National Policy on Environmental and Social Sustainability of the Hydropower Sector in Lao PDR

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1 National Policy on Environmental and Social Sustainability of the Hydropower Sector in Lao PDR By Xaypaseuth PHOMSOUPHA Deputy Director General Department of Energy Promotion and Development Ministry of Energy and Mines 1

2 Energy sector as prime sector for the longterm National Economic Development Plan Several hydro-power projects in operation, under construction and preparation Sustainable development of hydropower sector founded upon: Economic sustainability Social sustainability Ecological sustainability Planning and design of Nam Theun 2 Project is unprecedented in terms of Length Comprehensiveness Inclusiveness; Transparency National Policy not define new environmental and social standards, but linked to the development of national legal and institutional provisions for environmental and social safeguards 2

3 Principles developed under the Nam Theun 2 to be tailored and adapted to the hydropower sector Three principles of sustainability applied to projects with: Higher than 50MW of installed capacity Inundating more than 10,000 hectares of land Construction after 1990 Integrated basin development and management approach Cumulative impacts and mitigation supported by appropriate institutional and financing mechanism 3

4 All large scale projects subject to full environmental and social impact assessment report: Environmental Impact Assessment (EIA) and Social Impact Assessment (SIA). EIA to include Risk analysis Analysis for project structure and location No-project alternative Lesson learned from previous projects Environment Management Plan (EMP) Social Development Plan (SDP) Resettlement Action Plan (RAP) Ethnic Minority Development Plan (EMDP) 4

5 Loss of natural terrestrial habitat in construction area including reservoir unavoidable Offset by conservation and management in nearby watershed area Adaptive management and participatory planning strategy to stabilize land use, maintain vegetation cover Enhancement of productivity and sustainability of aquatic resources within reservoir and tributaries Initiation of development livelihoods of people residing within protected areas for eventual restriction on dependence on resource base Introduction of alternative means of livelihoods 5

6 Prior informed consultations with affected people Meaningful, balanced and transparent consultation Collect public view and input in E&S documents Involvement of vulnerable groups such as women, elderly, disable and ethnic minorities Possible trans-boundary consultation E& S reports are available for public review 6

7 Lao national laws, policies, strategies and action plans International convention Provisions for immediate corrective action and financial penalties following instances of non-compliance in the concession agreements Grievance dispute mechanism established 7

8 Implementing all environmental and social safeguard procedures under user-pays principles Project companies obliged to allocate part of revenue to special windows for Environment Protection Fund Use of revenues prioritized for future investment in power sectors of both commercialized projects and activities for social purposes such rural electrification Capacity building and improvement of legal framework funded from such revenues 8

9 Institutional Arrangement Base Issuance of Prime Minister s Decree on Resettlement Environment Protection Strategy and Environment Action Plan Establishment of Environment Protection Fund Lao Environment and Social Project (Lens) in operation aiming at building capacity of Lao personnel in protecting and monitoring environment and biodiversity. Third party monitoring arrangement under way Amendment of Electricity Law and other relevant regulations under way Segregation of STEA to establish Water Resource and Environment Agency Ministry of Energy and Mines takes over roles of former LNCE 9

10 Institutional Arrangement Base (cont d) Department of Energy promotion and Development under Ministry of Energy and Mines acting as Implementing Agency (designated Government Unit) to: Exercise Government rights Perform Government obligations Enforce the CA on project companies and contractors Monitor overall construction and operation Secretariat of project steering committee Focal points for overall implementation Department of Environment under Water and Environment Agency Overseeing both social and environmental activities Environment Management Unit as monitoring agency for environmental issues 10

11 Project Base Three-stage development process strengthened Memorandum of Understanding Pre-feasibility study (technical and financial) Initial social and environmental examination Project Development Agreement Detailed feasibility study : technical justification; and Financial viability Final E&S studies: Environment Impact Assessment, Environment Management Plan, Social Development Plan, Resettlement Action Plan, and Ethnic Minority Development Plan 11

12 Project Base (cont d) Concession Agreement Standardization under way Government imposts streamlined Government financial model proven efficient Obligations of project companies well defined: separate integrated social and environmental obligations Project companies obliged to cover costs of studies, planning, mitigation activities, compensation, restoration and monitoring. Provisions for non-compliance stringent and a case shall mean a termination of CA Government Undertakings issues to power buyer stating its full commitments to E&S consideration 12

13 Existing Project Theun-Hinboun, COD in 1998, (IPP) Refinancing to improve Government revenues Revisiting E&$ mitigation activities especially downstream area Houay Ho (IPP), COD in 1999, (IPP) Refinancing to improve Government revenues Revisiting E&S mitigating actions 13

14 Should be founded on Laos as host country to take adaptive management approach Developers to absorb more non-specific costs Bankers and other financial institutions to relax requirements considering different project economics Other stakeholders be involved Power buyer to consider sharing costs for E&S mitigation measures via energy tariff 14

15 More information available on or Contact 15

16 THANK YOU VERY MUCH FOR YOUR ATTENTION 16

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