Power plays on the Mekong

Bangkok Post 29 July 2012 : Spectrum

Laos' intransigence in pushing forward with the Xayaburi Dam project reveals the ineffectiveness of the commission charged with overseeing development on the river, leaving other countries that stand to be effected without a voice

Eventually, we could proceed no further. In the distance, a one-metre high gravel barrier emerged from the brownish waters of the Mekong, the planned construction site of the controversial Xayaburi Dam. As we moved closer, we could see the gravel wall had blocked most of the width of the river and there was only a small channel with rocks and rapids left for the longtail boat to navigate through.

 

Our veteran boatsman was nervous. He slowed the boat and craned his neck to get a better view. ''I'm not confident that I can steer the boat through it,'' the driver told us, and everyone in the boat was just as fearful.

The Mekong is at its most powerful at this time of year, and the strong current had been intensified by being forced through the narrow channel.

As our boat bobbed in the water, on the shore 100m away we could see 10 construction trucks busily working on the gravel barrier. We didn't want to get too close, as our team was on an unauthorised trip to inspect how much work has been done on the dam away from the public eye in this mountainous area.

We had seen enough and decided to turn back. But what we saw, and what we later learned from others who have made the trip to inspect the dam, is that work on the project has never stopped, despite the mixed messages from the Lao government that it was listening to its Mekong neighbours.

The Mekong River Commission (MRC), formed in 1995 and comprising Thailand, Cambodia, Laos and Vietnam, has still yet to give formal approval of the project despite a series of meetings on various levels.

The Bangkok Post made another unauthorised visit to the site one year ago and found road building for the project well under way. On this trip we saw that construction now extends from the mountain to the river itself, and it seems that the governance of the MRC has been helpless in halting the work.

If completed, the dam will stretch 810m across the river near the large Kaeng Luang rapids, around 30km east of Xayaburi town in northern Laos. In the late 2000s, the project _ first proposed 50 years ago _ was resurrected by Thailand's third largest building firm, CH Karnchang. After discussions with the Lao government, CH Karnchang signed a memorandum of understanding (MoU) with Vientiane in 2007.

The dam would take eight years to complete, and rise to a height of around 32m, with the tail of its reservoir extending up to Luang Prabang, a World Heritage-listed site. It was planned to have an electricity production capacity of 1,260MW, 95% of which would be exported to Thailand at the budget price of two baht per kilowatt-hour.

A year later, CH Karnchang signed a project development agreement with the Lao government, and in 2010 the company submitted an environmental impact assessment of the project to the government.

In the same year, the Lao government signed an MoU with the Electricity Generating Authority of Thailand (Egat) over the purchase of the electricity.

It also submitted the project to the MRC, starting for the first time the consultation process required by the commission.

Over the next two years there followed a series of meetings in which Laos failed to come to a formal agreement with its fellow MRC members to give the project the go-ahead _ a struggle that highlighted major flaws in the ability of the MRC to resolve such disputes.

What became apparent was the MRC's lack of punitive powers to force the Lao government to reign in the project.

Much of the confusion stems from the wording of the 1995 agreement and how it is interpreted differently by Laos and the other three MRC member countries.

Under the agreed prior consultation procedures for any project on the mainstream of the Mekong, all member countries must reach a consensus before such projects may begin.

After an April 19 meeting in Vientiane last year _ Thailand, Cambodia and Vietnam came away with an understanding that the four countries had agreed to defer the decision on the project until a full MRC council meeting last December.

At the December meeting the three countries again believed they had reached an agreement in principle to conduct further studies on overall dam development in the region, without mention of the Xayaburi Dam project.

However, Laos now argues that a formal consensus has never been reached on the Xayaburi Dam, and it is entitled to proceed with the project as long as the official views of the other MRC countries are noted.

Laos' position appears to be a blatant flaunting of the MRC's requirement for a consensus to be reached, and undermines any authority the regional water management body hopes to exert over member states.

Viraphonh Viravong, Laos' vice-minister of energy and mines, said in an exclusive interview with the Bangkok Post that at the April meeting, Laos had not agreed on extending the prior consultation process to the MRC council meeting in December.

He argued that the consultation had been completed within the six-month period stipulated by the MRC, and no unanimous agreement had been reached.

''In April, we didn't reach a consensus. If we stuck to the agreement, what we could do at best is record all the views [of the other member nations] that Laos would take into account later,'' said Mr Viraphonh.

To allay the concerns of its neighbours, Laos hired an independent engineering consulting firm, Swiss-based Poyry, to study the dam design and decide if it follows the MRC's guidelines.

When Mr Viraphonh was asked whether Laos was still committed to the MRC's decision, he hesitated before replying: ''Partially. But it should not be a factor to base a judgement on whether the Xayaburi Dam should be built or not be built.''

MRC UNDER FIRE

A Lao villager checks his fishing gear, called ‘sai lan’, which is normally used when the river is swollen to the point that fishermen cannot fish in it.

To Van Truong, a member of Vietnam's Ministry of Science and Technology and a former national adviser on the Mekong, said the Xayaburi Dam project was an acid test for the MRC, which would be considered a failure if the project went ahead.

''While the consultation process has not been completed, it would be against the spirit of cooperation if the Lao authorities allowed the Thai developer to start construction,'' Mr Truong said. He added it would be too controversial for a Lao construction company to conduct the work because of the possible negative impact of the dam on downstream communities.

''The Mekong River links six countries and their peaceful development,'' Mr Trong said. ''The potential for transboundary impacts are huge and, therefore, a mechanism for basin-wide governance is absolutely critical. I hope that the governance mechanisms will continue to be based on trust and reliability.''

