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Improving Feasibility Studies Could Help the Sustainability of Hydropower Projects in Lao PDR


2014-08-10

Improving Feasibility Studies Could Help the Sustainability of Hydropower Projects in Lao PDR


In hydropower development, feasibility studies foretell potential project impact and weigh risks against benefits. While these studies are a requirement for all hydropower developers in Lao People’s Democratic Republic, there is limited guidance on what information to include in them.

 

“Feasibility studies are extremely detailed and vast, covering all aspects of the project. If we have more instruction from the government on what our feasibility study should cover, we will better understand the viability of our project,” said Somphone Oudone, General Manager of Rasita Power Company.

 

IFC is working with government officials to develop a set of guidelines to improve the quality of feasibility studies for hydropower development. With clear direction from the Lao government, developers will be able to ensure they meet all requirements and address potential challenges that may impede business operations.

 

“All stakeholders benefit from comprehensive feasibility studies,” said Chansaveng Bounynong, Deputy Director General of the Department of Policy and Planning, the Ministry of Energy and Mines. “However, developers need direction. They need to know what information the Lao government requires.”

 

At a late-June workshop co-hosted by the Ministry of Energy and Mines, the Ministry of Natural Resources and Environment, IFC, and the World Bank, officials discussed the need to develop a template for developers undertaking a feasibility study. The template would specify what information developers should provide to comply with government regulations. Japan International Cooperation Agency, IFC, and the World Bank will continue to work with the government to develop more detailed technical feasibility study guidelines as well as training for staff of the Policy and Planning Department.   

 

Feasibility study guidelines will encourage hydropower developers to consider the technical and engineering aspects of project development and operations as well as key social, environmental, economic, and financial risks. The guidelines will provide clear instructions on how to conduct economic and financial analysis that is in line with government policy and plan for the hydropower sector.  

 

“With feasibility studies, hydropower developers should consider the social and environmental implications upfront: What will affected communities lose? What are the benefits they will gain?” said Oudone.

 

Technical guidance will help developers better assess stakeholders’ use of river resources.  Analysis conducted during the feasibility study will provide the government with information on viable technical, engineering and financial options to minimize potential negative impacts of hydropower projects on local people and environment while maintaining reasonable benefits and cost.

 

“Understanding who’s using the river and for what purpose will help lower risk for the developer and the impact on transport and trade, ensuring water is available for people who rely on it, “said Bounynong.