their new resettlement sites by then.

The resettlement program has been fraught withdelays, missing its original deadline to have all villagesresettled by the 2006-2007 dry season. As a result ofthese delays, NTPC began moving people to tempo-rary houses in their new villages in April 2006 underwhat has been called “transitional resettlement.”16

At the time of IRN’s visit, the more than 550 familiesthat had been moved were still in temporary houses.According to NTPC17, only 20 to 30 permanent hous-es had been finished due to a shortage of timber.18

NTPC says the problems with timber supply have nowbeen solved and all permanent houses are expected tobe completed early in the 2007-2008 dry season.

Many villagers complained that their temporary homes—built to last for just a few months—are falling apart.Villagers are concerned about facing the coming wetseason in substandard housing. NTPC says it willensure that “resettlers who will need to spend part ofthe 2007 wet season in their temporary houses willreceive necessary tools, materials and assistance toensure that their houses are secure.”

Resettled villagers depend on food distribution

For now, villagers in the resettlement sites are survivingon rice and protein supports from the company,

NAKAI PLATEAU RESETTLEMENT


24

income earned from the company for land clearanceand other work,19 fishing and forest product collection.Villagers reported that the amount of rice provided bythe company each month is often not enough for largefamilies. They miss their fruit trees in the old village,

and return there to get fish from the river and bambooand vegetables from the forest.

In Sop On, one of the headmen said that villagers relyon the old village for about half of their food and getthe other half from the company. They are worriedabout what will happen to them when the companystops providing rice and meat. One villager in Sop Hiasaid, “Before we depended on the mountain, now wedepend on the company supporting us. We used to livenext to the river and could catch fish for breakfast.” Anumber of villagers, for example in Done and SopPhene, expressed significant concern about not beingable to grow rice or find enough food “after the floodcomes” [when the reservoir is flooded].

According to NTPC:

The quantity of rice (and also protein) provided toeach household has been determined based on the adviceof nutrition experts. It is considered to be sufficient…the health and well being of the resettler communitiesis being monitored on a continuous basis, and com-plaints received by individual households stating thattheir rice rations are insufficient are and will be investigated.

Nonetheless, people in four resettlement villages toldIRN that large families have a rice shortage everymonth, ranging from a few days to more than a week.Additionally, the demonstration village, Nong Boua, isno longer receiving rice support and some villagershave reported selling buffalo and other assets to buyrice. NTPC asserts that “cattle and buffalo are regular-ly sold by Plateau villagers, to buy rice and other essen-tial and non essential items.”

According to NTPC, the company and the GoLagreed that protein support would be provided for 37weeks after relocation and that rice support would con-tinue indefinitely. Despite these assurances, theConcession Agreement requires that NTPC provides“rice and protein supplements for vulnerable house-holds through the rice bank modality until they attainand sustain the Household Income Target” (Schedule4, Part 1, Section 12.3.1). The 37-week cut-off forprotein support does not comply with this standard.

Primary concerns of Nakai Plateau resettlers

• Some villagers do not have enough rice (some

have reported selling cattle or buffalo to buy

rice, especially in the demonstration village,

Nong Boua, which is no longer receiving rice

support )

• Some people do not have enough water in the

new village

• Temporary houses are falling apart

• Nong Boua villages have received a lower price

for their vegetables now that other resettlers

are growing the same products

• Dust from the road

• Vietic villagers do not want to move to the

new site

• Will not be able to grow rice after the

reservoir is flooded

• Will not be able to keep all their buffalo

because there is not enough land

• Will not have enough food and will not know

what to do unless company tells them

Primary benefits noted by Nakai Plateauresettlers

• New village has roads, electricity, water and

better houses

• The company provides food support

• The company may have work for them

In total IRN spoke with people from eight villages, some ofwhom were still in their old villages and others who hadbeen resettled. Detailed notes from village visits are avail-able at: http://www.irn.org/programs/mekong/namtheun.html.

NTPC’s detailed response to issues raised by Nakai Plateauvillagers is available at: www.namtheun2.com


25

Water supply concerns

Some resettled villages alsoreported problems with watersupply. In Sop Phene, theyare waiting for a well sincethe water tank pump oftenbreaks and it does not provideenough water for bathing.Villagers in Done said only 8of 20 boreholes were working,leaving them with insufficientdrinking water. Villagers from Sop Hia and Boua Maalso complained about not having enough water.

