EdF announced it was pulling out from the Nam Theun II dam project – which
has been on the drawing board since before Asia’s 1997 economic crisis
– on Thursday, a day before the power-purchase agreement with Thailand
was due to be signed.

The pullout of French state-owned EdF – the biggest investor and the lead technical agency for the dam-building consortium – raises serious doubts about the future of the 1,070
megawatt project. Laos’ aid-dependent regime had hoped the dam would provide them up to $80m a year in export revenues.

Environmentalists have long opposed the project, which they say would displace 5,000
people, and affect the lives of another 130,000 people downstream, without any guarantee of adequate compensation.

EdF, which held a 35 per cent stake in the consortium, said its decision to back out
followed advice from French officials. But it also comes as EdF faces attacks by rightwing French deputies for risking taxpayers’ money on “reckless and ill-considered” overseas acquisitions.

Since the 1980s, the World Bank has been promoting the idea of hydropower development in Laos, as a way to bolster the finances, and alleviate poverty.

The bank held out the promise that it would support Nam Theun II by issuing a partial risk guarantee for the dam, which would reduce the cost of financing, and make the project more attractive.

But persistent concerns about the regime’s ability, and commitment, to properly manage the large flow of funds had prompted the World Bank to repeatedly postpone a decision on whether to issue the guarantee, a source of frustration for the developers.

Lao officials on Friday called on France, its former colonial ruler, to help the country
find an alternative investor to replace EdF. Energy officials in Thailand, which faces the prospect of a power shortage in the years to come, said they would wait a year for Laos to identify another potential investor, before drawing up plans for alternative sources of
power.