Nathanial Matthews, a PhD researcher at King's College London, who wrote the report ''Water Grabbing in the Mekong Basin _ An Analysis of the Winners and Losers of Thailand's Hydropower Development in Lao PDR'', said it was clear Laos had made up its mind in April last year and carried its position to the December meeting.

''In reality, this project is not an internal affair at all,'' Mr Matthews said. ''It is a transboundary affair and should be decided by all the countries,'' he said, adding the people of the Mekong basin should be concerned about the way the Xayaburi Dam is moving forward.

Mr Matthews said the project's implications for the region and MRC governance are mainly negative.

He said the consultation process was now in disarray, which proved the MRC was ineffective in dealing with politicised issues.

''The dam is a challenge to the organisation's capacity,'' said Mr Matthews. ''I believe the politics, power and economics of large scale dams will always override the MRC's mandate and aims.''

Mr Matthews said it was clear the MRC has no binding power over its members, which goes back to the geopolitics surrounding its formation in 1995.

''For the MRC to ensure sustainable development of the region it needs a stronger mandate and stronger procedures, but I do not believe that the politics of the region will allow the MRC to incorporate stronger rules,'' he said.

Mr Matthews said the MRC is primarily a donor-funded organisation, tolerated by member states as long as it does not interfere with national politics. He does not believe it is respected by the member governments.

''Why would Laos and Thailand agree to a stronger MRC when they are interested in developing hydropower in the Mekong basin without restriction?'' asked Mr Matthews.

POWER TO THE PEOPLE

Hydropower has long been seen as a cost-effective energy source in Laos, with a hydroelectric potential of about 26,500MW - excluding the mainstream Mekong - according to Laos' Ministry of Energy and Mines.

Of this, about 18,000MW is technically exploitable, with 12,500MW found in the major Mekong sub-basins and the remainder in minor Mekong or non-Mekong basins.

Over the past 30 years, said the ministry, less than 2% of the country's hydropower potential has been developed. The present government policy now aims to accelerate hydropower development to help lift Laos from the group of Least Developed Countries by 2020.

The export of electricity already accounts for about 30% of all of Laos' exports, and the country now has agreements for future exports with Thailand, Vietnam and Cambodia, the ministry said.

So far, Laos has signed an MoU to provide 7,000MW of energy to Thailand from 2015, and 3,000MW from now until 2020 to Vietnam.

The Xayaburi Dam project is one of six major dam projects planned for the mainstream Mekong in Laos. According to Mr Viraphonh, the Lao government has signed a concessionary agreement with the project developer already.

Egat, which signed an agreement to buy the power in October last year, told Thailand's National Human Rights Commission in February that the country needs to buy power because of limited domestic sources, adding that the national power purchasing committee had set a goal for purchasing power at no more than 25% of overall power requirements from 2010 to 2030.

CH Karnchang said the company had set up another company in Laos called Xayaburi Power, in which the Lao government also holds shares.

CH Karnchang insisted that the Lao government had complied with the MRC's notification and prior consultation requirements with the member countries.

''Laos has asked that when Laos, a poor country, wants to develop to improve the quality of life of its people, why do others stand in its way?'' a CH Karnchang representative said in the meeting.

The company said it had invested around four billion baht in the project, and that if Thailand withdraws China may jump in to fill the void.

However, the commission said the forecast for future power demands was based on unreasonably high power reserve calculations. It said the estimate of about 1,400MW a year was much higher than current usage, which is about 830MW per year.

The commission said the government must reduce energy imports and dependence on other countries for the sake of national security.

Mr Matthews of King's College said the Xayaburi Dam project had both positive and negative aspects. ''The Lao and Thai governments, CH Karnchang and Thai banks financing the project would all benefit, but at the community level jobs may disappear.

''However,'' he said, ''there appeared to be a case of 'water grabbing', where a small group of powerful actors would control the benefits from the dam and the millions of people who depend on basin's natural resources for their livelihoods and food security would be the losers.''

He added that the losses far outweighed the benefits, especially over the long term.

THE BIG LOSERS

In the Lower Mekong Basin, some 40 million people, or about two-thirds of the population, are involved in fishing, according to the MRC review of the project.

In Laos, more than 70% of rural households are dependent on fishing and collecting other aquatic animals to varying degrees for subsistence livelihoods and additional cash income.

Mr Matthews questioned whether the dam will offset the loss of livelihoods along the river by generating much-needed capital.

''Laos has an appalling record of social spending with poor health care and poor educational facilities throughout the country. The money from existing dams and mining has not brought positive benefits to the people of Laos,'' said Mr Matthews.

''There are serious accountability concerns with the billions of dollars that will be used for the dam and the income it will generate.''

Of equal concern is the symbolic stamp of approval for other planned dam projects on the mainstream Mekong following the Xayaburi Dam.

''It is a development free-for-all with everyone trying to make money from the basin's hydropower potential,'' Mr Matthews said. ''This type of shortsighted economic-led development could lead to political conflict over the shared resources of the basin, especially as impacts reach neighbouring countries.''

Pianporn Deetes, Thailand campaigner for the US-based International Rivers, said crossborder investment was now having an impact on people's lives in other countries, adding that the Mekong was a shared regional resource.

''It would be unrealistic to think about Asean integration if we still cannot manage the shared Mekong River,'' said Mrs Pianporn. ''They don't wait for a consensus but rather move ahead just because they see profits.''

Next week, 'Spectrum' examines the effect the Xayaburi dam will have on communities in the area.


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