Asian Development Bank

PI letters to ADB-backed Theun Hinboun Power Company

February 28, 2001

Letters of correspondence between Grainne Ryder, Probe International, and Theun Hinboun Power Company General Manager, Mr. Hourihan.

 

[February 19, 2001: Initial letter to Mr. Hourihan, General Manager, Theun-Hinboun Power Company from Grainne Ryder, Policy Director, Probe International]

[February 20, 2001: Reply from Mr. Hourihan, General Manager, Theun-Hinboun Power Company]

[February 28, 2001: Second letter to Mr. Hourihan, General Manager, Theun-Hinboun Power Company from Grainne Ryder, Policy Director, Probe International] ——————————————————————————————-

February 28, 2001: Second letter to Mr. Hourihan, General Manager, Theun-Hinboun Power Company from Grainne Ryder, Policy Director, Probe International

February 28, 2001
Edwin Hourihan
Theun Hinboun Power Company
Nongbone Road
Vientiane, Lao PDR

Dear Mr. Hourihan,

My February 19th letter directs questions about the THPC’s 10-year mitigation and compensation plan to you, as general manager of the Theun Hinboun Power Company, because the ADB now refers public inquiries to your company. (The ADB web site also provides e-mail addresses for two ADB contacts: B.M. Karunaratne, Senior Project Engineer, IWEN, bmkarunaratne@adb.org and Evelyn Panlilio, Assistant (Project Administration), Energy Division Infrastructure, Energy and Financial Sectors Department (West), namleuk@mail.asiandevbank.org, but their addresses are inactive.)

Details about Probe International’s funding, board members, staff qualifications, objectives, principles, campaigns, articles, reports, and books are available on our web site at https://journal.probeinternational.org/. Probe International works to reform taxpayer-financed aid institutions such as the Asian Development Bank, which believes that people in developing countries aren’t entitled to the same environmental standards as Canadians. The bulk of our funding comes from a network of 20,000 citizens across Canada who share our objections to the use of foreign aid for large-scale development schemes – such as the 210-MW Theun Hinboun dam in Lao PDR – that victimize communities, destroy fisheries and other resources upon which people depend for their food and livelihoods, and stifle democratic and sustainable development.

You may also be interested to know that Probe International is a division of the Energy Probe Research Foundation (www.eprf.ca), one of Canada’s leading environmental and public policy research institutes, with expertise in utility reform, environmental law enforcement, gas and electricity regulation, and environmental property rights. Probe International opposed ADB financing for the Theun-Hinboun hydropower project in 1994 because we knew, from experience with aid-financed hydro schemes elsewhere and from our analysis of the Theun Hinboun proponents’ claims, that none of the project proponents would respect the democratic and riparian rights of Theun-Hinboun residents nor were they prepared to take full responsibility for the project’s social and environmental costs.

In 1995, I visited the project site and spoke to local residents who were concerned then that the Theun Hinboun proponents’ promise of “more water, more fish” would not materialize and that, unlike communities living along Mekong tributaries in Thailand, they dare not speak out about their concerns. Since 1995, I have raised concerns about Theun Hinboun with Nordic Hydropower, Nordic consultants, ADB staff, government sources, journalists, and citizens’ groups in Australia, Japan, Nordic countries, the Netherlands, the Philippines, Thailand, and the United States. My October 1999 critique of the Theun-Hinboun project examines the rules for hydropower producers in Norway and reveals that the Theun Hinboun Power Company, partly owned by Statkraft of Norway, has no enforceable standards to which it is committed and does not recognize that citizens of Lao PDR are entitled to the same environmental standards as Norwegians.

Probe International has never claimed to represent citizens of Lao PDR nor do we have a “special relationship” with the ADB. What we object to is the Theun-Hinboun Power Company’s abuse of foreign aid, its environmental misconduct and its failure to respect the rights of Lao PDR citizens.

With access to public money comes demand for public accountability Mr. Hourihan. Your company has built a $280-million hydro dam in Lao PDR with the help of millions of dollars worth of subsidies channelled through taxpayer-funded aid and export credit institutions, including the Asian Development Bank. Therefore, your company has an obligation to respond to public enquiries about your activities regardless of the level of expertise behind those enquiries. In 1994, your company signed an agreement with the ADB, as the lead financier and project coordinator, stating that: “THPC shall carry out the Project with due diligence and efficiency and in conformity with sound administrative, financial, engineering, environmental and public utility practices.” Your company’s latest plan – to fritter away another US$4.65 million and 10 years on dubious mitigation programs, while thousands of people are left uncompensated for lost food security and income – does not constitute sound practice. More specifically, we have reviewed the Theun-Hinboun Power Company’s Mitigation and Compensation Program (approved by your Board of Directors last September) and the International Rivers Network-commissioned review of the Theun Hinboun Power Company’s Mitigation and Compensation Program, and find that the MCP:

• fails to include direct compensation for Theun Hinboun residents who have lost food security, income and livelihoods due to the dam’s operations since 1998. • assumes, without consulting people affected by the Theun Hinboun dam, that 10 years is an acceptable time frame for attempting to mitigate environmental damages caused by the dam. • plans to spend roughly three-quarters of the $4.65-million budget on further studies, assessments, plans, and monitoring with no definition of expected outcome or guaranteed benefits for Theun-Hinboun residents. • claims, without substantiation, that damage to fisheries can be mitigated with “small-scale experimentation and intensification in suitable parts of the production system.” • attempts to justify ending dry season releases from the Theun Hinboun dam to the Nam Kading river because such releases will not repair existing damages to the downstream ecosystem and diverting this water through the turbines instead would increase the company’s revenues. The MCP dismisses riparian releases that are required by law in other countries as ineffective “legal or bureaucratic gestures . . . a way of buying off environmental opponents.”

