World Bank Begins Appraisal of Proposed Nam Theun 2 Hydroelectric Project

      The World Bank has recently announced ( 28 January 2005 ) the begining of its appraisal of the Nam Theun 2 Hydroelectric Project (NT 2 ) and the associated Nam Theun 2 Social and Environmental Project ( NTSEP ). The appraisal phase constitutes an important part of the ongoing due diligence process for the project, and represents a further review of the extensive preparatory work undertaken by the Government of Lao PDR and the Nam Theun 2 Power company ( NTPC ).

       During appraisal, the Bank will review whether the NT2 project meets the criteria laid out in the ''Decision Framework'' for project processing which states that the project must be embedded in a development framework aimed at poverty Reduction and Environment Conservation; must be Technically, Financially, managerially and Economically sound and adhere to the Bank's Environment and social safequard policies; and must have greater understanding and wider support within the international donor community and civil society.

       Specifically, Bank staff will focus on:

• The Robustness of the project design, including the economic rational, as well as environment and social mitigation measures that have been developed through numerous assessments and extensive local consultations, and informed by feedback from recent international workshops;
  
  
• The soundness of proposed implementation arrangements, including a continous process for including local communities in implementation and informing international stakeholders; and
  
• The adquacy of the proposed framework for managing NT2 revenues in a transparent way to direct revenues toward priority poverty reduction and environment conservation efforts.
  
       If the appraisal is successful, the World Bank would then commence negotiations on the terms of financial instruments with the Lao goverment and the sponsors and prepare information for the Bank's Board of Executive Directors. The Board would then use that documentation to make the final decision on whether or not to support Nam Theun2.