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.