A Dam Conundrum: Xayaburi Project Could Help Laos And Thailand, Hurt Cambodia And Vietnam

Jacey Fortin International Business Times 5 Nov 12;

Officials in Laos announced that construction of the controversial Xayaburi dam will begin with a kickoff ceremony at the construction site Wednesday.

Protests from human rights activists and environmental groups have delayed the project for 18 months, but the joint Laotian and Thai project is apparently too lucrative to put off any longer.

The dam is nominally spearheaded by the Laos-based Xayaburi Power Company, but it is financed almost entirely by three Thai enterprises, according to Bloomberg: Ch. Karnchang Pcl (CK), PTT Pcl (PTT) and Electricity Generating Pcl (EGCO).

Nearly all of the energy produced by the facility will be purchased by the Electricity Generating Authority of Thailand, a state-owned enterprise.

The revenues could have a big impact in Laos, which suffers high rates of poverty and depends on foreign aid to augment its meager GDP of about US$8.3 billion. Laotian officials hope that Xayaburi will be just the first of several dams built on the central vein of the Mekong River; future facilities may do more to generate energy for domestic use.

But the project’s critics demand more research to ensure that the dam does not endanger the tens of millions of people who rely on the Mekong River for their livelihoods.

Not So Fast

The Xayaburi controversy essentially pits Laos and Thailand, which stand to benefit most from the dam, against Cambodia and Vietnam, which are further downriver and will suffer the environmental consequences of the deal.

Adding insult to injury, the four countries are members of the Mekong River Commission, or MRC, an organization meant to encourage collaboration on any river projects. The Commission issued a report last year recommending that the Xayaburi project be delayed so that the necessary research could be carried out, and Laos has said it would abide by that agreement.

But Laos had evidently never stopped planning for the facility, and this week’s announcement marks the official decision to bring those plans out into the open.

Viraphonh Viravong, deputy minister of energy and mining, told reporters on Monday that the concerns outlined by the MRC had already been adequately addressed. Investors have spent about US$100 million to modify the dam’s design, he said, making it more ecologically sound.

“We can sense that Vietnam and Cambodia now understand how we have addressed their concerns. We did address this properly with openness and put all our engineers at their disposal. We are convinced we are developing a very good dam,” he said to BBC.

But critics, including not only Vietnamese and Cambodian officials but also internationally based environmental groups, charge that those modifications are untested and inadequate -- especially since the waters of the Mekong River are the lifeblood of thousands of Southeast Asian communities.

All Downriver from Here

The 2,700-mile Mekong River begins in China’s Tibetan Plateau and trickles south through the mountainous Yunnan Province. From there, the Mekong swings through Laos. It demarcates the country’s western border in two spots, separating it from Myanmar and then Thailand. Continuing southward, the river crosses Cambodia and finally Vietnam before emptying into the South China Sea.

The Mekong River Basin is teeming with life; it is one of the world’s most spectacular biodiversity hotspots. Its myriad species of fish and other water-dependent creatures like frogs, snails and turtles constitute the main source of animal protein for human consumption in the region, and are therefore integral to the survival of many rural communities in Laos, Cambodia and Vietnam.

According to the most recent “State of the Basin Report” from the MRC in 2010, the people of the Lower Mekong Basin -- the land along the portion of the waterway that lies south of China -- consume nearly 3 million tons of fish from the river and its tributaries every year. In addition, farmers from Myanmar to Vietnam rely on the river to irrigate their farms, helping them to produce everything from rice to coffee to sweet potatoes.

Thousands of small dams already exist on the Mekong’s many tributaries, but a large facility on the main waterway is far more risky. If not executed carefully, it could have dire consequences for the millions of people who rely on the river’s robust ecosystem.

“Dams are a barrier to fish migrations up and down rivers, and mainstream dams in the middle and lower reaches of the Mekong could affect more than 70 percent of the basin’s catch,” said the MRC report. The lack of fish, combined with lower agricultural productivity across the region, could lead to “reduced production, substantial economic cost and social deprivation.”

