Laos aims to build Mekong dam this year, testing neighbours

Bloomberg, The Nation 11 Sep 11;

Laos wants to start construction this year on the $3.8 billion (Bt115 billion) Thai-financed Xayaburi hydropower plant on the Mekong River after changing the design of the dam to placate neighbouring countries opposed to the project.

Laos completed a review of the dam recently to ease concerns in three neighbouring countries that it would harm rice production and fish catches downstream.

Environmental groups say the project will endanger the livelihoods of tens of thousands of people on the fragile Tonle Sap lake in Cambodia, and cause grave damage to rice growers in the Mekong Delta in southern Vietnam, which is also threatened by rising sea levels. Villagers in riverside communities in Thailand also oppose the dam, which could be the first of up to a dozen proposed on the lower Mekong.

Early this year, Hanoi recommended a 10-year delay on all hydropower projects on the river, which flows from China through Burma, Thailand and Cambodia to the delta in southern Vietnam.

Viraphonh Viravong, director-general of Laos' Ministry of Energy and Mines' Department of Electricity, said in an interview in Hanoi last week: "We would like to start toward the end of this year when the dry season comes. We want to explain and make the other countries comfortable. If they are still very negative about it, of course we will spend some more time on it."

The hydropower dam is the first among eight that Laos plans to build on the Mekong to expand Southeast Asia's smallest economy by selling power to neighbouring countries. The landlocked nation may have about 38,000 megawatts of installed capacity supply by 2020, about 15 times greater than its domestic needs, according to a presentation by state-owned Electricite du Laos at a conference in Hanoi on Thursday.

Laos presented the project review conducted by Switzerland-based Poyry Energy AG to Vietnam and plans to meet separately with Thai and Cambodian officials to discuss recommendations, Viraphonh said. Vientiane claims it can decide if it will proceed with the project at any point.

In April, Laos proposed to end a review of Xayaburi called for under a 1995 agreement between the Mekong countries requiring prior consultations before building hydropower plants on the river. Officials agreed then to hold a ministerial meeting later this year to discuss the project, but that has yet to take place.

"Laos has no right to go forward on the project by itself," said Ame Trandem, Southeast Asia programme director for International Rivers, a Berkeley, California-based non-profit group that aims to protect rivers and human rights. "By doing so it will violate the 1995 Mekong agreement and the spirit of regional cooperation."

Poyry's review found that Xayaburi's design was in accordance with preliminary design guidelines from the Mekong River Commission, an inter-governmental body, and other international design manuals, Viraphonh said in a presentation. The firm recommended improvements for sediment transport and fish-passing facilities, he said.

Poyry was confident "any potential long-term trans-boundary impacts on the downstream region would be insignificant" if the recommended design changes are implemented, according to the presentation.

"Look, this has been reviewed by an independent engineer, very famous in the world," Viraphonh said. "And if they say 'yes, you can go ahead', why not?"

Thailand agreed in December to buy 95 per cent of the electricity from the plant, which will have a capacity of 1,285 megawatts, but the Abhisit government later withdrew support for the dam amid a chorus of opposition early this year.

Ch Karnchang Plc, Thailand's third-biggest construction firm by market value, owns a 57.5-per-cent stake in Xayaburi. Supamas Trivisvavet, an executive vice president at the company, declined to comment when reached by phone on Friday.

PTT Plc, Thailand's biggest energy company, has a 25-per-cent stake, while Bangkok-based Electricity Generating Plc owns 12.5 per cent, according to company filings. PTT told the Thai stock exchange on March 1 the huge project was expected to start commercial operations in January 2019 - if it starts this year.

The proposed alterations would slightly increase the cost of the project, Viraphonh said, without providing figures. The plant would be able to meet its target completion date if work started later this year, he said.

The Mekong and its tributaries provide food, water and transportation to about 60 million people in the four countries. In a July meeting with counterparts from Mekong nations in Bali, US Secretary of State Hillary Clinton called for a pause in construction of dams on the river "until we are all able to do a better assessment of the likely consequences".

Vietnamese officials in January recommended delaying the project and moving it to a Mekong tributary because it would affect "the safety of water sources and food security for Vietnam as well as for the whole world", according to notes of the meetings. Thailand and Cambodia also favoured more studies on the dam.

A technical review in March by the Mekong River Commission found that the dam may lead to the extinction of species like the Mekong giant catfish, and "gaps in knowledge" meant the full extent of the downstream impact on fisheries was hard to estimate. The dam "will not materially affect" the quantity and timing of river flows to Cambodia and Vietnam, it believed.