Mallesons Stephen Jaques, Clifford Chance, Chandler & Thong-Ek, The Mekong Law Group and Allen & Overy have closed the financing deal for the controversial US$1.25bn Nam Theun 2 hydropower project in Laos.
 
Mallesons Stephens Jacques acted as the adviser to the Government of Lao People's Democratic republic. Partner Paul Cargill led the Mallesons team, which drafted the framework by which the project was to be financed, developed and operated.

The project involves the construction of a 1070MW hydroelectric plant, which will be used mainly to supply power to Thailand. The deal is the largest foreign investment project in Laos to date, and the biggest internationally financed power project in Asia since the 1997 financial crisis.

While the project will undoubtedly boost the struggling Lao economy, environmental and social activists (who have delayed the completion of the project) warn it will seriously damage the local ecosystem and displace thousands of local people.

The government has countered this claim by stating that once the project is operational in 2009, it will generate US$2bn in revenue within 25 years. The Lao government says it will spend this money on efforts to reduce poverty.

Commenting on the social effects of the project Cargill said: "It has been extremely satisfying to be involved in a project with such profound social and economic consequences."

Clifford Chance acted as international counsel for the foreign sponsor consortium and the project company, Nam Theun 2 Power Company, while A&O advised on all aspects of the financing and also liased with the lenders' other advisers, Chandler & Thong-Ek and the Mekong law Group.

A consortium of nine international and seven Thai banks are funding the project, including ANZ, BNP Paribas, Societe General and the Bangkok Bank.