Laos Hopes World Bank Will Bless Dam
7/28/97
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RELAYED TEXT STARTS HERE:
Headline: Laos Hopes World Bank Will Bless Dam
Source: Patrick McCully
Campaigns Director
International Rivers Network
1847 Berkeley Way
Berkeley, CA 94703, USA
Tel. 510 848 1155
Fax. 510 848 1008
patrick@irn.org (Patrick McCully)
Date: 7/28/97
Author: Satya Sivaraman
ASIA TIMES
ASIA TIMES
Satya Sivaraman, Bangkok, 14th July 1997
Lao officials fear yet more delays in its Nam Theun 2 dam
project in what they say is a move by the World Bank to develop a greener
image for itself.
Government authorities in Laos were hoping last week's national public
workshop on the dam - the third such meeting - would finally be enough to
clinch the political risk guarantee it needs from the World Bank. The
bank, however, in keeping with its tough new line on the environment, is
expected to ask Lao authorities for yet more studies.
Billed by its promoters as a savior for Laos' economy and slammed by
critics as an ecological disaster, the US$1.2 billion hydroelectric power
project, already more than two years behind schedule, seems to be a dam
doomed to eternal delay.
The dam reservoir is expected to flood more than 450 square kilometers in
the Nakai Plateau in the highlands near Laos' border with Vietnam, which
environmentalists have said is an irreplaceable ecological habitat.
Lao government officials, however, have said the World Bank is simply
looking for cheap publicity. As a small nation with little influence, the
officials have said Laos is an easy target for the bank, which is trying
to develop a more eco-friendly image after years of criticism for
promoting big dams all over the world.
"They can't do such arm twisting to bigger countries like China and India
which are working on much larger and ecologically more damaging hydropower
projects," said a senior Lao minister negotiating with the World Bank. He
said the Nam Theun 2 dam was essential for the Lao economy.
Also playing the environment card, he said if the project fell through the
government might be forced to turn to logging to earn foreign exchange.
The project's developers and the Lao government, which signed an agreement
with Thailand to sell electricity generated by the dam, hope to earn up to
US$250 million a year over 25 years after the project's completion, now
scheduled for the year 2002. Commercial bankers are hesitant, however, to
lend money in a small, socialist country for a long-term project with only
one customer - Thailand.
The World Bank, whose guarantees against political risk are crucial
confidence-builders for lenders, has withheld its approval and
demanded a series of studies on the social, economic and environmental
impact of the project.
Environmental groups in the region are skeptical, however, about the
sincerity of the bank's surprisingly hard-line approach on protecting the
environment.
"The World Bank's record of supporting controversial dam projects all over
the world is not inspiring," said a Bangkok-based environmental activist.
He predicted that the bank, after making sufficient public noise, would
finally approve the project. The studies about the dam commissioned by the
Lao government and carried out by so-called independent consultants, he
said, were likely to only endorse mainstream concepts about the benefits
of big dams and use technical jargon to justify the project.
A study on alternatives to the Nam Theun 2 project, for example, tackled
such questions as whether the project could viably sell electricity to
Thailand, how it ranked among other potential power export
schemes from Laos and whether the configuration of the project was the
best in terms of its technical, environmental and social risks. Although a
draft of the study, conducted jointly by consultancies from Germany and
New Zealand, does not reach any major conclusions, it allays fears about
the economic viability of the project.
Thailand's demand for power, growing at more than 12 percent a year, is
more than enough to accommodate the dam's power-generating capacity,
according to the study.
Power exports to Thailand currently represent 25 percent of Laos' total
exports and Lao authorities have so far approved 24 hydropower projects
which together would have a total capacity of 6,59 megawatts.
Preliminary findings of a study on economic impact of the project are even
more upbeat. According to the study, "the project would yield substantial
net benefits to Laos, while at the same time providing the resources that
would be required over the medium term to mitigate the project's social
and environmental impact".
The Nam Theun 2 dam is the largest project currently under consideration
in Laos, representing a total investment about three-quarters as large as
the country's total annual gross domestic product.
The study of the project's economic impact does, however, raise questions
about the competence of various Lao state bodies to use the revenue from
the project effectively in attempts to alleviate poverty and to relocated
the nearly 1,000 families that will be displaced by the dam. Weak
government institutions, lack of trained personnel and potential
conflicts of interest between various state bodies, it said,
could hamper plans to mitigate the social and environmental consequences
of the dam.
Of greatest worry to many environmental groups is the fate of a 3,500sq km
area around the dam site, along the Laos-Vietnam border, where there are
unique ecological habitats. While proponents of the dam argue that revenue
from the project would help protect the area by providing an alternative
to logging, environmentalists contend that development around the area
will only increase chances of logging. While construction of the dam has
yet to begin, logging of the Nakai Plateau is already in full swing.
A draft of the study on the dam's impact on the Nakai Plateau suggests
that the entire area be declared a World Heritage Site by the United
Nations. The study, which recommends a five-year plan costing
US$13.5 million to protect the area, also advises against construction of
new roads or of commercial logging in the area.
As a means of providing alternative livelihoods to people living within
the ecologically sensitive zone, the study recommends a range of village
handicraft industries.