Probe International Mekong Press Backgrounder #4
October 1, 1996
EGAT cancels plans to purchase power from controversial dam in Laos
The Electricity Generating Authority of Thailand has cancelled plans to purchase electricity from the Nam Theun 2 hydro dam, reports the Bangkok daily, The Nation. EGAT’s announcement may be the final blow for the dam’s developers, who have sunk US$30 million into the project so far but have failed to secure either World Bank or commercial financing.
Without a power purchase agreement with EGAT, the project’s developers, including the world’s largest electrical utility, Electricité de France, and the Australian construction company, Transfield, will be hard pressed to come up with further financing for the US$1.2 billion dam. EGAT, meanwhile, has discovered that it can buy power at home for less than half the cost of power from Nam Theun 2, now that it has opened its grid to private power producers.
EGAT’s cancellation of the deal is also a blow for the World Bank, which has been championing “public-private partnerships” in Mekong infrastructure development since it officially resumed lending to Indochina in 1993. Although not “officially” financing the project, the Bank has worked closely with the Lao government and the project developers since 1995, claiming the project would boost Laos’ GDP by 25%.
If the project had proceeded, it would have sparked a major environmental battle because the area to be flooded is home to the region’s threatened populations of tiger, elephant, white-winged duck and two newly-described species, the large-antler muntjac and the Vu Quang ox. More than 5,000 people, including ethnic Makong and Thai Bo minority communities, were slated for eviction from their ancestral lands to make way for the reservoir. Downstream, at least 27 villages would have been affected by disrupted river flows and the destruction of fisheries.
Probe International is a Toronto-based citizens’ group, supported by 20,000 Canadians, concerned about the social, environmental and economic impact of Canadian aid in the Mekong region.
Categories: Mekong Utility Watch