NTPC responded that nearly 1,000 boreholes need tobe drilled across the NT2 project and some delays haveoccurred. But, NTPC says, the water supply situationcontinues to improve: “It is expected that while theborehole coverage is still relatively low, and especiallywhen water needs to be delivered from outside, thathouseholds are inconvenienced from time to time.However… water has always been provided and hasbeen good quality clean drinking water.” The failure toensure adequate water supply for resettlers prior torelocation is a violation of the Concession Agreement.

Promises broken over Vietic resettlement

The Vietic villagers on the Nakai Plateau, the mostvulnerable group of indigenous peoples to be resettled,are especially stuck. Sop Hia and Nam Nian villagers(including Vietics and other ethnic groups) were origi-nally going to move, by their choice, to KhemkheutDistrict, until the river there was found to be polluted.Now villagers have been or reportedly will be movedwith other villages to Resettlement Area 7 and 8A.

The Panel of Experts’ February 2007 report notes:

After elaborate consultations, the majority of Vietichouseholds in Ban Sop Hia have emphasized first, thatthey want to be resettled within their current spiritterritory, second, that they want their own Vietic vil-lage, third that temporary or permanent resettlementin either Area 8 or Area 7 on the Nakai Plateau is

unacceptable to them, andfourth, that temporary resettle-ment above their current housesin Sop Hia to avoid dam-relat-ed flooding during 2007 isacceptable (PoE, 11th Report, p.19).

During our visit, Vietic vil-lagers in old Sop Hiaexplained that first a foreignertold them they could choosewhere to move, but then a

Lao man came and said they would be moving toResettlement Area 7. The villagers were extremelyangry and said, “The new place is very dry and wedon’t want to go at all. They are taking us there to killus.” The villagers explained that here they grow vegeta-bles and rice, catch frogs and fish and bathe in theriver. In the new site (where some of their relatives arealready living), the soil is poorer and they will have tolearn how to do new things like operate a water pump.Their relatives can’t find enough food at the new siteand have to rely on rice provided by the company.

The Vietic villagers in old Sop Hia with whom IRNspoke said they wanted to move to Ban Kamphon20

next to a tributary of the Nam Theun. At first NTPCreported that all of old Sop Hia will be moved toResettlement Area 7, but now notes that “18 house-holds at the old Sop Hia have not yet decided on arelocation site.” According to the ConcessionAgreement, the Vietics should have the option offorming their own village. To comply with World Bankand ADB indigenous peoples’ policies, and theConcession Agreement, resettlement must have thebroad support of the community and all villagers mustagree on the site.

Livelihood programs in transition

Redoing agricultural plansLike the resettled villagers, NTPC’s livelihood plansare also in transition. The Panel of Experts notes that“lower priority continues to be given to livelihooddevelopment to the extent that it is unlikely that the

The Panel of Experts notes that

“lower priority continues to be given

to livelihood development to the

extent that it is unlikely that the

Household Income Target will be

reached by the beginning of year 5 of

the Resettlement Period, as required

by the Concession Agreement.”


26

Household Income Target will be reached by thebeginning of year 5 of the Resettlement Period, asrequired by the Concession Agreement” (PoE, 11thReport , p. 11). The Panel of Experts also warns that“for a range of reasons, the forestry and agriculturallivelihood programs are unlikely to meet their original-ly planned targets before impoundment” (PoE, 11thReport, p. 9).

Due to the poor quality of soil on the Plateau, NTPChas had to abandon the agriculture plans for resettlersthat were outlined in the 2005 NT2 SocialDevelopment Plan. NTPC is working on an agro-eco-logical approach for the .66 hectare plot allocated toeach household which “involves 2-3 years of soilimprovement activities, such as planting only one-thirdof the agricultural plots (preferably with vegetables butrice is also an option) and the other two-thirds in pas-ture and selected cover plants. This is then rotated.”NTPC says it is also testing borehole irrigation sys-tems for groups of farmers and will consider differenttypes of irrigation systems depending on the featuresof each resettlement site.

According to NTPC, villagers will now have an addi-tional three hectares per family allocated (and titled)for rain-fed direct mulch cropping in the communityforest area. Another five hectares per family would beavailable as a combined forestry/forage area. NTPCsays, “This combination has already been trialed andhas found to be beneficial both for forage productionand forestry plantation.” However, the Panel ofExperts notes:

While the switch during 2006 from the Pilot Villagesystem to the New System is more likely to be culturally,economically, institutionally, and environmentally sus-tainable, sufficient income from the crop agriculturalcomponent can not be expected until 2009 and beyonddue to the time required to improve soil productivitythrough a mulch based cropping system (DMC) andbecause of less emphasis on irrigation than intended inthe Social Development Plan (PoE, 11th Report, p. 11).

