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World Bank consults on big Laos dam project

John Aglionby
The Guardian
September 1, 2004

The World Bank launched an unprecedented exercise in public consultation yesterday on whether it should back a project to build a dam in Laos on a tributary of the Mekong river.

More than 200 officials from the Lao and Thai governments, businessmen, environmentalists and academics began debating whether the bank should underwrite a £675m project to build the dam, being developed by a consortium of Lao, Thai, French and Italian investors.

Bank officials claim the “detailed and intensive” level of consultation is setting a new benchmark for project assessment that should be copied worldwide.

Critics argue that the consultation is a waste of time because, they believe, the bank has decided to support the project, its first massive dam in East Asia for more than a decade.

If the Nam Theun 2 dam goes ahead the impoverished Lao economy stands to gain £1.1bn in revenue from the electricity generated, most of which will be exported to Thailand.

Some 70% of the Lao population lives on less than £1.10 a day. Set against the potential benefit from the dam is the disruption to one of east Asia’s most important waterways and the livelihoods of tens of thousands of people.

Peter Stephens, a World Bank spokesman, admitted that there had been “problems and issues”, but said that “the pluses outweigh the minuses”.

“[The project] will give the country the money to invest in areas where money is desperately needed, without having to borrow it,” he told the Guardian. “It will strengthen the systems and institutions of government that will see the money used productively.”

Other claimed benefits include a 23,000-acre protected area that will be created near the dam site and continued monitoring of the Lao government’s spending to minimise  corruption.

However, 6,000 people will be have to be moved. Fields belonging to a further 40,000 villagers will be flooded. Fish stocks will be affected and the ecosystem of the Mekong delta downstream will be damaged.

Mr Stephens claimed that a final decision would not be taken until after workshops in Paris, Washington, Tokyo and the Lao capital Vientiane in the next month.

Dr Juree Vichit-Vadakan, the independent moderator of yesterday’s event, said the Lao government’s presentation was impressive. “They made a very strong case for a need of the revenue from the project to take care of the environment, reduce poverty and improve social infrastructure,” she told the Guardian.

Several groups opposing the dam had made a persuasive argument that Thailand’s power needs would not be as great as the consortium and bank had estimated, and that the resulting energy surplus would discourage conservation and the use of renewable resources.

Thailand has agreed to buy 95% of the power generated by Nam Theun 2. A spokesman for the Nam Theun 2 Power Company, Ludovic Delplanque, described the workshop as a success because “the objective was to make sure the concerns are listened to and addressed to our best possible ability”.

“However, some concerns cannot be addressed”, he told the Guardian, “because some people are simply anti-dam and would like a completely different approach.”

One of the most vocal critics of the bank’s involvement is the International Rivers  Network. It believes five recent hydropower projects have been a major failure in Laos, leaving “a legacy of destroyed livelihoods and damaged ecosystems”, according to a report published in March.

“As a result of dams, tens of thousands of Laotians lack sufficient food to eat, clean water to drink and income to meet basic needs,” the study alleged. “The government has taken few steps to improve the livelihoods of communities.”

Premrudee Daonroung of the Thailand-based Project for Ecological Recovery was disappointed by the World Bank’s perceived bias towards the project. “It was clear from the atmosphere that the decision has already been taken,” she told the Guardian. “The bank 100% supports the project.”

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