Nam Theun 2 Trip Report and Project Update - BankTrack

International Rivers NetworkReliance 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 variouslivelihood projects, including pig farming, watermelonand 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 villagesavings 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 difficultymaking 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 villagershad 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 aVillager along the upper Xe Bang Fai showinglast year's flood level. Photo by Shannon Lawrence, IRN.micro-credit scheme to deliver compensation creates acycle of debt if projects fail or if re-payment terms aretoo demanding.Villagers bearing riskIn most of the pilot villages, livelihood projects supportedby village savings fund loans were only just gettingunderway 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-13