If built, the project would include a 50 meter high dam on the Theun River, a major Mekong Tributary, with an installed generating capacity of 1070 megawatts (MW). Water from the Theun would be stored in a 450 square kilometer reservoir on the Nakai Plateau and diverted to a powerhouse, before being discharged into another Mekong tributary, the Xe Bang Fai. Both the World Bank and the Asian Development Bank (ADB) are considering providing funding to this project.

The objectives of the project are to: 1) generate long-term net revenues and foreign exchange for the Government of Laos; 2) encourage the use of those revenues in support of economic growth and poverty alleviation; 3) fulfill the Government of Laos’ commitment to supply Thailand with 3000 MW of electricity by 2006; and 4) link hydropower development with environmental and social objectives.

Work has begun on the access tunnel which will be used to excavate the pressure tunnel and pressure shaft between the reservoir and power station.

Although the project has not been built, it has already caused significant environmental destruction, as the military-run logging company has logged more than one million cubic meters of timber on the Nakai Plateau to clear the reservoir area. The project is expected to displace 4,500 indigenous people and severely impact the Xe Bang Fai river on which over 120,000 people depend for all or part of their livelihood. The economic viability of the project is highly questionable as 90 percent of the power will be sold to Thailand, whose generating capacity is currently 43 percent more than peak demand and likely will not need the additional electricity.