WASHINGTON (AFP) – After three decades of near isolation, Laos will
come under global scrutiny as international groups and its communist
government debate the viability of a power project that could eject the
tiny and poorest East Asian state out of poverty and enhance political
reforms there.

The Washington-based World Bank is to host a series of consultations in
Bangkok, Tokyo, Paris and the US capital over the next two months on
the feasibility of the 1.3 billion dollar Nam Theun 2 hydroelectric
project in central Laos.

Lao government officials and project developers are surely to defend
the dam plan against attacks from some green groups worried over its
impact on the environment and farming and fishing communities.

The consultations on the landmark project will climax in the Laotian
capital Vientiane, where local groups could get a rare opportunity of
quizzing their rulers on wider political and economic issues centering
around the project.

“Our understanding is that this is the first time it is happening this
way in Laos,” World Bank spokesman for Southeast Asia Peter Stephens
told AFP.

He said the discussions would draw crucial feedback that would
determine the fate of the project, “which is still deep in the
exploration stage.”

“We are checking all aspects of it, from environmental and social to
economic,” he said. “If it does not live up to our standards, we will
not support it. If it does, we will propose it to our Board.”

The power project on Nam Theun, a tributary of the mighty Mekong river
which cuts across much of Indochina, has been on the drawing board for
30 years but gained interest among investors only over the last decade.

The cash-starved Lao government is bent on seeing the venture
implemented as it has the potential of generating revenue of nearly two
billion dollars — the current Gross Domestic Product value of Laos —
over a 25-year period.

The government sees the project as an essential component of its
development framework to alleviate poverty and a significant
contributor to the landlocked agrarian state’s economic growth.

Most of the 1,070 megawatts of electricity to be generated by the project would be sold to neighboring Thailand.

The developer of the project is international consortium Nam Theun 2
Power Company Ltd. (NTPC), where EDFI, the global arm of French
state-owned Electricite de France (EDF), holds a 35 percent key stake.

The Lao government and Thailand’s Electricity Generating Public Co.
Ltd. hold a 25 percent stake each while another 15 percent equity came
from joint venture Italian-Thai Development Public Co. Ltd.

Despite assurances by the foreign investors, the International Rivers
Network and several other groups maintain the planned dam could pollute
or choke waterways in the untamed region and displace impoverished
farming communities.

But a number of environmental groups have supported the project as it
would lead to preservation of forest areas surrounding the dam.

The foreign investors have been adamant they would not proceed with the project without World Bank endorsement.

“The World Bank’s role in the project is providing a guarantee against political risk,” Stephens said.

“This is why we are so detailed in looking at all aspects of the
project — from resettlement of the thousands of people who would have
to move from the area to be flooded down through to how the revenue for
the project and from the project would be managed in a way that
actually alleviates poverty,” he said.

The bank has also been nudging the Laos government to implement a
series of economic reforms after it became involved in the project.

The World Bank would decide at the end of the consultations whether it should go ahead with an “appraisal” of the project.

“That is the point where we would have to begin the work of turning the
idea into a firm project and decide pretty much that we want to support
it, want to make it work,” Stephens said.

If the World Bank gives a guarantee and the projects runs into a snag
after its implementation, the bank has to pay the investors.

To ensure that the consultatation process is transparent, balanced, and
meaningful, independent moderators will facilitate discussions.

Stephens said a bank guarantee for the project could pave the way for
more foreign investments in Laos, where more than three-quarters of the
countrys 5.7 million people live on less than two dollars a day.

Others say the open consultations over the power project could lay the
foundation for political reforms in Laos, where the communists seized
control from a monarchy in 1975.

“The power project will probably create a whole raft of new changes in
terms of opening and dialogue and create a focus of the world on
whether Laos is a sort of a place where business can be done,” said a
Western diplomat.