Interview with Jean-Pierre Katz, Chief Executive Officer of Nam Theun 2 Power Company Ltd. (NTPC) in Laos.

How important is the Nam Theun 2 (NT2) project?

To Laos it is very important. The electricity generated by the plant could go to make up around 8-10% of the country’s total exports. For a country such as Laos, landlocked and without great commodity resources, that is a significant earner of foreign currency. But I should stress, it is not just about the returns generated by the project. It also contributes substantially to the development of one of the poorest areas of what is a poor country.

Does being such a major local economic player give you good access to government officials?

It does. We had a good relationship with central and local government. Laos is relatively decentralised, with the local governor of the province being head of administration, justice and tax collection and the army. Working together with international financial institutions, we were able to construct a strong partnership around our concession agreement.

How is the concession agreement implemented?

The project is monitored extensively. We at the NTPC are the first line of the checks and balances. We consult closely with both the government and international development and funding agencies to ensure agreed standards are being met.

Do you find this constant monitoring difficult?

To be honest, we welcome it. We have enacted around 2,000 different recommendations within the monitoring reports. On the whole, there has been little overlap or redundancy; and where there was, we were able to negotiate a reasonable outcome. Some targets shifted, but that was inevitable on a project this size.  Nevertheless it is additional workload measured to be around 35% of the Environmental and Social teams

How did it encourage local infrastructure and development?

This area of Laos had only rudimentary health care and little in the way of education. Roads were poor and there was little opportunity to sell local produce outside the area. The dam project has and is changing lives for the better. Schooling has been extended, 2 health clinics and an hospital have been built, health indicators for nutrition and disease are improving.

Has the local economy changed as a result of the dam construction?

Such a major construction will always have a significant impact. We have done our best to ensure that is positive. It is not just a case of compensating flooded land. The dam has created, or at least enlarged, one local activity, that of fishing. We have put in place a team to work with local people on fishery management. We have worked with farmers to improve agricultural productivity, notably by building irrigation gates downstream, even though these were not part of the concession agreement. Perhaps most importantly, improved transport connections, together with expert help and advice, will help local people bring their goods to a wider market.

What of the Environmental impact of the dam?

We have an Environmental Management Office that works to an agreed action plan. This a wide range of activities. We have waste management procedures in place, including the construction of the first sanitary landfill in Laos. We have detailed emergency response procedures in place for oil or chemical spills. To maintain water quality we have a comprehensive monitoring process and a dedicated local lab facility.

And what of local wildlife?

Around USD1 million a year has been allocated from the start of construction over the lifetime of the concession to the protection of a 4,000km2 National Biodiversity Conservation Area. Our monitoring programme for local biodiversity revealed a number of creatures living in the area, of which we had little previous knowledge.

How would you describe your relations with your insurers?

The NT2 project is financed through its revenues. Lenders must, therefore, be assured that sufficient risk mitigation and management procedures are in place. That includes insurance. This adds another level of monitoring to the project, this one on the engineering construction and operational side. Again, we largely benefit from this relationship, and have a very positive interaction with our brokers and insurers.

Jean-Pierre Katz was speaking to a Swiss Re audience at the Swiss Re Centre for Global Dialogue, 1 July 2010. For further information, please see http://www.namtheun2.com/.

Interview by Simon Woodward, Swiss Re Centre for Global Dialogue