Reeling from the news, Thai Foreign Minister Surakiart Sathirathai hastily assured reporters that Bangkok remained committed to purchasing power from the dam and that Thai investors would keep the project alive.

Surakiart and Energy Minister Prommin Lertsuridej were supposed to witness
the signing of a purchasing agreement between the Electricity Generating
Authority of Thailand (Egat) and project developer Nam Theun II Power Co
Ltd in Vientiane yesterday.

But the French pull out came as a shock, prompting Lao and Thai officials
to hold a joint press conference to show their resolve. EDF’s decision
rocked the remaining backers, who have already been through lengthy delays
since a feasibility study was conducted in 1991 and a developers’ consortium was formed in 1995.

Lao Ministry of Industry and Handicrafts permanent secretary Somboun Manolom said Vientiane would work with Thailand to move the project forward. “It is the intention of the Lao government that the momentum of Nam Theun II not be interrupted by this setback,” he said.

EDF said in a statement from Paris that the withdrawal was part of its strategy to consolidate assets and prioritise investments only within Europe.

An observer noted that the plan expansion of the European Union, which is
expected to bring in 10 new Eastern Europe members next year, represented
an opportunity for greater investment by EDF.

EDF’s decision was also influenced by the recent jailing of French and Belgian journalists in Laos, he said.

The pull out disappointed other dam partners, who have been behind the project for nearly a decade, a Thai investor said, speaking on condition of anonymity.
The EDF offered to help find a replacement partner by December 30.

Egat governor Sithiporn Ratanopas said Thailand would give the Nam Theun developers a year to move the project forward, otherwise other projects would be substituted.

EDF has a 35-per-cent stake in the project, while the Lao government via its state-run Electricite du Laos holds 25 per cent. The remaining 40 per cent is held by Egat’s  subsidary, Electricity Generating Co Ltd, and Italian-Thai, with 25 and 15 per cent respectively.

The US$1.1 billion (Bt45.9 billion) Nam Theun project, if completed, would be a major source of foreign income for Laos. Its construction cost is more than half as large as the country’s $1.8 billion gross domestic product in 2002. Project revenues are expected to exceed $270 million a year.

The social and environmental implications of the project are at the core of concerns expressed by conservation groups. The dam would displace about 5,700 people from 28 ethnic groups who live in 17 communities on the Nakai plateau in central Khammouane province.

The conservationist International Rivers Network (IRN) praised the EDF decision, saying it casts serious doubt on the future of the project.
“Millions of dollars have been squandered on planning this socially, environmentally and economically disastrous project, money that could have been invested in more sustainable alternatives,” said Aviva Imhof, the IRN’s Southeast Asia programme director.

CHRONOLOGY

1989: Project initiated

1991: Feasibility study started

1993: Proposal to sell power to Thailand submitted

1994: Electricity sales negotiated

1995: Developer consortium formed

1996: Thailand, Laos sign MoU on power

1996: Site clearing started

1997: First major setback caused by Asian financial crisis

1999: New round of talks for PPA

2000: Negotiations intensified

2002: Concession agreement signed by Laos and NTPC, PPA settled

2003: Clearance of unexploded ordnance started

July 8: PPA endorsed by Thai Cabinet

July 18: Second major setback caused by sudden pull-out of French
partner