The document discusses potential options for establishing a fund to support management of the Nam Ngum River Basin in Laos. It outlines four options: 1) Mainstreamed funding through existing government budgets, 2) A stand-alone Nam Ngum River Basin Fund, 3) Creating a window for the river basin within an existing umbrella fund like the Environment Protection Fund, or 4) Establishing the river basin fund as a sub-fund within a new national umbrella fund for river basin funds. Each option is then evaluated in terms of its design and structure, potential funding sources and administration.

1. Options for the
Nam Ngum River Basin Fund
Mekong Forum on Water, Food and Energy
7-9 December 2011, Phnom Penh, Cambodia
Souphasay Komany
Acting Director
Nam Ngum River Basin Committee Secretariat
Department of Water Resources
Ministry of Natural Resources and Environment, Lao PDR
Email: souphasaykomany@yahoo.com and komany.s@gmail.com 1

2. Legal and Institutional Concerns
Decree No. 293/PM on Establishment and activities of River
Basin Committee; Dated June 15, 2010
Article 12 : Fund
The River Basin Committee has a fund for river basin
management and development, which gains from:
1. the government budget,
2. grant assistance
3. service charges, fine and;
4. contributions from water resources developers
in the river basin based on the principle of
“Polluter Pay”.

3. Review of Existing Funds in Lao PDR
Government Run-Funds
Autonomous fund Budgetary Funds
• Environment Pro tection • Forest and Forest Resources
Fund (EPF) Development Fund (FRDF)
• Poverty Reduction Fund • Road Maintenance Fund
(PRF) (RMF)

4. Summary of the Government-run Funds
Autonomous Funds Budgetary Funds
• Chair by Deputy Prime • Chair by Minister
Minister • Realize on national annual budget
• Realize on Donors assistance (approve by NA)
and contributions • Fund flow through Treasury Depart.
• Special account for fund flow MOF
and financing • Financing through annual budget
plan of Ministry under which, the
• Financing through proposals fund is running
(large sub grant approve by
• Audit is required as necessary
the Chair and Small approve
(occasional)
by Fund Office Director)
• Annual auditing required

5. Eg. of Existing Funds Operations
Poverty Reduction Fund:
– Fund Type: Stand-alone
– Structure:
Board of Directors
→ Central PRF
→ Provincial PRF
→ District PRF
→ Village Clusters
– Encompasses 5 Main Sectors:
• Education;
• Public Work and Transport;
• Public Health;
• Agriculture; and
• Capacity Development for Communities.
– Sources of Finance: Donor Grants and Loans.
5

6. Eg. of Existing Funds Operations
Forest and Forest Resources Development Fund:
– Fund Type: Public Mainstreamed Funding.
• 2 Mil. US$ / Year, which retains 20-30% at central level for administration, the remaining
is channeled to local administration.
– Structure:
• National Assembly Approval
• → Management Committee of the FDF (let by Ministry of Agriculture and Forestry)
screens the Fund Application under the format of Ministry of Planning and Investment
• → Ministry of Finance Allocation.
– Sources of Finance:
• Public Budget.
• Note that the fund is not extracted from selling of seized illegal logs, non from forest
clearance for road construction, and forest tourism.
6

7. Eg. of Existing Funds Operations
Road Maintenance Fund:
– Fund Type: Public Mainstream Funding.
• 30 Mil. US$ in 2009
– Structure:
• Executed by Ministry of Public Work and Transports
• Main Account is deposited at National Treasury of Ministry of Finance and
Subsidiary Accounts are deposited at Provincial branches of BCEL Bank (Public
Bank)
– Sources of Finance:
• Fuel Tax (420 LK / Liter or 5.25 US Cent / Liter).
• Over-load Fine;
• Annual fee on Heavy-load Truck Tax (Being cancelled)
• Road –Bridge Charges (Being cancelled)
• Trans-national transportation Charge (Being cancelled)
• Contribution from public and private sectors and international organizations
(Being cancelled)
7

