Marcel Masse
World Bank
Executive Director for Canada
Washington, D.C.

Dear Mr. Masse,

Please find below a Feb. 6 press release issued by WWF Thailand about the meeting between Thai citizens groups and World Bank Executive Directors concerning the proposed Nam Theun 2 hydropower project in Lao PDR. Based on this and our own assessment, World Bank financing for Nam Theun 2 clearly contradicts the Bank’s energy policy advice dispensed to Thailand and other developing countries over the past decade. Bank financing for Nam Theun 2 signals to the international investor community the Bank’s formal retreat from competitive power markets in favour of state-protected monopolies and secretive, arbitrary regulatory regimes.

We urge you to vote against World Bank financing for this anti-competitive, unnecessary, and environmentally damaging power project.

Sincerely,
Gráinne Ryder
Policy Director
Probe International, Energy Probe Research Foundation
Toronto, Canada
Tel. (416) 964-9223, ext. 228, https://journal.probeinternational.org/

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World Wildlife Fund Thailand

PRESS RELEASE

THAI CIVIL SOCIETY EXPRESSES NT2 CONCERNS TO WORLD BANK

Bangkok, Feb. 6, 2004

Last night at the Amari Airport Hotel, WWF joined a wide range of Thai NGOs and three Senators meeting with five Executive Directors of the World Bank to present some of the concerns about the proposed NT2 hydropower dam in Lao PDR. The worries expressed were grouped under the following issue headings:

Thailand does not need the electricity from the NT2, it will be a burden for Thai consumers to pay for power we do not need, and it will undermine the competitiveness of the Thai economy. However at the price at which Thailand will buy the electricity, it will not be economically viable for Laos;

Impacts on downstream fisheries in the Xe Bang Fai River are essentially irreversible and cannot be meaningfully mitigated, which will be of immense detriment to the livelihoods of at least 120,000 people;

Real public participation and stakeholder dialogue is not possible in Lao PDR;

In making any decision, the World Bank should learn lessons from the Pak Moon Dam in Thailand, the last hydropower dam the bank was involved in financing in Thailand, and apply these lessons in the context of Lao PDR.

Thai Electricity Sector

Thailand already has an overabundance of electricity (installed capacity exceeded peak demand by 43% in 2002). Add to this the fact that

Thailand is already paying for gas from Myanmar that it is not actually taking because there is no need to use the gas to generate additional electricity;

There are already a large number of Small Power Producers lining up to sign agreements to produce electricity from biomass and municipal waste;

While the cost of biomass generated electricity production is currently almost equivalent to the cost of electricity and transmission of electricity from the NT2, it has additional benefits of money circulating within the Thai economy, helping small farmers obtain additional income from agricultural waste, and also dealing with pollution issues at the same time;

Demand Side Management (DSM) has been very successful in Thailand and there is the potential to do much more. DSM provides electricity savings for 2.1 US Cents/Unit, whereas the cost of electricity (and transmission) from NT2 to Thailand will be 4.95 Cents/Unit.

Mr. Witoon Permpongsacharoen, of the National Economic and Social Advisory Council, concluded that it is clear that Thailand does not need to buy this electricity from Laos. “To do so, would mean Thai electricity consumers would be paying too much to maintain unnecessary supply,” said Mr. Witoon, adding that “Although power is necessary to support economic growth, in this case, paying too much for power that is not needed would undermine the competitiveness of the Thai economy.” At the same time, the Louis Berger Consultants analysis suggests that at the price at which Thailand is now agreeing to buy the electricity from Laos, the dam would not be economically viable from the Lao perspective.

Destruction of Xe Bang Fai fisheries and local livelihhoods

Under the NT2 scheme, water from the Nam Theun will be released into the Xe Bang Fai River. Mr. David Hubbel of TERRA pointed out the impacts this would have. “In the dry season, the water in the Xe Bang Fai will be several metres deeper than normal, several degrees colder than normal, and have much less oxygen than normal,” adding that, “the combined effects of these three attributes of the water will completely destroy the local fisheries, on which at least 120,000 people depend for their livelihood, and 80% of their protein.”

Senator Khunying Chodchoy Soponpanich pointed out that “the real number of affected people is actually much higher – hundreds of thousands of others who buy fish that comes from the Xe Bang Fai will be deprived of a cheap source of readily available protein.”

Public participation and stakeholder dialogue in Lao PDR

Ms. Premrudee Daoroung of TERRA explained how it is much more difficult for civil society to openly express opposition to government projects in Lao PDR, with so-called “public hearings” and stakeholder dialogues being very ineffectual. She suggested that whatever process bank staff carry out to have discussions with stakeholders in Laos, should be replicated with a parallel process in Thailand, where people are less afraid to speak out. “After all, we Thai people who will be paying for this electricity are valid stakeholders in the consultations too,” she said.

Learning lessons from Pak Mun

Senator Kraisak Choonhavan explained that in 1988-90 when he was advisor to the Prime Minister, 4 out of 5 dams proposed by EGAT were not approved because they were located inside National Parks – only one, the Pak Mun, partially financed by the World Bank was allowed to proceed. “To this day, I still regret, and am ashamed that we did not manage to prevent the Pak Mun dam from being developed.” The Pak Mun Dam, completed in 1992, has been the source of 12 years of ongoing social unrest. Khun Srisuwan of NGO-COD reminded the bank that the costs of dealing with this unrest – meetings, policing, and compensation; as well as the reduced benefits of the dam – that has never generated as much energy as forecasted, were never anticipated in the cost benefit analysis on which the decision to construct the dam was based. “All of these increased costs and reduced benefits, have been externalized (or socialized) to Thai tax payers.”

If we do not learn from history, we are doomed to repeat the same mistakes. How many times do we need to learn the clear lesson from Pak Mun – fishing communities do not like to have their traditional way of life, and their livelihood destroyed by dams? WWF’s Robert Mather said that “if you take away 80% of their protein, these people will starve,” pointing out that the Thai economy was strong enough to bear the costs of Pak Mun and if nothing else, affected villagers could find new jobs in Bangkok. In Laos when there are no alternative jobs as labourers in Vientianne for 120,000 Xe Bang Fai villagers, and the Lao government is in no position to bear the costs of dealing with social unrest of 120,000 starving people, then what will happen?

Senator Dr. Malinee Sukhawetworachit, also Chair of the Board of the World Bank’s Network of Parliamentarians implored the Executive Directors of the World Bank, to heed the words of everyone who had spoken, and “make the right decision.”

For more information, please contact:

World Wildlife Fund Thailand
Mr. Yongyut Khamkhong, E-mail: yongyut@wwfthai.org
OR
Ms. Sirinya Cherananon, E-mail: orgsirinya@wwfthai.org