While the allocation of additional land and the intro-duction of a more sustainable approach are welcome,concerns and questions remain about the new agricul-

tural plans. How does the land allocation affect otheruses of the community forest area? How long will ittake for the system to provide villagers with income?What is the marketing strategy for the products vil-lagers will grow? Will all unexploded ordinance (UXO)be cleared from the areas of the drawdown zone thatvillagers are expected to cultivate? NTPC should dis-close the agricultural plans and marketing studies thatanswer these questions.

Buffalo reductionBuffaloes are critical assets for villagers. As a Done vil-lager noted, “The most important thing in our life isbuffalo. If we want to buy something, we can sell buf-falo. If we need to buy rice, we can sell buffalo.” Fornow, many villagers keep buffalo in their old villages

Villager guarding his buffalo on the Nakai Plateau. Photo by Henrik Lindholm, SwedWatch.


27

where there is more grazing land and fodder. A num-ber of villagers expressed concern and confusion abouthaving to sell some of their cattle and buffalo “whenthe flood comes.”

NTPC admits that there is not enough land for the allof the resettlers’ buffalo and cattle, so families withlarge numbers will be “encouraged” to sell some oftheir animals. According to the Panel of Experts, theNakai Plateau cattle and buffalo population will needto be reduced from approximately 5,000 to 2,000, withvillages such as Nakai Tai, Nong Boua, Done and BouaMa having to sell the largest number of animals (PoE,11th Report, p. 11). NTPC has not disclosed anystrategies for buffalo reduction, including measures todeal with falling prices when villagers begin to selltheir buffalo at the same time.

Village Forestry AssociationThe Village Forestry Association (VFA), one ofNTPC’s primary livelihood options for resettled vil-lagers, is also under threat. According to theConcession Agreement, the VFA is an ambitious pro-gram “developed for the purpose of providing employ-

ment and other economic returns to the Resettlers andwill be based on the principle of community ownershipof the forest resource, allowing the Resettlers to partic-ipate directly in the financial benefits from sustainablecommercial logging of these forests” (Schedule 4, Part2, Section 9.6.1).

The VFA was established at the beginning of the NamTheun 2 project with three to four members from eachvillage receiving training in logging and sawmilling,wood processing, charcoal making, and other activities.Ultimately, all resettler households are members of theVFA and are supposed to receive US$100 in annualdividends per family. These dividends make up a keypart of the resettlers’ future income sources.

The 2005 NT2 Social Development Plan assignsresponsibility to the VFA for harvesting, selling andprocessing timber from the resettlement area (such ashousing plots and agricultural land).21 This timber wassupposed to be used to construct the 1,000+ permanenthouses for resettlers. According to the World Bank, theVFA was also not required to pay taxes: “To encouragethe profitability of forestry activities, the Government

Logging on the Nakai Plateau. Photo by Shannon Lawrence, IRN.


28

has granted tax exempt status to the Nakai PlateauVillage Forestry Association (NPVFA) on local tax andwill issue logging and sawmilling licenses after thecompletion of the NPVFA forest management plan inMay 2005” (World Bank Response to IRN-EDFTechnical Reviews, March 2005).

But these plans have come undone. The VFA is nowbeing run by a former Ministry of Agriculture andForestry (MAF) official and several VFA positionshave reportedly been given to district representatives.This appears to have resulted in the government agen-cies taking responsibility for harvesting the timber.Revenues from timber harvesting on resettlement landshave reportedly not reached VFA accounts. The failureto transfer the forest resources in the resettlement areato the VFA constitutes a violation of Schedule 4, Part1, Sections 9.1.2, 9.6.1, 9.6.7 and 10.6.1 of theConcession Agreement.

While the short-term success of the VFA is beingundermined, its long-term potential has also beeneroded. Illegal logging in the community forest areahas reportedly removed all the big, valuable trees thatwere supposed to provide each resettled family withdividends. As one observer close to the project noted,“only trunks are left.”

NTPC says it was necessary to bring in the MAF offi-cials to help build villagers’ capacity, and they assert that

the VFA will be turned back over to villagers in 2009.NTPC, the World Bank and the ADB said they arelooking into the issues raised here regarding the VFA.