8. Eg. of Existing Funds Operations
Environmental Protection Fund:
– Fund Type: Stand-alone
– Structure: Chaired by Deputy Prime Minister and Executed by Board of
Directors let by Ministry of Finance.
• Window 1: Policy implementation and capacity enhancement (PICE).
• Window 2: Biodiversity and community investment (CBI).
• Window3: Pollution Control.
• Window4: Water Resources (being considered)
• Window5: Sustainable Land Resources Management (being considered)
– Sources of Finance:
• Grant
• Loan with low interest for environment management (wastewater treatment,
recycling process, etc.)
• Co-finance with other donor agencies.
• Engagement and Contributions from Developers;
• Etc.
8

9. Eg. French River Basin Fund
Study on French River Basin “Ear-marked Charges”:
» Fund Type: Stand-alone
» Structure: Executed by Loire and Breutany River Basin
Authorities
» Sources of Finance:
• Applying Polluters Pay Principle, which most of the
charges are from domestic and industrial wastewater
discharge fee.
• Economically analytical-based charging design.
9

10. Approach for Designing
Practices of Funding in Laos
International best practices
Funds set up to manage Environment Protection
government & donor budgets Fund (stand-alone Fund)
Poverty Reduction Fund
Funds set up to manage
(stand-alone Fund)
user fees & service charges
Funds set up to manage Road Maintenance Fund
voluntary contributions (Budgetary Fund)
Forest and Forest
Multi-source funds Resources Development
Fund (Budgetary Fund)
Fund Establishment

11. Key issues and considerations
• NNRBF must be consistent with the legal and institutional structure of
the NNRBC and its Secretariat
• NNRBF can only attract financial resources that are directly linked to its
mandate and services that it will deliver to others
• NNRBF will have to be careful of being perceived as competing against
other agencies and organizations for scarce funding
• Even where new funds are generated, NNRBF may not be able to
retain them
• NNRBF will be wide-ranging in its sources, use and targets - requires
flexibility
• Need to be realistic about the timing of fund set-up and funding flows
11

12. OPTION #3: OPTION #4:
OPTION #1: OPTION #2:
NNRB WINDOW IN NNRB SUB-FUND
MAINSTREAMED STAND-ALONE
EXISTING IN NEW UMBRELLA
FUNDING NNRBF
UMBRELLA FUND FUND
Design, structure and management
No separate fund.
Sectoral budgets
and special Special account for
programmes of Funding window
MoNRE is set up by National RBF, with
relevant line created under the
the MoF, NNRBF as one sub-
agencies allocate EPF, earmarked for
earmarked for the fund under this
funds for the NNRB
NNRB
implementation of
NNRBP activities
12

13. OPTION #3: OPTION #4:
OPTION #1: OPTION #2:
NNRB WINDOW IN NNRB SUB-FUND
MAINSTREAMED STAND-ALONE
EXISTING IN NEW UMBRELLA
FUNDING NNRBF
UMBRELLA FUND FUND
Fund administration
Uses existing Sinking fund: draw down a pre-determined amount of funds over a
government specified time period
budget mechanism
Endowment fund: invest the capital and spend the interest earned
Annual budget
Replenishable fund: permit for new sources of funds or income to
allocation
be periodically added
Special Revolving fund: give out credit or loans, and return the interest
programmes and and capital repayments to the fund for further lending or
projects disbursement
13

14. OPTION #3: OPTION #4:
OPTION #1: OPTION #2:
NNRB WINDOW IN NNRB SUB-FUND
MAINSTREAMED STAND-ALONE
EXISTING IN NEW UMBRELLA
FUNDING NNRBF
UMBRELLA FUND FUND
Funding sources
Existing sectoral Government funds
funding (State
budget) International funds
New extra-budgetary sources of funding
New/ earmarked • Service charges
funding comes only • Payments for ecosystem services (PES)
from specific private
and international- • Private sector contributions
funded projects • Other voluntary and regulatory sources
14

15. Government budget 
Service fees and user fees ?
Royalties 
Fines ?
Payments for watershed services 
Payments for other ecosystem services ?
Carbon finance ?
Fiscal transfers ?
Contributions from water developers 
Biodiversity offsets 
Other corporate sponsorship 
International development grants 
Interest from investments ? 15

16. MAINSTREAMED FUNDING
STAND-ALONE NNRBF
NNRB WINDOW IN
EXISTING UMBRELLA FUND
NNRB SUB-FUND IN NEW
UMBRELLA FUND 16

17. Thank You
17