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Lesson
It is essential to carefully study and consider less socially and environmentally disruptive options in investment decision making in hydropower. Possible alternatives in future cases, for example, could include river offtake, run of the river, small decentralized hydro systems, and backup from solar and wind power. The choice should be made through a participatory assessment that gives the same weight to social and environmental dimensions as to technical and economic aspects.

Project Number: 37734-013, 37910-014
Project Name: Greater Mekong Subregion - Nam Theun 2 Hydroelectric Project
Report Date:
Lesson
Biodiversity conservation in the context of hydropower projects requires an approach whereby “conservation forest” is balanced with “production forest” as a source of income for affected people. To date, ADB, the World Bank, and international organizations consider many of the village forest activities as failures (e.g., trees are being cut down to the roots) with government advisors having little understanding of forestry practices in relation to biodiversity conservation and sustainable practice.

Project Number: 37734-013, 37910-014
Project Name: Greater Mekong Subregion - Nam Theun 2 Hydroelectric Project
Report Date:
Lesson
Overly prescriptive approaches limit the scope for adaptive management of livelihood restoration programs for project-affected people. Clear recognition of the many risks associated with implementing a complex project in partnership with a relatively inexperienced and limited-capacity government led to a concerted effort to “get everything right,” as it were, before the project even started. That is reflected in the negotiation of a comprehensive and highly detailed concession agreement, a 1,362-page legal document.

Project Number: 37734-013, 37910-014
Project Name: Greater Mekong Subregion - Nam Theun 2 Hydroelectric Project
Report Date:
Lesson
It is important to avoid overly ambitious objectives in project design. The enhancement of biodiversity conservation in NNT-NPA was an overly ambitious objective. The area to be protected involved the entire watershed and an area downstream. Its size challenged the capability and capacity of a number of agencies to plan, implement, and sustain conservation requirements.

Project Number: 37734-013, 37910-014
Project Name: Greater Mekong Subregion - Nam Theun 2 Hydroelectric Project
Report Date:
Lesson
A large, complex development project requires a commensurate and substantive long-term commitment. The exceptionally long preparation and implementation periods (2003–2019) were essential to provide sufficient time for analysis, appraisal, and supervision of a complex project and ensure an eventually successful outcome in a high-risk context.

Project Number: 37734-013, 37910-014
Project Name: Greater Mekong Subregion - Nam Theun 2 Hydroelectric Project
Report Date:
Lesson
Quality project sponsors are essential for success, but their limitations and country capacity constraints also need to be considered. The selection of a well-qualified developer as the primary equity holder in the NTPC consortium appears to have played a major role in the efficient construction and operation of the dam and power facilities with very modest cost and time overruns.

Project Number: 37734-013, 37910-014
Project Name: Greater Mekong Subregion - Nam Theun 2 Hydroelectric Project
Report Date:
Lesson
IFI collaboration can yield a major developmental contribution with a high-risk project in a limited-capacity country. The close and effective collaboration of ADB, the World Bank, and other IFIs from an early stage provided the necessary confidence for the private sector to undertake a pioneering, complex, and large-scale project in a limited-capacity country. Although the total IFI loans and guarantees were modest in scale, the independent evaluation team established that they had been a necessary requirement for the international dollar financiers to extend loans to NTPC.

Project Number: 37734-013, 37910-014
Project Name: Greater Mekong Subregion - Nam Theun 2 Hydroelectric Project
Report Date:
Lesson
The DSPP entity undertook non-operational decisions relating to the company name and accounting practices without gaining the required approvals from the lenders before implementing the decisions. While these matters have been satisfactorily explained subsequently, they raise concerns for lenders seeking to confirm that the project entity is being managed in accordance with the requirements of the loan documents; significant time is expended to work through these issues as they are discovered.

Project Number: 45915-014
Project Name: Dahanu Solar Power Project
Report Date:
Lesson
The hedging policy approved at appraisal did not reflect the foreign exchange hedging instruments available in the local market. When exchange rates deteriorated, the hedging policy and the required sponsor support needed to be renegotiated. It is fairly usual to have rolling foreign exchange hedging requirements, rather than the life-of-loan program that was originally documented, and better investigation of the likely options that would be available to the project could have reduced the work required to adapt to the situation as it arose.

Project Number: 45915-014
Project Name: Dahanu Solar Power Project
Report Date:
Lesson
RPL is a strong company with extensive resources, enabling it to quickly identify appropriate technology, supervise quality construction, and be a good corporate partner within the communities it serves. To meet the requirements of CERC’s tariff regulations, RPL needed to develop and construct a project in a short period of time that would withstand the local climate conditions. The project’s performance above expectations is due to RPL’s decisions about technology, design, and construction quality.

Project Number: 45915-014
Project Name: Dahanu Solar Power Project
Report Date:
Lesson
ADB’s long-term focus on energy sector development in India has supported all aspects of the improving energy situation in the country. Work done by ADB has contributed to policy changes, new infrastructure, and increased private sector participation in the delivery of electricity to end-users. Established knowledge of the local situation, and particular focus on renewable energy enabled ADB to respond quickly to the policy changes supporting solar power and provide timely support to an important client to deliver the first utility-scale solar PV plant in India.

Project Number: 45915-014
Project Name: Dahanu Solar Power Project
Report Date:
Lesson
The timely availability of counterpart funding prevented cash flow problems from arising, which could have delayed project completion. Because counterpart government funding was timely, there were no delays and the project was completed early.

Project Number: 39652-023
Project Name: Gansu Heihe Rural Hydropower Development Investment Program— Erlongshan Hydropower Project
Report Date:
Lesson
The project was the first tranche of the first MFF investment program developed in the PRC.17 Based on the experience from this project, the MFF modality should be suitable for future projects in the PRC where there are discrete components. The MFF enabled sequential construction and financing requirements that were funded by separate tranches, thus limiting unnecessary duplication of administrative effort and approvals.

Project Number: 39652-023
Project Name: Gansu Heihe Rural Hydropower Development Investment Program— Erlongshan Hydropower Project
Report Date:
Lesson
The project demonstrated the importance of retaining qualified and competent consultants at the project preparation stage. Knowledge of the project design and implementation that was transferred from ADB to the government was highly valued, and officials expressed the view that this was more important than the loan financing.

Project Number: 39652-023
Project Name: Gansu Heihe Rural Hydropower Development Investment Program— Erlongshan Hydropower Project
Report Date:
Lesson
Continuity of officials and staff at the executing agency, implementing agency, and ADB, who were involved in the development, implementation, and operation of the project, was maintained throughout the project. This continuity, together with stability in personnel capacity, was an important factor in the success of the project. While this lesson may be self-evident, it is not easily achieved and is often overlooked.

Project Number: 39652-023
Project Name: Gansu Heihe Rural Hydropower Development Investment Program— Erlongshan Hydropower Project
Report Date: