TECHNICAL ASSISTANCE DESCRIPTION, COST ESTIMATES AND OUTLINE TERMS OF REFERENCE

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1 Greater Mekong Subregion Nam Ngum 3 Hydropower Project (RRP LAO 41385) Supplementary Appendix 5 TECHNICAL ASSISTANCE DESCRIPTION, COST ESTIMATES AND OUTLINE TERMS OF REFERENCE Strengthening Biodiversity Protection and Management in the Nam Ngum 3 Hydropower Project 1. Background 1. Nam Ngum 3 Hydropower Project (NN3) is one of a cascade of existing and planned hydropower projects in the Nam Ngum basin in central Laos. It will operate as a storage system with a maximum storage capacity of 1,407 million cubic meters. Water will flow through a kilometer (km) long headrace tunnel to an underground power station. A nearly 1 km long tailrace tunnel will return the water to the river 15.8 km downstream of the dam. The main features of NN3 include (i) 2 x 220 MW rated capacity turbines; (ii) a concrete-faced rockfill dam 220 meters (m) in height; and (iii) a 99 km long, 500 kv transmission line. The NN3 reservoir will inundate roughly 60 km of the Nam Ngum plus part of its tributaries. NN3 dam will reduce the flows downstream along 17 km down to the Nam Ngum 2 Hydroelectric Facility (NN2) reservoir. The proposed 500 kv transmission line will partly run through the Phou Khao Khouay National Protected Area parallel to the existing 230 kv transmission line route of NN2. 2. The NN3 has been in development since the late 1990s and studies have been done to determine the feasibility of the project. An environmental impact assessment (EIA) and cumulative impact assessment has been prepared for the Project. In preparing the final EIA in September 2011, the Nam Ngum 3 Power Company (NN3PC) used the inputs made for an earlier version of the EIA by the consultant RMR International. RMR conducted baseline biodiversity studies in the project area in 1998 before the area was disturbed by the construction and operation of other hydropower projects and mining operations (such as NN2, Nam Ngum 5, Phou Bia Mine), and the preparatory works for NN3. Information from studies done by Duckworth and Warren in the Nam Ngum were also used as reference, where appropriate, to augment the RMR studies. 3. However, given the developments in the river basin, NN3PC needs to undertake a comprehensive and updated Baseline Biodiversity Assessment. The initial biodiversity surveys to be undertaken as part of the assessment are expected to commence in the coming dry season (estimate November 2011) covering the following areas: (a) the river section and adjoining areas downstream of the dam to the backwaters of the NN2 reservoir, including the areas earmarked for quarry and disposal sites, (b) reservoir inundation and adjoin areas, (c) a relatively undisturbed stretch of Nam Ngum upstream of the confluence with the river Nam Ting and (d) the transmission line corridor and adjoining areas (but excluding any areas impacted by the NN2 230 kv transmission line). The planned biodiversity assessment would include collection of baseline data on (a) aquatic and terrestrial flora, and (b) fauna and their habitats, including the status of forest cover. The results of the assessment will include recommendations for the implementation of appropriate and effective measures to minimize and mitigate potentially adverse impacts and risks to the biodiversity, and the need for biodiversity offset, to mitigate any residual impacts in order to achieve a no net loss of the affected biodiversity. 4. The assessment of the impacts of NN3 to the biodiversity and natural resources including the proposed mitigating measures and its implementation and management is

