Overview
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Chapter 8: NT2: A Transformative Endeavor Complementing the observations in chapter 7, Patchamuthu Illangovan provides additional thoughts on the broader impact of NT2 in chapter 8. He reveals how NT2 project goals are being realized on the ground and addresses some of the challenges ahead in four areas: the development context, the hydropower facility and related infrastructure, environmental and social programs, and international support. Achieving financial closure on NT2 in 2005 buoyed the hydropower industry worldwide. It also gave credence to the notion that Lao PDR could tap its rich water resources to address the power needs of its neighbors and eventually become the “battery of South East Asia.” The project helped institutionalize public-private partnership as a business model in the country. Since the deal’s closure, interest in investing in Lao hydropower has swelled, with a “hydro rush” ensuing as dam builders and contractors, power utilities, and consultants descend on the country. Moving forward must be done in a methodical and careful way, based on a sector strategy and plans, so that opportunities are pursued on the basis of sustainability, affordability, and benefit sharing. Path-breaking and wide-reaching reforms have been achieved in public financial management in Lao PDR; reform momentum has been sustained, supported by an authorizing political environment and significant strides in implementation capacity. The government’s commitment to reforms has been matched by development partners’ willingness to provide technical and financial support for reform implementation. Embedding the NT2 revenue-management arrangement in the broader Public Financial Management Strengthening Program has helped keep work largely on track. The priority programs eligible to receive NT2 revenues have been identified. The challenges going forward will be to track expenditures, monitor performance, audit expenses, and continue the impressive progress toward creation of a well-developed public financial management system, so that Lao PDR can transparently and productively use the revenues from NT2 to benefit its people. Implementing the programs that address social and environmental impacts, which involves introducing behavioral and mindset changes, has taken longer than building the dam itself. After some bumpy starts and myriad changes and adjustments, the implementers now appear fully geared up to deliver longerterm results.