Laos: 'Vicious capitalism' speeds up completion of first mainstream dam in Lower Mekong

Pichayada Promchertchoo Channel NewsAsia 21 Nov 16;

Like many hydropower projects, the Xayaburi Dam in northern Laos comes with pros and cons. While the Lao government and investors focus on economic benefits, environmentalists and residents voice concerns over risks it may bring to the Mekong. In her 1,800-kilometre journey across Thailand and Laos, Channel NewsAsia’s Pichayada Promchertchoo investigates who actually benefits from the controversial project.

CHIANG KHONG, Thailand: The roar of an engine broke the early morning serenity, as our boat glided on the misty Mekong. The air was fresh and wet from a cooling rain shower. Save for the boat's staccato growl, the only sound came from the mighty river as it raced downstream.

The wooden boat charged forward, sending ripples across the water that helps sustain tens of millions of lives in Southeast Asia. Thais call it "Mae Nam Khong" and so do their neighbours in Laos, just across the river. As it snakes through Cambodia, it becomes known as "Tonle Mekong" before changing into "Song Me Kong" in Vietnam.

But they all mean one thing: Khong, the Mother of Water. The name is appropriate.

The Mekong forms a natural border between Thailand and Laos. (Photo: Pichayada Promchertchoo)

The Mekong is the longest river in Southeast Asia, and connects to many other rivers and streams. It flows about 4,900 kilometres from the Tibetan Plateau through China, Myanmar, Laos, Thailand, Cambodia and Vietnam before draining into the South China Sea.

The river is rich in natural resources and boasts a great biodiversity of plants and fish that is second only to the Amazon. It is home to species such as the Mekong giant catfish and Irrawaddy dolphin, both of which are critically endangered.

"Mae Nam Khong is the main artery of Southeast Asia," a soft voice said from the seat behind. Its owner was a lean figure, his grey ponytail fluttering softly in the wind. The man was looking at the mighty river, taking in its majesty.

"Its colour changes with seasons. Now it's red because it’s the rainy season and soil gets washed into the water," the 56-year-old added as we travelled to visit the fishermen of Ban Hat Bai, two hours upstream. It had been a long time since Tee's last boat ride on the Mekong in the rainy season. And he was loving it.


Tee, whose full name is Niwat Roykaew, is a conservationist from the border town of Chiang Khong in northern Thailand.

He has spent all his life by the river and knows its natural rhythm by heart; so do the other children of the Mekong - fishermen, farmers, boat drivers and their families - whose lives change with the seasons, just like the river itself.

Tee is the leader of the Rak Chiang Khong conservation group, which has been working to preserve the Mekong over the past 20 years. (Photo: Pichayada Promchertchoo)

But the rhythm has changed.

The Mekong has become unpredictable. Since China built large dams across its upper mainstream in Yunnan, its seasonal cycles have become unnatural and fish catches have shrunk, according to local environmentalists and fishing communities. The changes are obvious in riverside villages downstream.

"In the old days, there were plenty of fish. It was so easy to catch them," said Por Oon Thammavong, a veteran fisherman at Ban Hat Bai. He started working on the water at the age of 14 and used to catch more than 10 fish every day. Now, the 67-year-old sometimes fails to catch anything for days, and big fish are a rarity.

Still, the Mekong remains home to the world's largest inland fishery. It accounts for about 25 per cent of the global freshwater catch and nearly 12 per cent of Cambodia's Gross Domestic Product (GDP). The sector also feeds tens of thousands of businesses in Thailand and Vietnam, channelling more than US$750 million to the countries' GDP every year.

But many fear this could change very soon.

Downstream, a dam is being built. Around 8,500 people are working around the clock to complete the immense concrete barrage, which rises 32.6 metres above the riverbed and stretches 820 metres across its mainstream. Once complete, it will be the biggest hydropower facility in the region.


In Xayaburi, a remote province north of Laos, the hydropower project has raised a storm of controversy since its construction began in 2011. Thousands of people in Thailand, Cambodia and Vietnam have opposed the development and voiced concerns over its transboundary impact on lives in the Lower Mekong Basin.

Many fear the dam will trap natural fertiliser sediment, disrupt fish migration and jeopardise inland fisheries - the main occupation in the region that provides 60 million people with their primary source of protein.

Their concerns were echoed in a key impact study - the Strategic Environmental Assessment of Hydropower on the Mekong Mainstream - which recommended a 10-year moratorium on mainstream dams due to "far-reaching potential effects and remaining uncertainties".

But despite strong opposition across the region, the project - which is owned almost entirely by Thai enterprises - is now 67 per cent complete and well on track to be finished in 2019.

"Why is Thailand doing what it's doing?" said Kraisak Choonhavan, a former Thai senator and ardent environmental advocate, pointing out that many Thais have become more aware of their rights and opposition to mega-projects like this has grown.

