It is the largest hydroelectric project so far in Laos, exporting power to Thailand as well as supplying the local area with electricity.

The dam also marked a return by the World Bank to funding large-scale infrastructure, after a decade-long hiatus.

A group of non-governmental organisations said: "Ten years after the start of the construction of the Nam Theun 2 Dam in Central Laos, it is clear that this mega project has disastrous impacts on people and their environment.

The Nam Theun River diversion was begun in March 2006 and then closed in April 2008 following completion of the Nakai Dam wall.

The project site is in Khammouane and Bolikhamxay Provinces in central Laos, about 250 kilometers east of Vientiane.

It stretches from the Nakai Plateau to the lower Xe Bang Fai River confluence with the Mekong.

The project was developed by NTPC, which is owned by a consortium composed of EDF (40%), Electricity Generating PCL (EGCO) of Thailand (35%),[8] and the Government of Laos (25%).

The government has multiple roles related to NT2, some of which may be conflicting: It partially owns NTPC and thus has an interest in the financial profitability of the project; it is supposed to monitor compliance with environmental and social safeguards under the concession contract; and it buys some of the electricity generated from the project through the state-owned power company EDL and thus has an interest in low electricity prices.

It is financed through equity, loans and guarantees from 26 financial institutions, including All financing in hard currencies is guaranteed through political risk insurance provided by the above-mentioned three export credit agencies, the ADB (US$50 million), the International Development Association (IDA) of the World Bank Group (US$50 million), and the Multilateral Investment Guarantee Agency (MIGA) of the World Bank Group (US$91 million).

Specifically, MIGA has provided a US$86 million guarantee to Fortis Bank of Belgium against the risks of expropriation, breach of contract, war and civil disturbance, as well as transfer inconvertibility in both Laos and Thailand.

[10] According to MIGA, its guarantee "was key to lowering the project's risk profile, which in turn enabled the government and developers to attract commercial financing at better rates and gave the investor the assurance needed to go ahead with the deal".

In the same vein, the then Managing Director of the World Bank, Shengman Zhang, said in 2003 "We see Nam Theun 2 not as a project per se, but as a vehicle through which to make a considerable progress in the effort of poverty reduction.

Special administrative units are being established to deal with the effective management and allocation of the funds earned by the project.

According to the organization, compensation payments and replacement land for villagers affected by construction activities have been "inadequate, unfair or non-existent".

Livelihood development programs were put in place for the villagers living downstream on the Xe Bang Fai, in districts such as Mahaxai.

The objective is to help villagers generate money from a variety of different sources to compensate for any changes in fishing catches after the river diversion.

[19] There is relatively little information on downstream impacts on the Nam Theun River, where water flows will be significantly reduced.

NTPC and the Lao Government have committed to doubling the income of resettled villagers, through livelihood programs, five years after they have been relocated.

Construction of the villages and major facilities (new roads, water pumps, toilets, schools, mills, and electricity) was completed by mid-2008.

[23] Consultations on house design, location, and construction materials were held and continue to ensure the outcomes reflect the needs of the local people.

Experts are helping the resettled villagers to adopt improved practices to increase agricultural and income productivity.

If substantial logging occurred in the upstream basin, the lifetime would be accordingly reduced and could affect the financial and economic viability of the project.