EIA: Lao PDR - Asian Development Bank

1.1 GENERAL BACKGROUND
CHAPTER 1
INTRODUCTION
The development of hydropower facilities, with planned and managed environmental
impacts, is seen as an opportunity for Lao PDR to enhance its economic prosperity and
improve the lives of its people. Lao PDR possesses a large, almost untapped, hydropower
potential beyond its own needs and has a central location in a regional market of the Greater
Mekong Sub-region characterized by expanding electricity demand.
As a r esult, one of the pillar policies of the government of the Lao PDR (GOL) is to
utilize its plentiful water resources. With its policy of domestic and rural electrification,
EDL’s primary objective is to supply power within the country, but it also exports excess
power to Thailand and other neighboring countries in order to earn foreign exchange.
The government owned Electricite du L aos (EdL) owns and operates a number of
hydropower projects. The theoretical hydropower potential of Lao PDR amounts to about
26,000 MW (excluding the mainstream Mekong River), but this assessment of the total
exploitable potential is only an estimate: Some of the studies involved in this estimate are up
to 30 years old and it must be borne in mind that limitations in hydrological, geological and
other technical information render the estimate approximate. Furthermore, it represents an
upper limit, bearing in mind that the socio-environmental impacts associated with
development of some part of the total potential may be considered unacceptable by today’s
more stringent standards.
The development of the Nam Theun 2 H ydropower Project, with a capacity of 1,070
MW, was considered by independent experts as having greatest immediate potential to
achieve the country’s development objectives as a m ajor source of foreign exchange. The
World Bank awarded a loan to the Lao PDR in March 2005 for the construction of the Nam
Theun 2 P roject. Following five years of construction, the Nam Thuen 2 P roject was
commissioned in 2010. T he decision of the World Bank to provide support for the Nam
Theun 2 Project is believed to have greatly encouraged other hydropower development plans,