A proposed $1.3 billion dam and hydroelectric power project appears to the government of Laos as a way to earn income by selling power to Thailand. Critics say the ecology of two major river systems in Laos will be altered if the Nam Theun 2 Hydroelectric Power Project is built, crucial documents have not been made public, and the people who would be affected by the dam have never been consulted.
The Nam Theun 2 Hydropower Project involves construction of a 50 meter (162 foot) high dam on the Theun River, a major tributary of the Mekong. Water would be stored in a reservoir on the Nakai Plateau and diverted to a powerhouse, before being released into another Mekong tributary, the Xe Bang Fai.
On behalf of the Communist government of Laos, the World Bank, in partnership with the Asian Development Bank, organized a series of workshops on Nam Theun 2 as part of its effort "to engage more directly with international stakeholders," the Bank says.
The workshops in Bangkok, Tokyo, Paris and Washington over the past two weeks were sponsored by the World Bank, which says it is trying to decide whether or not to provide funding for the project.
One dam already exists on the Theun River, upstream of the proposed Nam Theun 2 project. (Photo courtesy Statkraft SF)
Ian Porter, the World Bank's country director for the Lao Peoples Democratic Republic said the workshops are the latest step in what has been "an unprecedented process of research, consultation, and disclosure of information on a single project," for the Bank.
"The intensity of this effort reflects our strong desire to ensure that the proposed project would deliver real, durable benefits for the people of Laos," said Porter. "That is the only basis on which we would support it."
At the Bangkok and Tokyo workshops Dr. Somboune Manolom, permanent secretary of the Loatian Ministry of Industry and Handicrafts built the case for why Nam Theun 2 is needed.
He said that 70 percent of the Lao people live on less than $2 a day; 40 percent of villages practice slash-and-burn agriculture; 70 percent of the labor force has no education or did not finish primary school; 40 percent of children are malnourished and one in 10 will die before the age of five; half the population does not have access to clean water."
"One in four adults will die by age 40 and average life expectancy is 59 years," Manolom said.
"These are sobering statistics," he said. "While many of these indicators are improving, much remains to be done, which is why rural development and poverty reduction programs are so important to my government. Nam Theun 2 has the potential to deliver a significant and predictable stream of revenue that would have a very clear positive impact on national development."
But civil society organizations have "no confidence that the Nam Theun 2 project will deliver its promised benefits or that the project’s risks can be managed," said the International Rivers Network (IRN). "The World Bank should not support the Nam Theun 2 project," the group said.
The California based dam watchdog organization says the Nam Theun project would dispace about 5,700 indigenous people living on the Nakai Plateau who would be evicted to make way for the Nam Theun 2 Dam and its reservoir.
Another 150,000 people depend on the Xe Bang Fai River for their livelihoods. The IRN says they would suffer from destruction of fisheries, flooding of riverbank gardens and other impacts. "These people have never been consulted, let alone given their consent or agreement to the project," the IRN says.
The project is being developed by Electricité de France and two Thai companies in cooperation with the Lao government and will generate foreign exchange for Laos by selling the power to Thailand. The World Bank and other potential donors claim that the revenues will be used for poverty alleviation activities, but critics are skeptical based on the Lao government’s track record.
In an August 2 letter to World Bank Vice President for the East Asia and Pacific Region Jemal-ud-din Kassum, 16 civil society groups expressed their reservations about the hydropower project. They wanted the Bank to release pivotal documents at least 60 days before the consultations began, but the documents still have not been made public.
The groups wrote that they want to see the complete Power Purchase Agreement signed in 2003, the complete Concession Agreement, the World Bank’s analysis of alternative options for Laos’ sources of growth and poverty reduction, the Bank’s economic and financial analysis of the Thai and Laotian power markets, the Bank’s economic and financial analysis of the project and its macroeconomic impacts on Laos, the Power Sector Development Plan for Laos, and the Bank’s evaluation of hydrological risk as it relates to project performance and revenue.
In addition to international consultations, the civil society groups say meaningful consultations with the affected people inside Laos should take place.
"We wish to make it clear that international consultations are not a substitute for an open and credible consultation process in Laos, which respects the rights of Laotians to participate in decisions that affect them," the groups wrote in their letter to the Bank.
"Because of the Lao government’s strong support for Nam Theun 2, all debate has been stifled in the country. International NGOs based in Laos dare not criticize Nam Theun 2 for fear of government reprisals," they wrote.
"Under these conditions, a meaningful and informed consultation about hydro development is not possible within Laos and the Bank is proceeding without a complete accounting of project risks and costs," the letter states.
In Paris on Tuesday, more than 100 people from government, civil society, the donor community, the private sector, and the media in France and other European countries gathered to consider the project.
"We don’t have many alternatives to promote the kind of growth we need to reduce poverty,” Somdy Douangdy, Lao PDR's Vice Minister of Finance told the workshop.
The Xe Bang Fai River winds across Laos. (Photo courtesy Nam Theun 2 Hydropower Project)
"As a mountainous, land-locked and sparsely populated country," he said, "Lao PDR cannot easily develop large scale agriculture or labor intensive industries. Nor would it be sustainable to rely on logging its forests."
“We rely too much on Official Development Assistance," Douangdy said. "We, as a country, want to stand on our own feet, generate our own revenues, have our own source of income which we could use for our development priorities.”
Nam Theun 2 would enable Laos to export 995 MW of electricity generating capacity and electrical energy to the Electricity Generating Authority of Thailand.
The hydroelectric power project would also supply 75 MW of electricity to Electricité du Laos for domestic use.
The project is expected to generate annual revenues of US$13 million in the first year of operation with annual revenue growing to about US$150 million by the year 2033, the Bank says. "If the revenues are spent efficiently, accountably, and transparently, NT2 could provide significant, incremental support to Lao PDR’s poverty reduction and biodiversity conservation efforts."
But the conservation groups say the hydropower project, located in and adjacent to one of the largest remaining tropical forests in mainland Southeast Asia, will have adverse impacts on biodiversity.
At all the workshops, civil society groups repeated requests for the disclosure of key economic documents.
Workshop participants raised over 80 questions about the proposed project, mainly about social and environmental issues - resettlement, livelihood options, downstream impacts, fisheries, and natural habitats.
But even so, IRN says, at workshops in Bangkok, Tokyo and Paris questions from the floor were "ignored or answered only superficially, and moderators were biased and did not allow for views critical of the project to be fully expressed."
"Despite World Bank claims that it has not yet made a decision on whether or not to support the project, the World Bank staff present at the consultations defended the project and the Lao government rather than acknowledging the many legitimate concerns of the participants," said the IRN. "These workshops cannot and should not be considered credible international consultations, but rather promotional exercises for the project developers."
The financial institutions said they remain "committed to transparency and to ongoing dialogue with stakeholders," and promised to release the documents for public review.
When they are released they will be online here.
"This is not a project that the international financial institutions are taking lightly,” said Christian Delvoie, director of infrastructure in East Asia at the World Bank. “We have learned from the past and are applying a more comprehensive approach to project preparation and implementation, and integrating environmental and social aspects into the overall project costs and implementation schedule."
In the Laotian capital of Vientiane on September 24 the Lao PDR government will host a wrap-up workshop.
The civil society groups that signed the August 2 letter are from Australia, Canada, Germany, Italy, Japan, Norway, Sweden, Thailand, the United States. Read the letter online at: http://www.irn.org/programs/mekong/NamTheun2Letter.pdf
Visit the Nam Theun 2 Central Headquarters at: http://www.namtheun2.com/