Recommendations:

n NTPC and the GoL should address resettled vil-lagers’ concerns by ensuring adequate food supportuntil livelihood programs prove sustainable, fixingtemporary houses, repairing or developing water sup-ply systems, paying villagers for land clearance andspraying roads.

n NTPC and the GoL should ensure that the VFA hasreceived all the revenue it is due from timber sales inthe Resettlement Area, and that illegal logging in thecommunity forest area is stopped immediately.

n NTPC, the GoL, the World Bank and the ADBshould ensure disclosure of: 1) studies and plansregarding the new agriculture approach; 2) marketingsurveys; 3) the buffalo reduction strategy; 4) wet-lands, terrestrial, elephant and fish surveys and man-agement programs for the Nakai Plateau and otherproject areas; 5) the community forestry plan; 6) thesalvage logging plan and 7) the forthcoming reser-voir impoundment strategy, upon its completion.

Water buffalo in the area tobe flooded by the NT2 reser-voir. Photo by ShannonLawrence, IRN.


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Villagers living in temporary houses in Ban Done resettlement village. Photo by Shannon Lawrence, IRN.

The World Bank and the ADB assured their share-holders that Nam Theun 2 would reduce poverty, thataffected villagers’ livelihoods would be restored, andthat the project would bring development to Laos. TheWorld Bank and the ADB have so far failed to ensurecompliance with their safeguard policies and deliver ontheir promises. At the time of project approval, theWorld Bank and the ADB committed to enforcingtheir loan and guarantee agreements with the GoL andNTPC and to take action when these agreements areviolated. Now is the time for action.

NTPC and the GoL have also backtracked on thecommitments they made at project approval. Some ofthese broken promises constitute violations of theConcession Agreement. The gaps in planning, budget,and political will surrounding NT2 are now evident,and are threatening the livelihoods of more than 1 in50 Laotians. NTPC and the GoL should clear biomassand address water quality threats, deal with budget andplanning failures in livelihood restoration programs, anddisclose social and environmental documents. Urgentaction is required if NTPC, the GoL and Nam Theun2’s funders hope to avoid a repeat of past dam disasters.

CONCLUSION

Nam Theun 2 has reached a critical stage. Will the commitments made by NTPC, the GoL, the WorldBank and the ADB be kept? Or will villagers once again bear all the costs of misguided hydropowerdevelopment in Laos?


30

1. For more information concerning the Nakai-Nam TheunNational Protected Area, illegal logging and mining, seethe Eleventh Report of the International Environmental andSocial Panel of Experts (PoE) for NT2, 23 February 2007,pp. 25-38, available at:http://go.worldbank.org/XO1YWANPH0.

2. Nam Theun 2 Environmental Assessment and ManagementPlan (EAMP), March 2005, Chapter 3, p. 107.

3. The PoE also raises concerns about the DownstreamProgram budget and notes that “over $1 million… will bedevoted to consultants” (PoE 11th Report, p. 23).

4. Shoemaker, Baird and Baird, The People and their River: ASurvey of River-Based Livelihoods in the Xe Bang Fai RiverBasin in Central Lao PDR, November 2001, p. xi.

5. NTPC says that the plans contain confidential informa-tion regarding household assets. In March, the WorldBank and the ADB told IRN that NTPC was asked toremove the household asset information and disclose therest. The RAPs have not yet been disclosed.

6. There will be downstream impacts in other areas, such ason the Nam Theun downstream of the dam site wherewater flows will sharply decrease. However, the IRN fieldvisit focused on the Xe Bang Fai area where there is thelargest number of affected people.

7. These numbers are based on a survey conducted by inde-pendent experts (Shoemaker, Baird and Baird, The Peopleand their River, 2001). NTPC asserts that only 75,000people in 221 downstream villages will be affected byNT2, which includes the Khamkeut district downstreamof the Nam Theun. NTPC’s downstream livelihoodrestoration program targets 75,000 villagers.

8. NTPC responses to issues raised here were obtained in ameeting with Olivier Salignat, Social and EnvironmentalDeputy Director of NTPC, on March 8, 2007. DetailedXe Bang Fai village notes from IRN’s visit were sent toNTPC in mid-May 2007.

