The World Bank-backed Nam Theun 2 (NT2) hydropower project, which displaces 6,200 villagers, is set to start operation in December 2009 with a generating capacity of 1,070 megawatts, 95 percent of it for export to Thailand.

Workers on Thursday blocked a tunnel that had diverted the Nam Theun river during construction, and the dam gates will be closed in June, allowing the reservoir's full inundation in this year's rainy season, officials said.

"The project is well on track and impoundment can begin this wet season," said Lao energy department deputy head Sychath Boutsakitirath.

"We are delighted with the progress of the project as it represents a vital contribution to the Lao economy and the Lao people and will play a substantial role in helping the government meet its poverty alleviation goals."

Backers of the 1.45-billion-dollar Lao-French-Thai project say it will earn income that Laos, one of Asia's poorest countries, can use for development.

Critics point to the resettlement of 6,200 people to less fertile areas and the impact turbid river waters and erosion will have on fisheries and communities living downstream from the country's largest dam.

World Bank Southeast Asia director Ian Porter wrote in an article this week that, as the reservoir begins to fill, "it will come under increasing public scrutiny and, if history is a guide, increasingly polarised judgment."

With the construction project 85 percent complete but villager resettlement still ongoing, he said project developers had learnt from NT2 "that the engineering side can easily outpace the social and environmental measures."

In the long run, however, Porter pledged: "Our commitment... has been, and remains, absolute: the poor people of Laos, and especially those directly affected by this project, will benefit."

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