Mekong Utility Watch

Thirsty for the rivers of Laos

Grainne Ryder
World Rivers Review
December 1, 1994

On the advice of the World Bank, the Laos Ministry of Industry and Handicraft hopes to raise US $2.5 billion in foreign capital, over twice the national GDP, for investment in up to 58 big dams over the next 15 years.

With its own list of 50 potential sites, the Laos government has set a goal to complete 23 dams by 2010. The dams will reroute Laos’ rivers through tunnels and turbines in order to drive industrial growth in Thailand. Lost forever would be the forested river valleys where dozens of distinct ethnic communities now live.

As part of a new agreement for Laos to provide 1500 MW to Thailand, plans call for three projects on the Nam Theun River, the Mekong’s fourth largest tributary: Nam Theun 1, Nam Theun 2, and Nam Theun-Hinboun. (Nam means river.) Combined, the projects will significantly alter the river and the Theun valley, which is home to 70,000 people. Included among these ethnic groups are the Tai Men, Tai Meuy, Tai Pao, Tai Yuang, Tai Senkap, Tai Oh, Tai Khang, and Lao Kaleung.

Fishing

The river and its surrounding forests are the area’s most important assets for the communities of largely self-sufficient people who depend on fish as a major source of food and currency. Where upland fields do not yield rice throughout the year, or in years of poor rice harvests, fish is sold or bartered for rice. Villagers catch up to three kilograms of fish each day during the rainy season.

Approximately 130 species of fish have been identified in Nam Hinboun and Nam Theun Rivers. Productive fisheries such as at Ban Kangvit, just upstream of the Nam Theun-Hinboun Dam site, provide several tons of fish each year for direct consumption and for local fish traders.

Of the three proposed Nam Theun projects, the 400 MW Nam Theun I remains the furthest from realization. Though no formal design or construction contracts have been signed, an initial agreement (called a Memorandum of Understanding, (MOU)) between Laos and the SUSCO Group of Thailand for a build, own, transfer (BOT) lease has been signed. Nam Theun 2 and Nam Theun-Hinboun are further along. If both Nam Theun 2 and Nam Theun-Hinboun projects are completed, the year-round flow in Nam Theun would be reduced by about 50 percent.

Though financing is not yet secured, contracts have been signed for the 600 MW Nam Theun 2 Dam, which will flood about one-fourth of the 1600-square kilometer Nakai Plateau, an area designated by the Lao government as a national biodiversity conservation area. The Plateau is unique for its mosaic of pine forests, grasslands and swamps which serve as important grazing areas for livestock and breeding ground for fowl. With its large, shallow reservoir, Nam Theun 2 will reduce the flow of the river year round, and cut it off completely during the dry season.

Saola

This year, the International Union for the Conservation of Nature recommended to the Lao government that projects which “clearly and severely” affect declared protected areas “should be abandoned.” Nearly 70 percent of the Theun River basin consists of primary forest, a habitat of 17 internationally threatened species such as the black gibbon, sun bear, clouded leopard, tiger, elephant, gaur, and the Vu Quang ox or saola, a species newly identified by scientists in 1992.

Despite decreeing two areas of the Theun River Basin as national biodiversity conservation areas in 1993, government sanctioned logging and preparation for dam sites continues wherever MOUs have been signed. Downstream of the protected areas lies one such project, the Nam Theun-Hinboun dam, which is a joint venture primarily between the Lao government, the Norwegian firm Norpower, and the MDX Group from Thailand.

At the Nam Theun-Hinboun site, project roads have already brought in loggers, poachers, and migrant settlers. Logs from the site are bound for sawmills across the Mekong in Thailand and then on to Japan, Taiwan, and Singapore.

The Nam Theun-Hinboun Dam will flood a 24 and 14-kilometer stretch of the Nam Theun and Nam Gnouang Rivers. Riverside land, which is used by the villagers in the dry season, will become permanently submerged, yet the government has no plans to resettle villages along the river. Releases from the power plant into Nam Hinboun will prolong flooding of low-lying farmland, thus adversely affecting rice production in the area.

Nam Theun-Hinboun Dam has been hotly debated in Norway over the past few years. Environmentalists want NORAD, the Norwegian governmental aid agency, to stop subsidizing the dam industry. Several government agencies, including the Directorate for Nature Management and the State Pollution Control Board, have condemned Norpower’s environmental assessment of Nam Theun-Hinboun as biased and inadequate, pointing out that the dam will destroy fisheries both up and downstream of the site, and will cut off flow in the Nam Theun for at least 3 to 4 months of the year. In response, NORAD has directed additional aid to the dam consortium for supplemental environmental studies.

But NGOs and academics in Thailand and Laos believe that Lao decision makers are ill-informed by dam industry consultants who have a vested interest in promoting dam projects and downplaying environmental costs. Some of the most vital information to consider, they say, isn’t even reproduced in local languages. The feasibility studies produced for the Nam Theun-Hinboun Dam, for instance, were produced in English to attract financiers, rather than inform the Lao decision-making process.

“I am scared we are building new power plants [in Laos] for the inefficient [energy] user in Thailand. The power from such plants is unnaturally cheap because the environmental costs are not included,” warns Dr. Chirapol Sintunawa, an advisor to the Thai Parliament on energy conservation.

To raise the level of both government and public understanding of the projects in Laos, the Lao Women’s Union last year called on concerned citizens in the Nordic countries to set up a committee of government officials, non-government organizations, academics, and journalists “to monitor and review all large projects before they are approved.” In the case of the Nam Theun-Hinboun Dam, which has already been approved by the Laotian government, the Women’s Union suggests that the committee carry out a site investigation to identify and document problems associated with the project.

But just who will be accountable for the social and environmental impacts of schemes built in the BOT model isn’t clear, nor is there an adequate definition of the rights and responsibilities of proponents vs. existing resource users. Already nervous investors are likely to distance themselves from social and environmental costs as much as possible, while at the same time ensuring themselves against anything going wrong by demanding financial guarantees from the government.

As Director-General of NORAD, Per Grimstad, (formerly of Norconsult) would have it, the recipient government, not outside investors, is responsible “for making sure that all economic, social, and environmental aspects of a project are taken into consideration before a decision on a potential hydropower project is made.”

So far, the Electricity Generating Authority of Thailand (EGAT) has agreed to a price for electricity for the Nam Theun-Hinboun project only. The Nam Theun-Hinboun power company will sell to EGAT for 4.3 cents (U.S.) per kilowatt-hour [Bt.25], a price that World Bank advisors in Vientiane privately admit is too low. Referring to the inevitable mark-up in price that will be charged to electricity consumers in Thailand by EGAT, Viraphone Viravong, project department chief of Electricite du Laos (EdL) told the Thai newspaper, The Nation, “Thailand [EGAT] can make six times more profits from the price of electricity bought from Laos. This is not a fair deal.”

Long a major source of foreign exchange for the Laos government, hydropower generated more than U.S.$17 million in 1994. But sources in Laos believe that the operating costs of the 150 MW Nam Num Dam – the oldest and largest power plant built to date – exceed its electricity revenues. In Thailand, EGAT recently cut the buying price for Nam Ngum electricity because drought and siltation at Nam Ngum Dam have made it less reliable. Nam Ngum’s operation and maintenance costs are heavily subsidized by the Japanese government, and western governments are subsidizing the social assistance programs being carried out in communities adversely affected by the project.

Categories: Mekong Utility Watch, Nam Theun

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