November 22, 2000

A major obstacle to the proposed 1,069-megawatt, $1.2 billion, Nam Theun 2 dam is the World Bank’s hesitancy to underwrite the project, largely due to environmental concerns.

Bangkok (AP) – Laos began a public hearing Wednesday on a proposed major hydropower dam, viewed by the government as a keystone of its development plans but assailed by activists as environmentally unsound, officials said.

Deputy Prime Minister Bounyang Vorachith, who is also minister of finance, opened the two-day workshop in the capital Vientiane, describing the proposed 1,069-megawatt Nam Theun 2 dam as “the highest priority for the Lao government.”

The project developer, the Nam Theun 2 Electricity Consortium, is presenting a final environmental assessment and management plan in a bid to quell fears over the impact the dam could have on biodiversity and local communities.

“The Lao government is very pleased with the study and the proposed mitigating actions,” Bounyang was quoted as saying in his speech received in Bangkok.

“A new standard has been reached which will minimize negative impacts and bring the upmost benefits to Laos,” he said.

Laos, a mountainous country crisscrossed by rivers, has made hydroelectric projects the core of its development policy to leave the ranks of Least Developed Countries by 2020.

A major obstacle to the $1.2 billion dam is the World Bank’s hesitancy to underwrite the project, largely due to environmental concerns.

The project has also been stalled by the Asian economic crisis, which dampened the demand for electricity in Thailand, set to be the sole client for power from Nam Theun 2.

Earlier this year, Laos and Thailand agreed on a price for the electricity, putting the project back on track.

The dam site, 250 kilometers east of Vientiane in the central province of Khammouane, would be the second on the Theun River, following the opening of the 210-megawatt Theun-Hinboun dam in April 1998.

International environmental groups have assailed the proposed development, which would flood a 450-square kilometer area known as the Nakai Plateau.

But NTEC say their mitigation measures would stop destruction of forests in the watershed of the river by local people.

Jean Christophe Delvallet, the NTEC Project Director, said that total expenditure earmarked for environmental and social aspects during construction amount to about $70 million.

NTEC consists Electricite de France (F.EDF), Transfield Holdings of Australia and two Thai companies, Electricity Generating PCL (H.EGA) and Italian-Thai Development PCL (H.ITD). The government of Laos would also have equity in the project.

Last week, the World Commission on Dams published a major report critical of large-scale dams, which it said have often led to loss of forests, wildlife and aquatic biodiversity.

An estimated 40 million to 80 million people have been displaced by dams worldwide while the livelihoods of many more living downstream were affected but not recognized, the report found.

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