Mekong Utility Watch

Military Logging Company Expects World Bank Funds to Police Forests and Forcibly Resettle Ethnic Communities

Probe International Mekong Press Backgrounder #7

October 2, 1997

Military Logging Company Expects World Bank Funds to Police Forests and Forcibly Resettle Ethnic Communities

The World Bank is expected to vote this month whether or not to support resettlement and conservation in the Nam Theun 2 watershed in Lao PDR.

If approved the World Bank would find its money going to the Bolisat Pattana Khet Phoudoi (BPKP), a military logging company, which has already earned hundreds of millions of dollars from logging the dam’s reservoir and now expects to profit from dam-related conservation and forced resettlement.

The BPKP controls the timber trade and rural development in the country’s central highlands which includes the Nakai Plateau, site of the Nam Theun 2 dam and reservoir, and the proposed 3500-square kilometre Nakai-Nam Theun National Biodiversity Conservation Area (NBCA).

In anticipation of World Bank funding, the BPKP has suspended its road-building and logging inside the NBCA and restricted indigenous peoples’ use of the area.

According to the Vientiane-based chapter of the World Conservation Union, the BPKP’s ban on traditional cultivation has contributed to food shortages and, earlier this year, armed conflict with Hmong farmers.

(Locally, the BPKP has been dubbed the bolisat tewada or ‘company of the gods’ in reference to its ‘god-given’ monopoly on logging and its campaign to outlaw forest use by indigenous communities.)

With Bank funding for vehicles, patrol boats, access roads and ranger stations, the BPKP plans to tighten its control over the Nam Theun watershed by forcing the 7,000 indigenous people now living in the area into several BPKP-controlled resettlement sites.

Project planners have failed to recognize the importance of the BPKP to the dam project, according to a report prepared for the World Bank by Washington-based consultants, Louis Berger International.

The consultants also found that “it is not at all clear how BPKP’s role should or will evolve as its principal source of revenue — logging and wood products — declines.”

Specifically, the consultants’ concerns about the Bank’s would-be partner are summarized as follows:

The International Monetary Fund is suspicious of the BPKP’s finances and has criticized its lack of fiduciary accountability to the central government. Under the country’s new law, all state-owned enterprises are required to have a Board of Directors and a Chief Financial Officer appointed by the Ministry of Finance but the BPKP has neither.

As a result of its accelerated logging in the Nam Theun 2 area, the BPKP’s earnings reportedly jumped from US$88 million in 1995 to US$127 million in 1996. In both those years, the BPKP paid only US$20 million in timber royalties to the central government.

The BPKP’s commercial logging interests are likely to undermine its ability to manage the Nakai-Nam Theun NBCA for conservation purposes. About 90 percent of the BPKP’s revenues, over US$200 million since 1995, come from logging and wood-processing. Once the BPKP has exhausted its supply of timber from the dam’s 500-square kilometre reservoir, it will have a strong economic incentive to continue logging the remainder of the Nam Theun watershed, including the NBCA. This would threaten not only the NBCA but the economic life of the Nam Theun 2 reservoir as well.

The BPKP plans to bid for resettlement-related infrastructure contracts (i.e., land-clearing, road-building and housing), even though it is a member of the government committee that decides on resettlement-related infrastructure budgets and contracts, putting it in another conflict of interest position.

The BPKP claims to have spent US$12 million over the last three years on rural development infrastructure but there are no records of its expenditures.

Categories: Mekong Utility Watch

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