A major new hydropower project in Laos PDR will help to spark economic growth and development in the country, according to the Asian Development Bank (ADB).

The 1070 MW Nam Theun 2 hydropower plant on the Nam Theun river in central Laos has been officially inaugurated and its operation marks a new era for the southeast Asian nation, says the ADB, which provided $120 million of support for the $1.43 billion project.

“This project is a testament to the fact that when hydropower projects are done right, in a socially and environmentally responsible manner, the benefits are considerable,” said Kunio Senga, director general of ADB’s Southeast Asia Department.

Before the Nam Theun 2 project, more than half of the families in Nakai Plateau villages, where the project is located, lived in poverty. Child mortality rates were high, clean drinking water was scarce, and sanitation was almost non-existent.

“Today, the vast majority of residents say they are better off than ever before,” said Senga.

Families who had to move to make way for the dam have been provided with new hardwood homes complete with electricity, clean water and sanitation facilities.

These improvements, coupled with improved healthcare services, have resulted in a measurable decline in child and infant mortality rates, with parasitic infections falling by 90 per cent.

“This is an incredibly complex project, and numerous challenges have arisen along the way,” said Senga. “By working closely with communities we strive to address their concerns – from compensation to the need for more land – and to introduce programs tailored to their specific needs. We will continue to closely monitor the situation.”

The new power plant was developed by the Nam Theun 2 Power Company – a joint venture between Electricite de France International, Electricity Generating Public Company (Thailand), and the government of Lao PDR.

Over 90 per cent of the electricity generated by the project will be sold to Thailand, providing Laos with a $2 billion revenue stream over the next 25 years.

The funds will be used for the improvement of health and education services and other poverty reduction programmes, according to the ADB, which also says that $60 million has been invested in down stream water quality management to help reduce the impact of the dam.

Campaign group International Rivers says, however, that 110 000 people living downstream from the dam who depend on the Xe Bang Fai and Nam Theun rivers for their livelihoods, have been directly affected by the project due to the destruction of fisheries, flooding of riverbank gardens and water quality problems.

International Rivers has also expressed concerns over the use of revenues from the project, as Laos is ranked as one of the ten most corrupt countries by Transparency International.