2 2 complex and the capacity of the Government of Lao to undertake the necessary regulatory decisions including implementation is limited. Therefore, it is recommended that an Independent Advisory Panel (IAP) be established to assist the Government of Lao PDR to (a) assess these project impacts on biodiversity and natural resources, (b) decide on effective mitigation and offset measures, and (c) implement and manage mitigation and offset measures adequately. 2. Scope of IAP 5. The ADB will recruit three distinguished international specialists to provide technical assistance to the government The specialists will be required with expertise in (i) biodiversity assessment; (ii) protected/conservation area management; and (iii) social assessment including Indigenous People. The assistance will be for 190 person-days of technical advisory services. The IAP will be supported by specialists in additional disciplines, as needed. The assignment will be completed by December The services will be provided in two Phases: Phase I: Review and comment on Baseline Biodiversity Assessment (November 2011 to April 2013) undertaken by NN3PC Phase II: Review and Comment on Biodiversity Offset Studies and Implementation of its recommendations (March 2013 to December 2017) by the Government. 3. Terms of Reference for Panel Members a. Conservation Area Management Expert /Team Leader (90 person-days) 7. The conservation area management expert will lead the IAP and will be responsible to coordinate its activities and prepare the reports consolidating inputs from other panel members. The specific task of the expert, during the preparatory phase of the offset plan will include review and analysis of available information on the project and its impacts on biodiversity, review and comment on draft TOR for proposed Biodiversity Offset Studies for identification, design and implementation of offsets, lead the IAP during the field visits to the project impact and the offset sites, lead the investigation on environmental flow assessment, review the wildlife rescue plan and site specific mitigation measures for residual biodiversity impacts and review the biodiversity offset design methodology and design based on international and local good practice experience. During the implementation phase, the expert will be responsible to undertake two field visits and prepare and submit midterm and final report on effectiveness on offset implementation and suggest any additional measure if necessary. b. Biodiversity Assessment Expert (60 person-days) 8. The biodiversity assessment expert will be responsible for review of existing and additional information on biodiversity status of the project affected areas, visit the project affected sited as well as the offset locations, review biodiversity assessment conducted by the borrower for biodiversity impacts due to the project and offset needs, review environmental flow assessment for effectiveness of released flows to meet biodiversity conservation needs in the stretch downstream of the dam. The expert will also review the biodiversity status of the areas proposed for offset, advise on their ecological suitability to achieve measureable conservation outcomes as offsets for the affected biodiversity and review the indicators and monitoring plan for evaluation of effectiveness of biodiversity offsets and advice on implementation.

3 3 c. The Social Assessment Expert with background in Indigenous People (60 person days) 9. The social assessment expert will be responsible for review of the proposed onsite biodiversity conservation measures as well as the proposed biodiversity offsets for their associated impacts to stakeholders on issues related to the sustainability of the offsets and their interactions with local communities. The social expert will review the socio-economic profile of inhabitants in project affected area as well as the locations identified for biodiversity offsets and provide comments on the social impact assessment of biodiversity offset plans including gender specific considerations. During the implementation stage the safeguards expert will visit the offset implementation sites and independently review the progress on implementation social safeguards in relation to involuntary resettlement and indigenous peoples development plan and community participation in the context of biodiversity offsets. 4. Specific Terms of Reference Phase I Baseline Biodiversity Studies to be conducted by NN3PC 10. The IAP is required to conduct a preliminary due diligence review of the Project based on internationally accepted criteria for such a review, specifically the review will consist of a visit to the project site and a desk stop study of the following documents: a. Environmental Impact Assessment (September 2011) b. RMR International studies: Social Action Plan and Environmental Management Plan to producing the Nam Ngum 3 Social Action Plan and Environmental Management Plan (Chapters 7, 9,10, 21, 32, 36) c. Wildlife of the Nam Ngum Basin, Lao PDR, by J.W. Duckworth, January 2010 d. Final Report by the Aquatic Environmental Specialist, Lao PDR, by Terry J. Warren, November e. Other relevant background biodiversity assessment reports; f. National biodiversity strategy to 2020, g. Legal frameworks for management of conservation areas in Lao PDR, and h. ADB Safeguard Policy Statement (2009) 11. The IAP will review the Baseline Biodiversity Assessment and comment on: a. the draft methodology for the biodiversity assessment including environmental flow assessment; b. the draft Baseline Biodiversity Assessment report including i. Biodiversity survey iv. Assessment of impacts on affected biodiversity Environmental flow assessment to conserve biodiversity in the river stretch downstream of the dam until the backwaters of NN2; The need for and adequacy of a Wildlife Rescue Plan to be implemented during the first impoundment of the reservoir in 2016; v. Compensatory reforestation vi. Recommendations for biodiversity offsets and potential biodiversity activities

