General As the key financial organization in Lao PDR to provide sustainable financing for projects/activities related to the strengthening of environmental protection, the sustainable natural resources management, biodiversity conservation and associated community development, the EPF works closely with the different Government Agencies in providing policy support and subsequently identify investment requirements. For this the EPF ensures that its activities are closely coordinated with all agencies and existing development funds, namely the Poverty Reduction Fund and Forestry Development Fund and others aiming at the complementarities.

ADB Environment and Social Program Loan In the starting phase, the Government has received financial support from the Asian Development Bank (ADB) to establish an US$ 5.7 million endowment fund to operate and maintain its executive office. The financial support was provided through the Environment and Social Program Loan (Loan 1867-LAO and TA 3746-LAO), which intended to support the policy reform agenda of the Government of Lao PDR (the Government) for improved environmental management and social safeguards in the energy and transport sectors. As part of the Environment and Social Program Loan, the EPF was established through the issuing of Prime Ministers Decree 146 on June 7, 2005, the subsequent appointment of the EPF Board of Directors and Executive Director, the approval of the EPF Charter and Operations Manual, and the authorization to set-up authorized bank accounts locally and overseas to invest the EPF funds.

World Bank Environment and Social Project Subsequently, the World Bank (WB) is currently supporting the EPF through the Lao Environmental and Social (LENS). The LEnS Project is designed as a complimentary activity to the NT2 project as stated in the GOLs Letter of Implementation Policy (GLIP) for NT2: We are seeking support from the World Bank for a nation-wide Environment and Social (LENS) Project, addressing the need to mainstream environmental and social safeguards in infrastructure development, strengthen biodiversity conservation in Central Lao, and increase the publics knowledge of and support for environmental management. As further defined in the LEnS Development Grant Agreement between the Lao PDR and World Bank (No H177-LA dated 15 August 2005), the LENS Project has been integrated as specialized financing windows under the Environment Protection Fund (EPF).

The linkage with NT2 Project has been integrated into the LEnS DGA through key-covenants related to the main sub-components. Notably, the covenants are related to the National Policy on Environmental and Social Sustainability of the Hydropower Sector (see Annex VIII), support for the integrated management of the Nam Theun/Nam Kading river basin, the implementation of the Decree on Resettlement and Compensation (see Annex III), Protected Area management, and support for communities on sustainable environmental management activities.

Strategic Plan To sustain the operations and financing opportunities of the EPF, the Executive Office is further expanding its strategic partnerships to seek additional funds and to establish sustainable financing mechanisms. As described in its 5-year Strategic Plan, these will include:

• Grants and Loan from foreign entities, to complement the existing Grants.
• State Budget: Lao PDR has high potential to fund the environment from the natural resources use and activities (hydropower, mining, eco-tourism..), EPF will undertake a study on the fees and surcharges from the resource use that will provide contribution to the EPF.
• Contributions from business and person entities: The contribution from provide sector is highly promising as the GOL provide policy for hydropower sector to contribute to the EPF and many other business developed have agreed with the GOL to contribute to the EPF, the EPF Office will further work with these entities and other GOL agencies about the contribution.
• Interest or benefits accrued from investing the EPF endowment: EPF will invest the fund that will not be immediately used for the EPF activities such as the endowment fund from the ADB.

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