9. According to World Bank and ADB definitions, involun-tary resettlement includes not only physical relocation, butalso loss of land, assets and/or access to natural resources.As such, the Downstream Livelihood and AssetRestoration Program is a resettlement action plan andshould be disclosed in accordance with ADB and WorldBank involuntary resettlement and information disclosurepolicies.

10. It is not clear yet when the first transfers of water fromthe reservoir will be—during reservoir impoundment in2008 or 2009 or once power production commences at theend of 2009. NTPC is developing a reservoir impound-ment strategy which should address this question.

11. The PoE also raises concerns about the DownstreamProgram budget and notes that “over $1 million… willbe devoted to consultants” (PoE 11th Report, p. 23).

12. Shoemaker, Baird and Baird, The People and their River:A Survey of River-Based Livelihoods in the Xe Bang FaiRiver Basin in Central Lao PDR, November 2001, p. xi.

13. See Barney, K. (forthcoming). Power, Progress, andImpoverishment: Plantations, Hydropower, EcologicalChange and Community Transformation in HinbounDistrict, Lao PDR. Working Paper No 1, York Centrefor Asian Research (YCAR). York University, Torontoand draft chapters of Theun-Hinboun Expansion ProjectEIA submitted by consultant to THPC and available at:http://www.rmruk.com/eia_files/Chapters/Chapters.html.

14. NT2 EAMP, 2005, Chapter 3; Lanza, “Review of theWater Quality Assessment (EAMP), Proposed NamTheun 2 Hydroelectric Project,” 2005, and Theiss,“Reservoir Fisheries Predictions for the Nam Theun 2Hydroelectric Project”, 2005, available at:http://www.irn.org/programs/mekong/namtheun.php?id=namtheuntech.html.

15. NTPC says that the plans contain confidential informa-tion regarding household assets. In March, the WorldBank and the ADB told IRN that NTPC was asked toremove the household asset information and disclose therest. The RAPs have not yet been disclosed.

16. For more details regarding the transitional resettlementprocess, see the IRN NT2 Trip Report September 2006,available at:http://www.irn.org/programs/mekong/namtheun.html.

17. NTPC responses to issues raised in this section wereobtained in a meeting with Michael Beauchamp, NTPCResettlement Manager, on March 5, 2007 and in subse-quent email correspondence.

18. NTPC says that the GOL overestimated the quality andquantity of timber available for resettlement housing, andthat villagers have been too selective about the type ofwood they want to be used in housing construction.

ENDNOTES


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19. According to NTPC, in the first year after resettlement,most households can earn up to $762 from land clear-ance, fence building, fertilizer application and otheractivities associated with preparing the resettlement sites.NTPC says that sometimes small delays occur, but thatthe company tries to pay as quickly as possible.

20. The spelling of the village is unclear and there was con-fusion about whether or not villagers were referring tothe original Nam Pan site in the Khemkheut District.

21. The logging in these areas is separate from the GoL’ssalvage logging operation which is supposed to clear thereservoir area of valuable timber. Salvage logging will netapproximately US$50-70 million for the GoL.


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March 1, 2007

• Visit villages in the lower Xe Bang Fai(Gnangkham, Hadkhamhieng, Dong Ka Sinh)

March 2, 2007

• Visit villages in the lower and middle XeBang Fai (Hat Xaisung Neua, Boeung Xe, TonHaen, Beungboatong, Vernsananh)

• Visit villages along the transmission lines (NaThong)

March 3, 2007

• Visit villages in the upper Xe Bang Fai(Mahaxai Tai, Kham Phare Dong)

March 4, 2007

• Visit villages on the Nakai Plateau (NongBoua, Nakai Tai, old Sop Hia, Sop Phene)

March 5, 2007

• Visit villages on the Nakai Plateau (Done, SopOn, Boua Ma)

• Meeting with NTPC (Michael Beauchamp,Nakai Plateau Resettlement Manager)

March 6, 2007

• Visit villages on the Nakai Plateau (New SopHia/Resettlement Area 7)

• Visit villages along the downstream channel(Sangkeo, Phone Lat Khuay)

March 7, 2007

• Visit villages along the downstream channel(Nong Ping, Tham Phuang)

March 8, 2007

• Meeting with World Bank (PatchamuthuIllangovan, Stephen Ling, Chaohua Zhang)

• Meeting with NTPC (Olivier Salignat, Socialand Environmental Division Deputy Director)

March 9, 2007

• Meeting with Asian Development Bank (JohnCooney, Ed Baardsen, Marla Huddleston)

March 12, 2007

• Meeting with GoL [Dr. Somboune Manolom,Lao Holding State Enterprise (LHSE), and Mr.Xaypaseuth Phomsoupha, Lao NationalCommittee for Energy (LNCE)]

Appendix 1: IRN NT2 TRIP ITINERARY


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The following section highlights key violations of theConcession Agreement and of World Bank and ADB poli-cies, but does not provide a comprehensive analysis of allcontract breaches.