4 4 v Biodiversity offset design methodology including criteria and process to select potential locations and activities to assess the biodiversity gains; c. the draft TOR for the proposed Biodiversity Offset Studies; 12. The IAP will participate in tripartite meetings among GOL, NN3PC and ADB to discuss their findings and recommendations on: a. Report on Baseline Biodiversity Assessment downstream of the dam including Environmental Flow Assessment (tentatively, July 2012) b. Report on Baseline Biodiversity Assessment for reservoir area and transmission line (tentatively March 2013) Phase II Biodiversity Offset Studies and Implementation to be conducted by GOL 13. The IAP will review and comment on: a. proposed biodiversity offset methodology including: i. Site level biodiversity offset survey; Stakeholder consultation, participation and Social Impacts Assessment (SIA) for potential offset locations; Assessment of costs and benefits of the proposed biodiversity offset plan; b. draft and final Biodiversity Offset Design reports providing advice on adequacy of proposed biodiversity offsets to address any residual impacts on biodiversity and associated natural habitats in order to achieve no net loss of biodiversity. The review will pay special attention to: i. Potential offset locations and biodiversity status. iv. Sites specific legal, policy and land use management arrangements Ecological suitability of offsets in terms of measurable conservation outcomes; Assessment of potential biodiversity gains at each location v. Social Impact Assessment of proposed offset activities on local stakeholders and their role in implementation of offsets vi. v v ix. Analysis of cost and benefits for affected stakeholders Proposed biodiversity offset activities, management and financing arrangements. Monitoring plans for the biodiversity offset implementation to measure the effectiveness of the biodiversity offsets Appropriate consultation and participatory approaches for affected communities and Indigenous Peoples in conservation areas, if any; 14. The IAP will further review the progress of implementation of biodiversity offsets program and advise corrective actions if necessary.

5 5 5. Implementation Arrangements 15. ADB will be the Executing Agency and MNRE will be the Implementing Agency. The MNRE and NN3PC will provide necessary assistance, including provision of documents without cost to the consultant, for the IAP to execute its mandate. It is envisaged that the IAP will make up to seven site visits over the duration of the services of about 6 years (tentatively November 2011 June 2017). 6. Reporting Arrangements 16. The consultants will report to MNRE and to the ADB. The IAP will submit their observations and comments in the form of reports: a. For Phase I on completion of Baseline Biodiversity Assessment covering downstream of the dam including Environmental Flow Assessment (tentatively August 2012) Baseline Biodiversity Study for reservoir and transmission line including proposed criteria for selection of offset areas and TOR for Phase II implementation (tentatively April 2013) b. For Phase II on completion of i. Inception Report of Phase II consultants (see para 11 a. and b.) (tentatively November 2012) Biodiversity Offset Design Report (see para. 11 c.) (tentatively June 2014) Implementation review reports (tentatively mid 2015, mid 2016 and mid 2017) 17. The IAP will submit its reports to the Government of Lao PDR, ADB and NN3PC simultaneously. 18. The ADB is required to disclose certain information to the public in accordance with its Public Communications Policy. The IAP reports will be posted on ADB's website except to the extent disclosure of such reports is not required under the Public Communications Policy.

6 COST ESTIMATES AND FINANCING PLAN ($'000) Total Item Cost A. Asian Development Bank 1. Consultants a. Remuneration and Per Diem i. International Consultants 281 b. International and Local Travel 116 c. Reports and Communications Miscellaneous Administration and Support Costs Contingencies 65 Subtotal (A) 500 B. Government Financing 1. Office Accommodation a Remuneration and Per Diem of Counterpart Staff Others 10 Subtotal (B) 30 Total 530 Notes: (a) MNRE will provide furnished office space for the consultants incl. telephone line and internet Source: ADB staff estimates