World Bank Attacked for Promoting Controversial Dam
11/6/97
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Headline: World Bank Attacked for Promoting Controversial Dam
Source: Associated Press
Date: 11/6/97
Author: Denis D. Gray, Associated Press Writer
BANGKOK, Thailand (AP) _ The World Bank is going ahead
with loans and guarantees for a dlrs 1.4 billion
hydro-electric dam in Laos, which critics say will be
environmentally destructive and financially risky, it was
learned Wednesday.
The Nam Theun 2 dam, planned for a tributary of the
Mekong River, has emerged as one of Asia's major
environmental battles. It pits developers from half a dozen
nations against conservationists around the world.
The developers appeared to win another round, with the
World Bank decision Oct. 30 to proceed with some loans and
guarantees to investors against actions that might be taken
by the Laos government.
But the World Bank office in Bangkok said the precise
terms of the guarantees have not been finalized and that the
bank's Operations Committee has imposed several conditions
that developers would have to follow.
These include compliance with the bank's program to
minimize environmental and social damage in the remote, once
pristine region of southern Laos.
Details are to be announced by the bank's headquarters
in Washington D.C. in coming days, the office said.
Word of the bank's decision drew immediate fire from
anti-dam activists.
``This is a foolish and irresponsible decision by the
bank. The government of Laos could end up further indebted,
whilst its rivers, forests and the livelihoods of thousands
of people would have been compromised,'' said a statement
from AID/WATCH, an Australian non-government organization.
The San Franciso-based International Rivers Network said
that it was ``foolish for the bank to push ahead with this
highly risky project'' just as Thailand and other Southeast
Asian nations face economic crises.
Thailand is to be the sole buyer of electricity from the
681 megawatt dam, but how much it will eventually purchase
remains highly uncertain.
Thai forecasts for electricity consumption are being
lowered, as are some projections for how much Laos will
earn from Nam Theun.
One of the world's poorest nations, Laos hopes to become
to Southeast Asia in electricity what Kuwait is to the
Middle East in oil.
Dozens of dam projects are on the drawing boards, and
proponents say that with its limited resources the country
must turn to hydro-power to uplift its economy. The country's
other major export items are opium and logs.
Environmental groups say the dam will flood forests where
rare species still survive and uproot some 4,500 people from
their villages and traditional way of life. The dam's
reservoir will cover 450 square kilometers (174 square
miles) of the Sakai Plateau, an area of great, but
increasingly degraded, bio-diversity.
The World Bank, stung by past criticism for backing
destructive dams, has moved with caution on the Nam Theun
project, demanding numerous studies and participation in the
decision making by Laotians at various levels of society.
Needing the World Bank's blessing is a multi-national
consortium headed by Transfield, an Australian engineering
firm which was granted the lead role by Laos in 1993.
Others in the consortium are Electricite de France, three
Thai firms and the government of Laos, which would hold an
equity stake of about 25 percent in the project.
The bank's caution, which has greatly slowed progress on
the dam, has not satisfied a number of the environmental
groups. They claim some of the environmental and social
impact studies are flawed, and that meaningful public
decision-making is a farce in Laos, a Communist Party-ruled
state.
``The Bank should surely understand by now that
promoting mega-projects in poor and indebted countries is a
recipe for economic and environmental disaster,'' said the
International Rivers Network.
Hurdles remain before any construction can begin. The
final financing package will not be submitted for approval
by the Bank's board until mid-1998.