Mekong Utility Watch

Development trends in the Mekong Region

November 30, 1999


To promote economic growth in the Mekong region, the international financial institutions, such as the World Bank and the Asian Development Bank (MDBs), are encouraging large-scale, capital-intensive infrastructure development with private sector participation. To raise the enormous amounts of capital required for the plans, the MDBs are now rallying for private investment in what have traditionally been publicly financed projects (dams, railways, roads etc) Northern bilateral donors to the re-constituted Mekong Committee, now known as the Mekong River Commission, are also promoting private sector participation in large-scale infrastructure development. Their international advisors are particularly promoting a massive expansion of hydropower dams, and the financing of affiliated planning, data collection, monitoring and mitigation programs.

The Mekong governments, meanwhile, are giving international consortia (made up of private companies and state utilities from the North) permission to exploit river systems for hydropower development.

Ironically, Northern donors are now using their development resources to back Northern companies in joint ventures with ailing state enterprises originally established with World Bank support (the Electricity Generating Authority of Thailand (EGAT) and the Electricite du Laos for example).

We predict that hydropower development in the Mekong region, if implemented as promoted by the Asian Development Bank and the World Bank, will produce similar problems to those of the past: private monopolies (instead of public monopolies) and poorly designed regulatory regimes which lead to excess capacity, environmental destruction, inefficient energy use, and the displacement and impoverishment of rural communities; and pricing regimes that discriminate against consumers in favour of the private sector promoters. Furthermore, we predict that with heavy subsidization from the MDBs, the bilateral aid agencies, the export credit agencies, and with extraordinary powers of expropriation, Mekong hydropower developers would be able to externalize the real costs of their schemes.

With such protection from the real costs of their schemes, proponents will continue to advocate large-scale hydropower as a cheap and environment-friendly source of electricity. But for the local communities who have had their resources expropriated — their homes and land flooded, their forests and fisheries destroyed — big dams and diversion schemes will continue to be neither cheap nor environmentally-benign.

Fortunately, there is a growing recognition within commercial banking and private investment sectors that building large hydropower dams in the Mekong region — most of which were planned in the 1960s and the 1970s — are economically unviable and inferior to smaller-scale, flexible, cheaper gas turbine plants that can produce power, where it is needed, without expensive transmission systems.

Yet big dam proponents continue to dominate development planning and decision making arenas in the Mekong region. In part this is due to the longtime links between foreign aid and the hydropower industry, and because unaccountable governments and their international advisors, not local people, are judging what constitutes optimal resource exploitation. Hundreds of thousands of rural communities who depend upon Mekong resources are uninformed and excluded from all planning and decision making affecting the future of their resources. Legally and financially unaccountable to these communities, hydropower proponents are excluding social and environmental costs from their cost-benefit analyses. Without public disclosure and a free press, there has been little opportunity for an informed public debate about development and reconstruction in the Mekong region.

For more information, read this online chapter by Grainne Ryder and Ann Danaiya Usher, “Damming the Theun river,” from the book, Dams As Aid: An anatomy of Nordic development thinking, (Routledge, New York, 1997).

Categories: Mekong Utility Watch

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