Laos launches money-spinning dam

Key Issues: 

RFA 9 December 2010

Investors hail the project, but green groups say displaced residents lack 'sustainable livelihoods.'

Landlocked Laos inaugurated a key hydroelectric dam on Thursday that will give critical revenue to the rural-based economy, but was criticized by environmentalists as having denied "sustainable livelihoods" for people relocated for the project.

The World Bank, a key financier of the project on the Nam Theun River, a tributary of the Mekong, called the dam a feat of engineering, a boon to conservation, and an aid to capacity building and revenue management.

More than 90 percent of electricity generated by the project, which has been operational since April, is being sold to Thailand, giving Laos a U.S. $2 billion revenue stream over the next 25 years.
    
The Nam Theun 2 (NT2) project is jointly owned by the government of communist Laos, Electricite de France International, and Electricity Generating Public Company (Thailand).

“I have high hopes that the NT2 will protect nature, the environment, and society, and the power generated will be used for development and to improve the livelihoods of the peoples of Laos and Thailand.” said Choumaly Sayasone, the President of Laos, at the official launching.

Sri Mulyani Indrawati, the Managing Director of the World Bank, said the project has been "truly transformational" for Laos, which is highly reliant on foreign donors.

It showed that "large industrial projects can contribute to socially and environmentally sustainable development, and that the private sector and public sectors can work together to reduce poverty and support environmental protection," she said.

'Considerable' benefits

Revenue from the project are earmarked for the nationwide improvement of health and education services and for other poverty alleviation programs.

"This project is a testament to the fact that when hydropower projects are done right, in a socially and environmentally responsible manner, the benefits are considerable," said Kunio Senga, Director-General of the Asian Development Bank's (ADB) Southeast Asia Department.

Before the Nam Theun 2 project, more than half of the families in Nakai Plateau villages, where the project is located, lived in poverty, the Manila-based bank said. Child mortality rates were high, clean drinking water was scarce, and sanitation was almost nonexistent, said the ADB, another of the 27 project financiers.

"Today, the vast majority of residents say they are better off than ever before," Senga said.

Families who had to move to make way for the dam have been provided with new hardwood homes complete with electricity, clean water, and sanitation facilities, the ADB said.

The transition from subsistence livelihoods, based on slash-and-burn agriculture, to a more settled agricultural market economy has not always been easy for many households, but families report their food security has notably improved since their move, the ADB said.

Call for 'sustainable' livelihoods

But environmentalists and some of the people affected by the project tell a different story.

Thirty-four civil society groups and individuals from 18 countries wrote to the World Bank and Asian Development Bank this week calling on them to take immediate action to ensure "sustainable livelihoods for the affected communities," according to International Rivers, a U.S.-based watchdog.

"People on the Nakai Plateau still have no means for a sustainable livelihood, threatening their food security, as poor quality land in the resettlement sites continues to cause problems for villagers’ agriculture, the long-term production of the reservoir fisheries is in doubt, and outsiders are encroaching on the villagers’ community forest areas," a statement said.

It said that thousands of people living downstream along the Xe Bang Fai River, a tributary of the Nam Theun River, have suffered "impaired water quality and reduced fisheries, and funding is inadequate to restore their livelihoods."

"Even though the project was supposed to improve standards for hydropower development more generally in Laos, there is little evidence that this has happened. Projects continue to be approved without disclosing environmental impact assessments and without adequate resettlement and livelihood improvement plans," it said.

Claims by villagers downstream that the dam had polluted the Xe Bang Fai River were denied by a Lao environmental official.

“The NT2 Dam has not polluted the Xe Bang Fai River. The Xe Bang Fai region was flooded in early October, following nonstop heavy rains. The almost mature rice harvest was rotting under water, resulting in the pollution,“ he said.

Soil quality questioned

Most of the villagers relocated by the dam project had earlier complained that the land allocated to them was not sufficient to grow rice for their families’ needs, and that the quality of the soil was not good.

As a way out, the Nam Theun 2 Company has suggested fishing as an alternative for their livelihood.

Now, some of them have made fishing in the dam reservoir their livelihood.

Khamkeut Keophila, one of the villagers, said “Now each [resettlement] village has a fishing association. The catch is sold immediately to waiting fishmongers. Supplies cannot meet demand.”

The ADB said the project had placed great emphasis on environmental management, with more than U.S. $60 million invested in downstream water quality management, "with better than expected results."

The Nam Theun 2 Power Company is also disbursing U.S. $1 million annually for the protection of a 4,000 square kilometer (1,544 square mile) Nakai-Nam Theun Biodiversity Conservation Area.

Nam Theun 2 will release 35 times less greenhouse gases than a coal-fired power plant of equivalent size, and the biodiversity conservation area will help sequester an additional 40-60 million tons of carbon dioxide (CO2) emissions, the ADB said.

 

Reported by RFA’s Lao service. Translated by Viengsay Luangkhot. Written in English by Parameswaran Ponnudurai.