Hydropower driving social change in Laos

Challenges in balancing lucrative dam projects, aid for affected villagers
Nirmal Ghosh Straits Times 25 Jan 12;

VIENTIANE (Laos): At the edge of a vast reservoir on the windy Nakai plateau, Ms Hom, a 54-year-old villager, sits in her wood and rattan home recalling how life has changed ever since a dam was built on the Nam Theun River, a tributary of the Mekong in central Laos.

Along with about 1,600 other villagers, she was forced to relocate when the reservoir half the size of Singapore was created, submerging her home near the bank of the original river.

The Nam Theun 2 Power Company (NTPC) gave her a new home as part of a resettlement package. It also cut new roads across the previously remote and isolated plateau, built schools and gave the villagers, who used to be landless, titles to their land.

For Ms Hom, who goes by one name, some of the changes that the project brought about were good and some were not so good.

'In our old village there was flooding every year, and no electricity. But we were living with nature. We would go into the forest for our daily food,' she said. 'Now, it's more convenient in a way; our old village was not as tidy. But now we need money to buy food.'

Hydroelectric projects are lucrative: Electricity exports from the Nam Theun 2 (NT2) hydropower project are expected to earn Laos US$80 million (S$102 million) a year for the next 24 years.

Another hydroelectric project being planned, the 440MW Nam Ngum 3 project south-east of Luang Prabang, promises earnings of another US$770 million over 27 years.

But as large populations are relocated due to these projects, they will need help to adjust to different livelihoods, cope with a changed environment and adapt from a cashless, subsistence lifestyle to the cash economy, observers say.

Whether Laos can push ahead in its bold plans to build more dams across the country hinges largely on whether the NT2 project is seen as a success.

The NT2, which began as a hydropower proposal, morphed into a 'multi-purpose' project under pressure to produce more than just cash for electricity. It was seen as an engine of growth and poverty alleviation in Laos.

The project, which started operating in 2010 and generates 1,070MW of electricity, is part of the landlocked nation's ambitious plans to turn itself into the 'battery of South-east Asia', which the government hopes will lift many of its six million people out of poverty.

In the 440MW Nam Ngum 3 project, US$200 million has been earmarked for social services and environmental protection programmes.

Laos' push for hydroelectric power is driven to a large extent by Thailand's quest for energy: Over 90 per cent of the electricity generated by the NT2 is bought by Thailand, which will also be a primary buyer of Nam Ngum 3's output.

While Laos' communist government banks its reputation on the NT2, touting it as a 'showcase' for the impoverished but resource-rich nation, the reputations of an array of banks and credit and aid agencies - including the Asian Development Bank (ADB) and World Bank, which have lent to the US$1.2 billion project - are also at stake.

Institutions including the ADB are also lending up to US$465 million to the Nam Ngum 3 project.

If Laos wants the NT2 to succeed, it will need to manage the changes wrought by the project, experts say.

Hydropower is a good source of renewable energy, but it alters topography, hydrology and ecosystems, and displaces communities from homelands.

The NT2, for example, is a trans-basin project. By diverting the bulk of the water from the Nam Theun to another river, the Xe Bang Fai, it has caused the Nam Theun to shrink and Xe Bang Fai to swell, sometimes dangerously.

This has disrupted the lives and livelihoods of thousands of farmers and fishermen who rely on the two Mekong tributaries for water and fish.

Last month, Laos had to suspend plans for the 1,260MW Xayaburi dam project, the first of 11 dams planned on the lower Mekong, after neighbours Vietnam and Cambodia objected to it on fears that it would disrupt fisheries and rice production downstream.

The changes are not easy to cope with. Mr Soun Nilsvang, a rural agronomist and the NTPC's deputy manager for resettlement, admitted that it could take a generation to make the shift.

Foreign Minister Thongloun Sisoulith has acknowledged the challenges. 'Assuring a balance between economic growth and social and environmental development are major priorities,' he said at a conference late last year.

There remain problems like illegal logging of the water catchment forests. And critics like the United States-based International Rivers say the NT2 cannot be called a success unless all the livelihood and relocation issues and environmental problems are ironed out. But they also give it some grudging praise.

'It's not a disaster,' said campaigner Aviva Imhof. 'You could say it's the best project in Laos - though Laos has a poor track record.'

But, she added, the jury is still out. 'Very often it takes years for impacts to be felt,' she said. 'The big question is the sustainability of livelihoods both on the Nakai plateau and the Xe Bang Fai.'

The NTPC points to its efforts in providing schools and health clinics for resettled villagers and creating alternative livelihood options - mostly agricultural.

Higher school attendance, rising health indices and a growth in incomes, the company says, show that resettlement is going well. The director of its environmental and social division, Mr Ruedi Luthi, said he would give the company a score of 8.5 out of 10.

'It was a benchmark for the World Bank and the ADB,' he added. 'There was a lot of pressure from the financing side that the project would truly set new standards and act as a reference and a model for hydropower in the region.'

ADB country director Chong Chi Nai said there were 'strong monitoring and evaluation systems in place'.

'This shows how hydro can be developed in a socially responsible way,' he said. 'It's a showcase.'

The arguments likely make little difference to Ms Hom, who appeared resigned to the change, recognising that she had little choice in the matter.

One obvious sign of how life has changed: Almost every house in the resettled villages now has a TV set. But Ms Hom's is one of the few that does not, so her 13-year-old grandson, Mai, goes to a friend's house every evening to watch Thai soap operas on TV. 'Sometimes he doesn't come back, and I have to go and fetch him,' she said.

Mai grinned when asked what he wanted to be when he grows up.

'A policeman' he said.