Other benefits to the population of the Lao PDR will, in general, be through predicted increased GDP levels and for communities in the vicinity of the Project area through the generation of employment, increased demand for goods and services and increased development of infrastructure such as roads.
6.3 Benefits to the Environment
TThe Project will transfer on average 6,900 million cubic metres of water each year from the Nam Theun to the Xe Bang Fai. Such a transfer has environmental impacts on both rivers and is a common feature of all trans-basin projects. Those effects have been carefully identified and mitigated to the extent possible as detailed in Section 8. The effects are relatively small. However, the Project has a massive net benefit to the environment because of the support it will be able to give to the protection of the Nakai-Nam Theun NBCA. However, the Project has a massive net benefit to the environment because of the support it will be able to give to the protection of the Nakai-Nam Theun NBCA.
This conservation area of approximately 4,000 km2 consists of primary rain forest in an almost totally primal state. It is globally recognised to be of extraordinary environmental value and professional studies have shown that it clearly warrants treatment as a world class conservation area. It is also presently at significant future risk as resource restraints within Lao PDR will make the area an increasingly attractive target for logging and hunting. Without the Project, there is little likelihood of the GOL finding sufficient funds to manage this magnificent area effectively. Project funds will enable the present carefully drafted management plans for the area to be realised. The GOL is actively considering applying for World Heritage Status for this unique area once the management plans become effective.
Dedicated section details the potential environmental impact and mitigation measures being undertaken by NTPC and/or the GOL, including detailed Project environmental protection management and mitigation measures. In summary, these plans were prepared as part of an extensive project Environmental Assessment and Management Plan and provide:
   * institutional frameworks, policies and procedures for the implementation within the overall framework of the Project’s development; and
   * detailed environmental, social, institutional and watershed project management and mitigation measures, including implementation responsibilities,
      budgetary allocation and schedules.
The key features of the Environmental Assessment and Management Plan are summarised below:
   * any bio-diversity losses or other environmental impacts attributable to the Project will be offset by financial support to the management of the Nakai-Nam Theun watershed. The Project will contribute USD 6.5 million during the Construction Period and USD 1.0 million (as escalated) per year for each year of the Operating Period towards the management of the Nakai-Nam Theun watershed, including the protected primary forest area that is recognised to be of outstanding international significance in terms of bio-diversity. According to the International Panel of Experts “the project will by way of direct funding help to preserve a vast primary forest of great international significance which makes up the catchment, and which is presently at risk.”
   * the Project’s support to the Nakai-Nam Theun watershed area will:
          (i) limit the continued exploitation of forest and wildlife in the area considered to be of World Heritage Status;
      (ii) ensure the protection of the rights of indigenous peoples in the area in accordance with the World Bank’s Operational Directive 4.20 on                indigenous peoples;
         (iii) comply with World Bank’s Operational Policy 4.04 on natural habitats; and
         (iv) minimise risk of deforestation of the catchment area.
   * the social impacts are addressed by developing a USD 34.5 million resettlement and compensation programme. In addition a further USD 7.5 million has been allocated for ongoing activities during the operational phase of the Project.
6.4 Benefits to the Kingdom of Thailand
The Project represents a cheap, reliable long-term source of sizeable generating capacity and electrical energy for EGAT and, hence, the Kingdom of Thailand. The cost of the energy from the Project is significantly below the cost of thermal power producers in the country and substantially below the cost of new build thermal power stations. In addition, being hydroelectric in nature, the electrical energy can be made available much more quickly than would be the case for thermal power stations.
The Project also represents a significant diversification of EGAT’s concentration on specific fuel and geographic sources of power. The development of foreign hydroelectric power for the EGAT is a divergence from the more historic development of gas-fired combined cycle plant. The Theun Hinboun and Houay Ho projects represented the first of the new generation of non-Thai domiciled hydroelectric power projects, and whilst the Project is significantly larger than either of these two transactions its development has been undertaken under the same political and economic impetus.
The development of hydroelectric capacity such as the Project means that the generating mix for EGAT is split between conventional thermal power plants, hydroelectric power plants (both within and without the Kingdom of Thailand) and, increasingly, electricity export - import agreements with neighbours such as China and Malaysia as well as the Lao PDR. The Project therefore represents an important element within the fuel mix of Thailand’s electricity supply industry.