8 December 2003
Nam Theun 2 Project Director at the World Bank, requesting important documents in relation to Nam Theun 2 Dam
To: Mr. J. Shivakumar, Nam Theun 2 Project Director, The World Bank
From: Ms. Aviva Imhof, International Rivers Network
Date: November 26, 2002
Dear Mr. Shivakumar
I am writing to request a number of documents related to the Nam Theun 2 project. I am pleased to see the Bank’s stated commitment to openness and transparency. In its Aide Memoire of Communications Mission, September 2, 2002, the Bank recognizes the importance of making all project documents and information readily available to all stakeholders. The World Bank’s Decision-Making Framework on Nam Theun 2 states that “It would be important to develop great understanding and wide support for the project among the international donor community and global and local civil society.” It is with these statements in mind that I write to request the following documents.
1. Concession Agreement between Government of Laos and NTPC
I would like to request a copy - and public release of - the Concession Agreement that was recently signed between the Nam Theun 2 Power Company and the Government of Lao PDR. As I understand it, the Concession Agreement defines the rights and obligations of both the Government of the Lao PDR and NTPC, and defines the contractual background for the project. Given Laos’ rudimentary legal system, the Concession Agreement also provides the legal basis for the project, outlining key obligations and methods of dispute resolution. The Concession Agreement also includes NTPC’s environmental and social obligations.
Given the far-reaching implications of the Concession Agreement, and the lack of a credible legal system within Laos with which to hold the government and developers responsible, it seems critically important that the Concession Agreement be made public. All parties, including affected communities, should be aware of their legal rights to compensation and mitigation measures, and the responsibilities of the government and the Power Company in this respect.
In addition, as the concession agreement outlines the government’s expected revenues and royalties from the project, public disclosure of the agreement would be a precondition for any independent economic and financial analysis of the project and its benefits for Lao PDR.
2. Power Purchase Agreement between Government of Thailand and NTPC
I would like to know what the Bank’s policy is on releasing the Power Purchase Agreement for the project once it is signed? At our meeting last May, Mara Baranson said that parts of the PPA and Concession Agreement may be disclosed to the public. If there is to be any independent scrutiny of the financial and economic viability of the project, public disclosure of the PPA is necessary.
As you might be aware, the Ugandan High Court recently ordered the release of the PPA between the Bujagali Dam’s private developer and the Government of Uganda. An independent review of the PPA by Prayas Energy Group of India reveals that Ugandans will pay hundreds of millions of dollars in excessive power payments if the World Bank-financed dam proceeds according to plan. The study demonstrates that the agreement between the dam's private developer and the Government of Uganda falls short of international standards. As a result, Uganda will be faced with $20-40 million in excessive payments each year if the dam moves forward. The study also finds that the World Bank provided poor advice to Uganda’s government on how to negotiate the contract for this project and also published misleading or wrong information on important issues.
The circumstances surrounding Bujagali illustrate the importance of releasing crucial project documents to allow public scrutiny prior to World Bank commitments to financing a project. Both the Concession Agreement and the Power Purchase Agreement should be released to allow independent analysis of the financial viability of the project and the economic benefits accruing to the Government of Laos.
3. Logging Mission Report
I am still waiting for a copy of the report from the last World Bank logging mission to Laos. This report was promised back in May by Mara Baranson, but I have still not received a copy. Could you please send me a copy as soon as possible?
4. World Commission on Dams Compliance
The World Bank has committed to using the WCD guidelines as a reference when evaluating new dam projects. As you may recall, IRN undertook an analysis of the project’s compliance with WCD guidelines last year and found that the project failed to comply with six out of seven of the WCD’s strategic priorities, and that it would be difficult to bring the project into compliance given the current political climate in Laos. How can the Bank justify its support for a project that fails to meet nearly all of the WCD’s guidelines?
I look forward to your reply to these issues.
Sincerely
Aviva Imhof
Director, Southeast Asia Program
Cc Mr. Jemal-ud-din Kassum, Vice President, East Asia and Pacific Region Treasury