Concession Agreement

Schedule 4, Part 1

7.8.2 The Company must ensure that the following requirementsare satisfied prior to confirmation of the sites in paragraph 7.8.1:• all villagers have visited the site and been provided with tech-

nical information (in an easily understood form);• all villagers have agreed on the site;

9.1.4 The GOL and the Company shall ensure that at all timesduring the Resettlement Implementation Period, appropriatesteps are taken to mitigate against the additional risks to ethnicminority groups and vulnerable households and will ensure thatplans addressing the issue of culturally sensitive development ofProject Affected People (“Ethnic Minorities Development Plans”)are implemented, having due regard to the SDP. This willinclude the following:• relocation of Vietic or other vulnerable groups into separate

administrative village units with clearly demarked bound-aries and rights to resources,…;

• Vietic villagers in Sop Hia have not all agreed to move with other villagers to Resettlement Area 7.

8.5.5 Irrigation and household water supply and distribution toeach house and farm lotThe Company shall provide good quality year-round water sup-ply to Resettlers for household use (in accordance with nationalstandards) for the duration of the Resettlement ImplementationPeriod from, as close as reasonably possible to each of their houses(at a minimum of 1 outlet per five houses….)

8.7.1 Relocation of Resettlers shall not be commenced until afterthe Resettler housing and essential community infrastructure andservices are complete (including, without limitation, the villageaccess road, allocated farm plots, schools, housing and clinics andavailability of water for Resettlers households and as far aspossible, water for gardening).

• Three of the eight resettled villages on the Plateauthat IRN visited complained of water supply shortages.

9.1.2 The GOL will take appropriate steps to ensure that:• the forest resources in the Resettlement Area are for the exclu-

sive use and benefit of the plateau Resettlers for seventy (70)years from the establishment of the NPVFA; and

9.6.1 The RO, with assistance from the RMU will procure thata plan for sustainable forestry …will be developed immediatelyafter the Resettlers have been relocated and land allocation hasbeen completed. The plan will be developed for the purpose ofproviding employment and other economic returns to theResettlers and will be based on the principle of community own-ership of the forest resource, allowing the Resettlers to partici-pate directly in the financial benefits from sustainable com-mercial logging of these forests.

9.6.7 The RO, with assistance from the RMU shall ensure that:• the stated components of the Community Forestry Program

(institutional development, natural resource management,forestry business and enterprise development and forestimprovement with local species) are implemented in a man-ner which shall achieve the objectives referred to in 9.6.1above; and

• appropriate steps are taken to mitigate against the risks of theCommunity Forestry Program.

10.6.1 The GOL will hand over the community forest to theNakai Forest Association after theAssociation has been established, and the Forest ManagementPlan has been prepared by theCompany and approved by the GOL and the forest managementcontract has been signed asprovided in clause 9.7.

• Forest resources in the resettlement area have report-edly not been transferred for the VFA’s exclusive useand benefit.

Appendix 2: VIOLATIONS OF NT2 LEGAL FRAMEWORK


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12.3.1 The RMU shall coordinate the provision of income sup-port incorporating the following key principles:• during the Resettlement Implementation Period, the Company

will provide to the RMU (for distribution in accordance withregulations made under the NT2 Resettlement Policy) rice andprotein supplements for vulnerable households through therice bank modality until they attain and sustain theHousehold Income Target.

• Nong Boua villagers are no longer receiving rice sup-ports and have reported selling buffalo and otherassets to buy rice. NTPC and the GoL plan to end protein support 37 weeks after relocation.

