August 12, 1997
Thank you very much for your letter of 29 July 1997 indicating your opposition to “more than fifty large” hydropower dams along the Mekong River and its tributaries. Your interest in Canadian development assistance in Asia and the Asian Development Bank (ADB) is very much appreciated. I am replying to your letter in some detail given your serious and obviously very sincere concerns. I am also enclosing some information on Canada and the ADB on the ADB’s general policy and procedures to ensure its projects have no adverse environmental impacts.
Following receipt of your letter and a number of other similar ones, I reviewed your specific concerns with appropriate ADB professional staff. On the basis of information received, it appears that you may have been misinformed about the extent of the involvement of the ADB in supporting hydropower projects in the Greater Mekong Subregion (GMS). ADB staff have confirmed that:
(1) the ADB is not the leading financier of hvdrodower proiects in the GMS and that the Bank has supported only three small-to-medium scale hydropower projects within the subregion since 1990 with these projects selected after considering alternatives and as least cost options. These projects are: the Theun-Hinbourn Hydropower Project in central Laos; the Nam Leuk Hydropower Project in central Laos; and the Nam Song Hydropower Development Project in northern Laos (with copies of the Fact Sheets prepared by the ADB addressing concerns raised by NGOs prepared by the ADB on the first two and attached for your further reference).
(2) the ADB is NOT financing plans for more than fifty hydropower dams. ADB’s pIans for financing of future hydropower proiects in the GMS to the vear 2000 include only two studies. a feasibility study for one hydropower project in Lao PDR and a prefeasibility study for one proiect in Cambodia.; and
(3) when financing hydropower projects, the ADB has taken steps to consider cumulative impacts of such proiects which it finances which includes: (a) at the project level, the mandatory Environmental Impact Assessment for each project which addresses amongst other things what the expected cumulative impacts will be in quantitative and/or qualitative terms; and (b) at the sub-basin level, the undertaking of studies of two large river basins (Nam Theun, and Xe Kong/Xe San) with these studies to provide information on cumulative impacts in the downstream regions of the Mekong River.
To ensure an appropriate overall frame of reference for (and alternatives to) any proposed new energy projects, the ADB has been involved in assisting in a review of all various energv potential sources and supplies for the GMS. A major milestone in achieving such an informed energy plan was the preparation and publication of the ADB’s two-volume report entitled, “Subregional Energy Sector Study for the Greater Mekong Subregion dated October 1995 (and available to the public at a cost of US$10.00, should you wish a copy). Other ongoing and planned studies will further add to, and update, this “big picture”.
Last but not least the ADB is currently providing or, is planning, technical assistance to Cambodia and Lao PDR to help them rationalize their national energy policies. In Lao PDR this assistance has recently resulted in a more rational, phased approach to private sector investment in energy development projects, with the past practice of ad hoc issuance of Memoranda of Understandings for new hydropower projects now abandoned. In related areas, the ADB has been assisting Lao PDR to prepare a National Water Sector Profile, and has supported a Water Resources Sector Review for Viet Nam.
It appears that the misunderstanding reflected in your letter may have arisen from references in an initial consultant’s study financed by the ADB to identify all potential hydropower and other non-hydropower sources of energy in the Greater Mekong Subregion which included amongst other sources references to some possible hydropower dam sites in Laos. Bank staff have confirmed that the ADB has not agreed to fund the construction of any of the hydropower dam projects identified in this early consultant’s study, with the exception of two mentioned earlier in this letter.
As the Executive Director representing Canada on the ADB’s Board of Directors since 1994, 1 can reassure you that Canada has pressed strongly for the ADB to adopt rigorous policies and procedures to ensure ADB-financed projects have no adverse environmental impact and include necessary measures to mitigate adverse effects of any involuntary resettlement of peoples that may be involved. Such policies have been approved by the ADB Board of Directors, are now in effect and are open for public review. Indeed the ADB is now recognized as having one of the most demanding environmental impact assessment procedures which apply equally to projects it supports in the private sector as well as those in the public sector. The Environmental Impact Assessments for ADB projects are circulated publicly to interested parties with copies sent to all ADB Depository Libraries and listed on the ADB Website 120 days prior to submission for Board approval so interested parties may respond with comments. With strong support by Canada, the ADB Board of Directors has also approved and now has in effect an inspection policy under which individuals and groups directly affected by ADB-supported proiects can have these proiects reviewed by independent experts and the conclusions brought to the attention of the Board of Directors where it is alleged that the ADB has not complied fully with its own policies. Finally, again with the strong support by Canada, the ADB is now developing a new policy to identify how it should take into account the special needs of indigenous peoples with NGOs being consulted in the development of this policy.
In closing I believe that Canadians can be confident about the good work that the ADB is doing with its recent policies and projects to promote sustainable economic and social development in the Greater Mekong Subregion as well as be proud of the role that Canada has played to ensure the ADB addresses the serious concerns expressed in your letter when it designs and implements its projects.
JULIAN H. PAYNE
Executive Director for Canada