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dam-l LS: New report on Hydro in Laos

POWER STRUGGLE: The Impacts of Hydro-Development in Laos.

A new report by International Rivers Network

Acting on the advice of the World Bank and Asian Development Bank, Laos has
borrowed millions of dollars to develop its hydropower resources for export
to Thailand. In spite of the government's hopes that this will fuel
national development, there are already signs that the strategy is not
working.

Power Struggle: The Impacts of Hydro-Development in Laos provides a
comprehensive analysis of the economic, social and environmental impacts of
hydropower development in Laos. Based on field visits and interviews
conducted in 1998, Power Struggle contains six case studies of hydropower
projects at various stages of implementation. 

The report identifies fundamental problems with how hydropower development
is proceeding in Lao PDR, such as poor economic viability, forcible
resettlement, uncontrolled logging, inadequate compensation for affected
people, and poor quality environmental impact assessments. 

The report includes the following case studies:   
Nam Theun-Hinboun   
Nam Leuk   
Nam Theun 2   
Houay Ho   
Xe Pian-Xe Namnoi   
Xe Kaman 1 

68 pages, photos, maps. 

Cost: $15 plus $2 for shipping within the US, $3.50 Canada and Mexico, and
$7 shipping overseas. 

To purchase this report, go to www.irn.org (secure server) or send in the
following form with a check in US dollars or your credit card details:

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Report Synopsis 

Chapter 1 of this report documents the history of dam plans for Lao PDR and
looks at the macroeconomic impacts of the proposed hydropower strategy. The
current economic crisis in Thailand points to increasing uncertainty that
the benefits promised to Lao PDR will be realized. Existing schemes are
running into financial problems, calling into question the economic
viability of large dams in Lao PDR. 

Chapter 2 analyzes the Nam Theun-Hinboun Hydropower Project, a 210 MW
trans-basin river diversion project located in Bolikhamxai and Khammouane
Provinces of central Lao PDR, which was officially opened on April 4, 1998.
The project was partially financed by the Asian Development Bank (ADB) and
the Norwegian government, together with other public and private sources,
as a Build-Operate-Transfer (BOT) joint venture. An independent researcher
visited the project site in March 1998 and documented the severe and
unmitigated impacts being experienced by villagers as a result of the dam,
including declines in fish catches, transportation difficulties, flooding
of vegetable gardens, and erosion of fertile river banks. The ADB and the
Norwegian and Swedish power utilities involved in the project have only
recently admitted that the project has had serious impacts on peoples'
livelihoods and that villagers deserve compensation for their losses. 

Chapter 3 looks at the Nam Leuk Hydropower Project, a 60 MW dam located
within the Phou Khao Khouay National Biodiversity Conservation Area in
Vientiane Province and the Saysomboon Special Zone. Funding for this $130
million project, which is entirely owned by the Lao government, has come
mainly from loans issued by the Asian Development Bank and the Japanese
government. Construction on Nam Leuk began in early 1997 and is expected to
be completed by 1999. Problems have plagued the project from the outset,
including two sub-standard environmental impact assessments,
badly-regulated logging operations, and initially poor standards for road
and dam construction, which forced the ADB to halt the project for several
months in 1997. The project is now facing a $20 million cost overrun due to
the substandard construction work. 

Chapter 4 examines the Nam Theun 2 Hydropower Project, the largest and most
controversial of all the hydropower projects planned for Lao PDR. Situated
in Khammouang Province in central Lao PDR, the $1.2 billion BOT scheme is
being developed by Electricite de France, Transfield Holdings of Australia,
and three Thai companies in association with the Lao government. The
project is currently stalled until the following are established: a Power
Purchase Agreement with EGAT, a concession agreement with the government,
and a decision from the World Bank on whether to grant guarantees and other
financial assistance to the project. Major concerns have centered around
the economic feasibility of the project given the huge construction costs
relative to the size of the Lao economy. The project's cost is three times
the national budget of Lao PDR, and virtually equivalent to Lao PDR's
annual GDP. 

Chapter 5 documents the Houay Ho Hydropower Project, a 150 MW transbasin
diversion scheme located in Champassak and Attapeu Provinces of southern
Lao PDR. Houay Ho was built and funded by the Korean company Daewoo and was
completed at the end of 1998, although it will not start selling power to
Thailand until September 1999. By all accounts, the Lao government will
derive very little benefit from this project despite the fact that it owns
a 20 percent stake. The project is also reportedly running into financial
difficulties. Meanwhile, resettlement of mostly ethnic minority Nya Heun
people from the reservoir and watershed areas has taken place under very
poor conditions, and people are suffering from a severe lack of food, a
shortage of arable land, and insufficient clean water. Project
implementation has resulted in extensive logging without apparent benefit
to either local citizens or the Lao people as a whole. 

Chapter 6 looks at the Xe Pian-Xe Namnoi Hydropower Project, a series of 3
dams and river diversions in a remote area of the southeastern Bolovens
Plateau in Champassak Province that will cost over $1 billion and generate
438 MW of power. South Korea's Dong Ah Construction Industrial Group has
been the main partner in this joint venture BOT project. Currently, the
project is stalled whilst Dong Ah, also facing financial difficulties at
home, waits for Thailand to give the green light for negotiation of a power
purchase agreement. Meanwhile, resettlement of ethnic Nya Heun villagers
from the watershed and inundation areas has commenced and is causing
hardship similar to that faced by the oustees from Houay Ho. 

Chapter 7 looks at the 468 MW Xe Kaman 1 Hydropower Project which would be
located in eastern Attapeu Province in the far southeast of the Lao PDR.
The project is being developed by Austral-Lao Power (ALP), a company spun
off from HECEC, a former Tasmanian state-owned company that was privatized
in 1996. The process by which ALP gained the project concession appears to
have violated established Lao government laws and procedures for the
granting of concession agreements for large infrastructure projects. Whilst
construction has not yet commenced and the consortium has no power purchase
agreement with EGAT, logging of the reservoir area is planned to start in
1999, and resettlement of ethnic minority villagers in both the watershed
and reservoir areas has already commenced. Many observers fear that the
project is a logging scheme in disguise. 

The concluding chapter points to some similar and very fundamental problems
with all of the projects examined in the report, including anticipatory
resettlement under very poor conditions, uncontrolled logging, inadequate
compensation for affected villagers, problems with regulation and the
conduct of environmental impact assessments. A fundamental rethinking of
Lao PDR's economic development strategy is recommended, as well as
far-reaching reforms to ensure that any future hydropower development is in
the best interests of the country as a whole. 

 



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Aviva Imhof
South-East Asia Campaigns
International Rivers Network
1847 Berkeley Way, Berkeley CA 94703 USA
Tel: + 1 510 848 1155 (ext. 312), Fax: + 1 510 848 1008
Email: aviva@irn.org, Web: http://www.irn.org
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