Tiny Laos in the spotlight over landmark power project

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Channel News Asia 22 August 2004

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.

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

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

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

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

Our understanding first time happening way Laos, World Bank spokesman Southeast Asia Peter Stephens told AFP.

He said discussions would draw crucial feedback would determine fate project, which still deep exploration stage.

We are checking aspects it, environmental social economic, he said. If does not live up standards, will not support it. If does, will propose Board.

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

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

The government sees project an essential component its development framework alleviate poverty significant contributor landlocked agrarian states economic growth.

Most 1,070 megawatts electricity generated project would sold neighboring Thailand.

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

The Lao government Thailands Electricity Generating Public Co. Ltd. hold 25 percent stake each another 15 percent equity came joint venture Italian-Thai Development Public Co. Ltd.

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

But number environmental groups have supported project would lead preservation forest areas surrounding dam.

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

The World Banks role project providing guarantee against political risk, Stephens said.

This why are so detailed looking aspects project -- resettlement thousands people who would have move area flooded down through how revenue project project would managed way actually alleviates poverty, he said.

The bank has been nudging Laos government implement series economic reforms after became involved project.

The World Bank would decide end consultations whether should go ahead with an appraisal project.

That point where would have begin work turning idea into firm project decide pretty much want support it, want make work, Stephens said.

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

To ensure consultatation process transparent, balanced, meaningful, independent moderators will facilitate discussions.

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

Others say open consultations over power project could lay foundation political reforms Laos, where communists seized control monarchy 1975. The power project will probably create whole raft new changes terms opening dialogue create focus world on whether Laos sort place where business can done, said Western diplomat.