Apparently the THPC believes it can make up its own operating rules with impunity and without accountability to citizens affected by its actions given that Lao PDR has no effective legal framework for regulating dam operators. Probe International, on the other hand, expects the ADB to enforce THPC compliance with ADB loan agreements and guidelines: at a minimum, this should include obtaining public consent prior to changing the dam’s operating regime and ensuring that all individuals and communities affected by the Theun Hinboun dam are compensated to their satisfaction. By Nordic standards, the Theun Hinboun Power Company would be obliged to provide direct compensation to villagers affected by its operations in addition to its 10-year budget for experimental mitigation measures. So that I may keep your Board of Directors informed about our concerns kindly provide the names and addresses of THPC Directors.
Sincerely,

Gráinne Ryder
Policy Director

cc: Julian Payne, Executive Director for Canada, Denmark, Finland, Netherlands, Norway and Sweden, Asian Development Bank
Len Good, President, CIDA
Christopher Liebich, CIDA

——————————————————————————————-
February 20, 2001: Reply from Mr. Hourihan, General Manager, Theun-Hinboun Power Company

February 20, 2001

Grainne Ryder, Policy Director
Probe International
225 Brunswick Ave, Toronto, Ontario M5S 2M6 Canada

Thank you for the interest in our Mitigation and Compensation Program. We would be delighted to respond to your questions but I am not familiar with your organization and its role as a stakeholder or a representative of a stakeholder in our project. In particular, I do not understand the stated relationship of “a Canadian citizens group that investigates the economic and environmental impact of Canadian aid-financed projects overseas.”

We have had a large number of individuals and organizations who represent themselves as stakeholders. Unfortunately, after spending a large amount of time responding to their enquiries or intellectual interest in the project, we find that all they have is an intellectual interest and do not have any stake holding. While we are not setting up a formal register of outside stakeholders in the project, I am sure that you will appreciate that we would like to know with whom we are talking.

The following are some questions to solicit information that would be provided by any serious stake holder.

What is Probe International?
What is its ownership structure?
From whom does it obtain financing?
Name any organization or individual that provides more than 25% of Probe International funding.
Does Probe International have a special relationship with Asian development Bank?
Who are Probe International’s principal officers?
What are the qualifications of its principal officers?
What experience do they have in run-of-river hydropower projects?
What experience do they have with riparian releases?
What connection does Probe International have with Laos?
What qualifies Probe International to represent or considered to be a stakeholder in the project?
Have any of the officers of Probe International ever contacted THPC prior to this enquiry?
Have any officers of Probe International ever visited the Project Impact area and if so, at what stage of development?

If you believe that you have a serious stake holding in the project, please respond to the above questions.

Sincerely

Edwin F. Hourihan
General Manager

———————————————————————————————-

February 19, 2001: Initial letter to Mr. Hourihan, General Manager, Theun-Hinboun Power Company from Grainne Ryder, Policy Director, Probe International

February 19, 2001

Edwin Hourihan
General Manager
Theun-Hinboun Power Company
Nongbone Road, P.O. Box 3382, Vientiane, Lao PDR
Fax 011 856 21 413 913
Re: THPC Mitigation and Compensation Program

Dear Mr. Hourihan,

I am writing on behalf of Probe International, a Canadian citizens group that investigates the economic and environmental impact of Canadian aid-financed projects overseas. I have reviewed your company’s plan for mitigating environmental damages caused by the Nordic aid- and ADB-financed Theun Hinboun hydropower project in Lao PDR. ­ The Mitigation and Compensation Program (MCP) report is posted on the Asian Development Bank’s web site and was approved by the company’s Board of Directors last September. For the public record, and to ensure that we understand your company’s environmental mitigation plans correctly, we would appreciate it if you could clarify the following in writing:

1. Proposed Downstream Flow Reductions The MCP report states that the “present riparian release is an expensive ‘gesture’ of unknown mitigative benefit.” It further states that riparian releases from the Theun-Hinboun dam equivalent to half the 1:20 dry season flow would reduce potential revenues by about 8 million dollars annually [or about 40 percent of projected annual revenue]. The report concludes that “THPC has committed to apply any savings, which result from any riparian release reductions to the MCP [mitigation and compensation plan].”

1.1 What is the “present riparian release” from the Theun-Hinboun dam?
1.2 Is the present riparian release stipulated in any of the project contracts or environmental mitigation agreements?
1.3 What is the annual value of THPC’s lost revenue for the present riparian release?
1.4 By how much is THPC proposing to reduce the present riparian release?
1.5 What is the annual value of the proposed reduction in riparian release, in terms of foregone electricity sales revenue?
1.6 Is THPC obliged under Lao law to subject its proposed changes to the dam’s operating regime and river flow to an environmental assessment procedure, public consultations etc?
1.7 Has THPC revised the existing environmental mitigation agreement or signed a new agreement with the government of Lao PDR to reflect the proposed reduction in riparian release?

2. Compensation for Lost Fishing Income and Livelihoods The MCP report concludes that the best way to compensate people for lost fishing income and livelihoods is “to catalyse small-scale experimentation and intensification in suitable parts of the production system.”

2.1 What does this mean, for whom, where, at what cost to THPC, the government of Lao PDR, and over what time period? Who will be responsible for this program, how many affected people/villages are expected to benefit, and what is the expected outcome?
2.2 Please confirm that the THPC has no plan to share project revenues directly with affected communities.

3. Board of Directors

Could you please provide the names and addresses of your company’s Board of Directors.

Sincerely,
Gráinne Ryder
cc Julian Payne, Executive Director, Asian Development Bank
Christopher Liebich, Canadian International Development Agency

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