13.1 Preparation of detailed resettlement plans for Project Lands(c) The Company’s exact requirements for Project Lands will

be identified at or around the time of Financial Close afterwhich time the Company will finalise the compensation agree-ments for Project Affected Persons (on a household by house-hold basis). …(d) The Company shall ensure that compensation in the form ofcash and replacement housing applicable to each household is pro-vided to each affected household and that compensation paymentand relocation is satisfactorily completed prior to the handoverof land to the Company in accordance with the updated reset-tlement plans.(e) The Company shall ensure that compensation in the form oflivelihood restoration is provided to eligible Project AffectedPersons prior to hand over of land where reasonably possible.(g) The Company agrees that it will prepare the updated reset-

tlement plans in accordance with applicable World Bank andAsian Development Bank Safeguard Policies and in consulta-tion with GOL and the Project Affected Persons and/or Projectaffected villages in question.

• Project Lands compensation agreements were notdeveloped until the year after Financial Close.Compensation payments and livelihood restorationwere not provided prior to the handover of land.World Bank and ADB Safeguard Policies have notbeen complied with (see next section).

Schedule 4, Part 2

9 Detailed description of Environmental Measures1 Water quality monitoring and maintenance of beneficial uses(f )… Water in the Downstream Channel must at least be suit-able for irrigation purposes.

3 Water quality improvements through reduction of biomass inReservoir Area by salvage logging during construction(a) The Company shall ensure that a survey of present biomass inthe inundation area based on a satellite image of the NakaiPlateau shall be completed by suitably competent and expert per-sons prior to the Construction Phase.Such survey will update thebiomass estimate in the area to be inundated. The results shall beused to propose means for maximising removal of biomass inhigh biomass areas of the Nakai Reservoir. The priority shallbe to clear the vegetation in areas which will be permanentlyflooded. The vegetation along the Nam Theun will be removedat the last moment in order to reduce the stress to the aquaticcommunity.

• There are no plans to maximize biomass removal inhigh biomass areas of the reservoir and predictions are that water in the downstream channel will not be suitable for irrigation purposes.

19. Wildlife program Element E—Adaptive management program

The Company and the GOL will develop and implement anadaptive management program for the wildlife program byestablishing a committee, comprising suitably competent andexpert persons, to oversee the implementation and review theeffectiveness of the wildlife program.The adaptive management committee will meet regularly toreview the findings of the wildlife studies and the experimentalapproach to wildlife management and to make recommendationsfor improving the effectiveness of the wildlife program.

• No committee has been established and none of therequired wildlife plans have been finalized or disclosed.

3.1 Mitigation of Project Impacts by Head ConstructionContractor during the Construction Phase(a) Without limiting clause 9, the Company agrees that, by theHead Construction Contract it will ensure that theHCCEMMP:(ii) adequately addresses each of the following activities in order

to avoid, alleviate, mitigate or remedy or otherwise address theProject Impacts within the Construction Areas:(A) meeting effluent standards and water quality requirementsfor discharges into surface waters and groundwater;(B) controlling drainage, erosion and sedimentation;(E) landscaping, rehabilitating and revegetating theConstruction Areas;


35

(F) managing on-site waste;(G) managing use and storage of chemicals, preventing anddeveloping emergency plans for chemical pollution incidents;(H) controlling noise, emissions and dust;

28 Road construction and operationThe Monitoring Program shall be such as will enable theCompany to monitor and ensure compliance by the HCC withthe provisions in the HCCEMMP relating to road design, con-struction standards and applicable mitigation measures prior toand during the construction of those roads by the HCC. In thatregard the HCCEMMP shall provide for:(a) the alignment of roads to be designed to:(i) avoid large trees to the greatest extent reasonably practicableand otherwise so as to minimise damage to vegetation;(b) construction management to ensure that disturbance is limit-ed to the road easement;(c) the restriction of construction to the dry season when possible;(d) protection of susceptible soil surfaces with seeding and/ormulch;(e) protection of drainage channels with berms or fabric barriers;(f ) construction of sedimentation ponds and implementation ofother sediment control measures as necessary;(p) road quality and stability standards to be implemented;(q) erosion mitigation measures to be implemented;

• The Lender’s Engineer and the Panel of Experts haveraised concerns about the Head ConstructionContractor and the subcontractors’ impacts in theseareas.

World Bank and Asian Development BankPolicies

Involuntary Resettlement Policy

World Bank OP 4.12: “Displaced persons should be meaningfullyconsulted and should have opportunities to participate in plan-ning and implementing resettlement programs.” The policy coversthose people who suffer “direct economic and social impacts”including “loss of income sources or means of livelihood, whetheror not the affected persons must move to another location”.

