ADB OKs loan for Nam Ngum 3, Lao PDR

ADB OKs loan for Nam Ngum 3, Lao PDR
International Water Power & Dam Construction
03 November 2011
www.waterpowermagazine.com/story.asp?sectioncode=130&storyCode=2061054

The Asian Development Bank (ADB) has approved a $465M loan to support
construction of the 440MW Nam Ngum 3 hydroelectric project on the Nam
Ngum River in northern Lao PDR.

The public-private power project will provide 2072GWh of clean energy
annually for export to neighboring Thailand, and is expected to generate
upwards of $770M for Lao PDR, of which more than $200M is specifically
earmarked for poverty reduction and environmental protection programs.

The project will comprise a 220m-high dam that will create a 27.5km2
reservoir. Seasonal flooding from the new reservoir will necessitate the
move of 144 households located near the planned reservoir. All eligible
families can receive permanent housing and title to their new
residential and agricultural land – a first in this area of the country.

Around 45 more households located along the upgraded national road and
the transmission line may also lose housing and parcels of land, and
will be fully compensated for their losses.

ADB said its stringent environmental and social safeguards will ensure
that any environmental and social impacts will be minimized and
mitigated, and the livelihoods and standards of living of all those
directly affected by the project will be better than they are now.

ADB is also actively supporting efforts to assess and address any
cumulative impacts from the various hydropower plants in the river
basin, including through the newly formed Nam Ngum River Basin Committee.

The plant, estimated to cost around $1B, will be built and operated for
27 years by the Nam Ngum 3 Power Company (NN3PC), which is owned by
three private sector companies: Thailand's GMS Lao Company Ltd and
Ratchaburi Electricity Generating Holding PCL, together with Axia Power
Holdings, a wholly owned subsidiary of Japan's Marubeni Corporation. The
Government of Lao PDR will also hold a stake through the Lao Holding
State Enterprises (LHSE).

ADB will lend up to $350M to NN3PC. Under a risk participation
agreement, commercial financial firms will assume the risk on up to
$150M of that. Thai banks and other international financial institutions
will also provide loans to the project. ADB is also lending
approximately $115M to the Lao PDR government to finance LHSE's equity
stake in NN3PC.

The Nam Ngum 3 plant, expected to be operational in 2017, will be
located upstream of two existing hydropower plants, and downstream from
another plant that is currently under construction. The Nam Ngum 4 A and
B plants are also planned upstream of Nam Ngum 3.
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