The Xayaburi dam is scheduled for completion in 2019. Around 8,500 people are working around the clock to finish the facility. (Photo: Pichayada Promchertchoo)

Part of the reason may be that Thailand's investment sector is ever expanding. Companies and individuals with money to invest are seeking major new projects that could yield high profits. Increasingly, big companies, state enterprises and commercial banks are working together as a consortium to advance business interests.

The hydropower sector, which is fast growing with the country's demand for electricity, has been one destination for this investor appetite. Since the 1960s, Thailand has built more than 40 dams for power generation and irrigation. But at the same time, the impact on the environment and local livelihoods has resulted in growing opposition from residents and environmental groups.

That has pushed investors to look at overseas projects to bypass domestic concerns. One of those projects is the Xayaburi hydropower dam.

"They have to invest overseas, in countries where people have limited rights and whose authoritarian government can facilitate mega-projects without considering the impact on its environment or people," Kraisak said.

"This condition is most obvious in Laos."

More than 2,900 people from 15 villages in Laos were forced to resettle because of the Xayaburi hydropower project. (Photo: Pichayada Promchertchoo)


For the Lao government and Thai investors, the project has many benefits. Besides generating clean energy, the Xayaburi dam is also bringing foreign capital into Laos and will help Thailand meet its growing demand for power.

Over the next 20 years, the demand is expected to grow by 2.67 per cent annually. Peak demand will jump from 30,218 megawatts this year to 49,655 megawatts in 2036. At the same time, the reserve margin - the capacity to generate more energy than normal peak demand levels - is also set to climb, from 35.2 per cent this year to 39.4 per cent in 2024.

Fishermen in Chiang Khong said it is very hard to catch fish in the Mekong nowadays. Many of them have to find a part-time job to support families. (Photo: Pichayada Promchertchoo)

However, critics believe these forecasts are helping to pave the way for mega-projects that would benefit big enterprises such as EGAT, the state power monopoly that supplies most electricity in Thailand.

"The need for energy in Thailand is forecast by EGAT - the very agency that benefits from energy development," said Dr R Edward Grumbine, an expert on the impact of dam development in the Mekong and senior scientist at the Chinese Academy of Sciences in Yunnan.

"EGAT has a long history of overestimating the country's power needs and favouring projects that are large-scale, like dams."

Once completed, the Xayaburi power plant will be able to generate 1,285 megawatts, 95 per cent of which will be sold to EGAT, with the rest to be kept within Laos.

Despite several attempts, EGAT did not respond to Channel NewsAsia's requests to comment on the issue.

Nonetheless, Thai interests in Xayaburi are clear, despite the project being located in Laos and managed by a Lao firm Xayaburi Power Co Ltd (XPCL).

XPCL is mostly owned by Thai enterprises, including EGAT's subsidiary EGCO, which holds 12.5 per cent of the total shares. Its biggest shareholder is CH Karnchang - the project's primary developer and one of Thailand’s largest construction firms. Through its subsidiary CKP, it holds 30 per cent of the total shares. Other shareowners include Thailand's largest energy firm PTT - through its subsidiary Natee Synergy - and Bangkok Expressway.

All in, Thai interests own about 75 per cent of Xayaburi, with Laos' electricity generating authority EDL holding 20 per cent and Laotian private company PT Construction and Irrigation owning 5 per cent.

The Xayaburi hydropower dam is the first project that blocks the Lower Mekong main channel. Environmental groups are concerned it will threaten the regional food security. (Photo: Pichayada Promchertchoo)

Kraisak described the consortium as a product of "vicious capitalism".

"It’s a system that disregards conscience and ethics and only focuses on personal interests," he said.


The Xayaburi dam is scheduled to be completed in 2019, after a construction phase lasting eight years and costing US$3.8 billion. But as soon as the turbines start to turn, the money will start to flow.

If the dam operates at its full potential, CH Karchang alone could receive more than US$430 million annually throughout its concession period of 29 years. Such sums are generating interest in other potential Mekong dams, with more than 10 being considered.

"The impact of the Xayaburi dam will surely be felt in Chiang Khong. We’ve already felt the impact of dams in China," Por Oon said. (Photo: Pichayada Promchertchoo)

And while such projects could generate power and profits, riverside communities may not benefit to the same degree. At the Xayaburi dam, residents remain uncertain about whether those benefits will trickle down to them. All they can see is a loss of farmland along the banks, fewer fish to catch and unseasonal floods and droughts.

Many fishermen in Chiang Khong have already left the river to work at construction sites in Bangkok. Those who are not fit enough have to find another job as a sideline. Por Oon is among them.

"Nowadays, I drive a passenger boat and buy fish from the market. Sometimes I get them from my own pond. It’s very hard to catch any fish in the Mekong."

Explore the whole series: Power Struggle - Damming the Mekong. Follow Pichayada Promchertchoo on Twitter @PichayadaCNA

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