ADB OM Secton F2/BP: “Affected people are to be consulted oncompensation and/or resettlement options, including relocationsites, and socioeconomic rehabilitation. Pertinent resettlementinformation is to be disclosed to the affected people at key points,and specific opportunities provided for them to participate in

choosing, planning, and implementation options. Grievanceredress mechanisms for affected people are to be established. Whereadversely affected people are particularly vulnerable groups, reset-tlement planning decisions will be preceded by a social prepara-tion phase to enhance their participation in negotiation, plan-ning, and implementation.”

• The failure to ensure a meaningful consultationprocess has contributed to the confusion with theProject Lands compensation and livelihood restora-tion process.

World Bank OP 4.12 requires that “taking of land and relatedassets may only take place after compensation has been paid”.

• Compensation was not paid to Project Lands vil-lagers before their lands and assets were taken.

World Bank OP 4.12: “Preference should be given to land-basedresettlement strategies for displaced persons whose livelihoods areland-based…. If land is not the preferred option of the displacedpersons, the provision of land would adversely affect the sustain-ability of a park or protected area, or sufficient land is not avail-able at a reasonable price, non-land-based options built aroundopportunities for employment or self-employment should be pro-vided in addition to cash compensation for land and other assetslost. The lack of adequate land must be demonstrated and docu-mented to the satisfaction of the Bank.”

• It does not seem that sufficient replacement land hasbeen found for Project Lands villagers.

World Bank OP 4.12: As a condition of appraisal of projectsinvolving resettlement, the borrower provides the Bank with therelevant draft resettlement instrument which conforms to thispolicy, and makes it available at a place accessible to displacedpersons and local NGOs, in a form, manner, and language thatare understandable to them. Once the Bank accepts this instru-ment as providing an adequate basis for project appraisal, theBank makes it available to the public through its InfoShop. Afterthe Bank has approved the final resettlement instrument, theBank and the borrower disclose it again in the same manner.

ADB OM Section F2/BP: “A satisfactory resettlementplan/framework must be submitted by the EA or the projectsponsors to ADB, preferably together with the project feasibilitystudy, but in any case, before project appraisal.”


36

• Resettlement Action Plans for Project Lands havestill not been disclosed although villagers’ land wastaken more than one year ago, even before compensa-tion was paid. Additionally, the DownstreamLivelihood and Asset Restoration Program has notbeen disclosed.

Indigenous Peoples Policy

World Bank OP 4.10: “ Because physical relocation of IndigenousPeoples is particularly complex and may have significant adverseimpacts on their identity, culture, and customary livelihoods, theBank requires the borrower to explore alternative project designsto avoid physical relocation of Indigenous Peoples. In exceptionalcircumstances, when it is not feasible to avoid relocation, the bor-rower will not carry out such relocation without obtaining broadsupport for it from the affected Indigenous Peoples’ communitiesas part of the free, prior, and informed consultation process.”

• Vietic villagers in Sop Hia have not all agreed tomove with other villagers to Resettlement Area 7.

Information Disclosure Policy

World Bank Policy on Disclosure of Information: “Whenever theBank requires a Resettlement Instrument (RI) or Indigenous

Peoples’ Development Plan (IPDP) for an operation, the pro-posed borrower prepares an RI or IPDP as a separate, free-standing document. As a condition of appraisal of the operation,the borrower provides the draft RI or IPDP, which conforms tothe relevant policy, and makes it available at a place accessible to,and in a form, manner and language understandable to the dis-placed or affected people and local NGOs. Once the Bank acceptsthe draft RI or IPDP as providing an adequate basis for projectappraisal, and before the Bank begins formal appraisal of theproject, the Bank makes it publicly available. After the Bankhas approved the final RI or IPDP, the borrower again makes itavailable at a place accessible to, and in a form, manner and lan-guage understandable to the displaced or affected people and localNGOs. When the borrower officially transmits the final RI orIPDP to the Bank, it is publicly available.”

ADB Public Communications Policy: The borrower or privatesector sponsor and ADB shall make available to affected peopleand to the public a draft resettlement plan and indigenous peoplesplan before appraisal, a final resettlement plan and final indige-nous peoples plan upon completion of the plan, and a revisedresettlement plan and indigenous peoples plan following changesin detailed technical design or scope of the project.

• Resettlement Action Plans for Project Lands havestill not been disclosed although villagers’ land wastaken more than one year ago, even before compensa-tion was paid. Additionally, the DownstreamLivelihood and Asset Restoration Program has notbeen disclosed.

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