Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature. Environmental and Social Review Summaries are provided for projects assigned an Environmental Assessment Category of A or B.
- Project name
- Nam Theun 2 Power Company Ltd.
- Project ID
- Fiscal year
- Guarantee holder
Fortis Banque SA
Fortis Bank NV
- Investor country
- Host country
Lao People's Democratic Republic
- Environmental category
- Gross exposure
- $90.6 million
- Project type
Total project cost is $1.2 billion, the largest investment ever in Lao PDR. The project involves the development, construction, and operation of a trans-basin power plant that will use water from the Nam Theun River. In addition to the construction of a dam, the project also provides for increased environmental protection in Lao PDR, with a biodiversity area being set aside and conserved; improved housing and higher incomes for the 6,200 villagers who are re-settling from the reservoir area; a robust and proactive mitigation and compensation program to help communities downstream prepare for changes to their livelihoods; special measures to ensure that revenues from the project are used effectively to reduce poverty; and a continued commitment by the World Bank to monitor the project and ensure that it is fully and properly implemented.
Lao PDR has an average income level of less than a dollar a day, with levels considerably lower in rural areas and few options for generating income. The project is expected to generate an estimated $1.9 billion in foreign exchange earnings over a 25-year period through the export of 995 MW of electricity to Thailand. The income generated by the project will provide key funding for Lao’s National Growth and Poverty Eradication Strategy, enabling the country to increase the amount of money it can invest in health, education, and basic infrastructure for the benefit of the poor. The project will also produce 75 MW of power for domestic consumption.
MIGA’s guarantee was key to lowering the project’s risk profile, which in turn enabled the government and developers to attract commercial financing at better rates and gave the investor the assurance needed to go ahead with the deal. MIGA’s guarantee complements a $50 million partial risk guarantee issued by the World Bank, as well as a $20 million grant from the International Development Association.