But while the people who live in and around Lower Mekong Basin currently enjoy well-irrigated farms and plenty of fish, they also suffer a dire lack of energy -- and this is central to the argument of those who support the Xayaburi Dam.

A Weighted Exchange

Southeast Asia has experienced steady economic growth over the last several years, but the resultant rise in energy demand -- especially for electricity -- has been woefully underserved. Laos, Vietnam and Cambodia are increasingly reliant on fuel imports, which, even combined with domestic production, leave tens of millions of households with no electricity at all.

Hydropower could change that. It is a domestic solution that has the added benefit of being environmentally friendly, if properly executed.

“Hydropower is regarded as an indigenous renewable energy source with limited carbon emissions,” says the MRC report. “Increasing its use could boost the region’s contribution to climate change mitigation, through reducing dependence on fossil fuels (coal, gas and oil) that today account for up to 80 percent of total electricity generation.”

It is no wonder that Laos is eager to forge ahead with its Xayaburi plans. Hydropower electricity generation is the best bet for independent economic development in this poverty-stricken country; its 6.3 million people have plenty to gain, especially with Thailand as a dependable consumer.

But in the end, success depends on execution -- and Laos’s competency as a steward of this project is questionable. The national one-party government tends to exercise heavy-handed control over commerce, despite ongoing liberalization. It is also steeped in corruption.

In the worst-case scenario, that the Xayaburi dam will not only disrupt the livelihoods of tens of millions of people downstream; it could also fail to deliver the expected economic benefits to the Laotian society as a whole.

But it does not seem that Viraphonh is losing sleep over either of these risks.

"I am very confident that we will not have any adverse impacts on the Mekong river," he said to the BBC. "But any development will have changes. We have to balance between the benefits and the costs."

Laos approves Xayaburi 'mega' dam on Mekong
BBC News 5 Nov 12;

Laos has given the go-ahead to build a massive dam on the lower Mekong river, despite opposition from neighbouring countries and environmentalists.

A formal ceremony marking the start of full construction at Xayaburi would be held on Wednesday, the government said.

Countries downstream from the $3.5bn (£2.2bn) dam fear it will affect fish stocks and the livelihoods of millions.

The announcement came as leaders from Asia and Europe began a two-day meeting in the Laos capital, Vientiane.

Landlocked Laos is one of South-east Asia's poorest countries and its strategy for development is based on generating electricity from its rivers and selling the power to its neighbours, says the BBC's Jonah Fisher in Bangkok.

Xayaburi is being built by a Thai company with Thai money - and almost all of the electricity has been pre-sold to Thailand, our correspondent says.

Countries such as Cambodia and Vietnam point to a report last year that said the project should be delayed while more research was done on the dam's environmental impact. Up to now, Laos had promised not to press ahead while those concerns remained.

Four dams already exist in the narrow gorges of the Upper Mekong in China but until now there have been none on the slower-moving lower reaches of the river, our correspondent says.

Laos deputy energy minister Viraphonh Virawong said work on the Xayaburi dam itself would begin this week, and hoped it would be the first of many.

"I am very confident that we will not have any adverse impacts on the Mekong river," Mr Viraphonh told the BBC. "But any development will have changes. We have to balance between the benefits and the costs."

Mr Viraphonh said he believed that concerns about fish migration and sediment flow had been addressed thanks to modifications to the original dam design costing more than $100m.

Sediment will be allowed out of the bottom of the dam periodically through a flap and lifts, and ladders will help the fish travel upstream.

"We can sense that Vietnam and Cambodia now understand how we have addressed their concerns. We did address this properly with openness and put all our engineers at their disposal. We are convinced we are developing a very good dam," Mr Viraphonh said.

There was no immediate reaction from Cambodia or Vietnam, whose prime ministers are in Laos for this week's Asia-Europe summit.

Under the terms of a longstanding agreement on the Mekong, there must be consultation between countries on any development on the river.

Environmental campaign group International Rivers said Laos' promise to cooperate with neighbouring countries had never been genuine.

"The project has always continued on schedule and was never actually delayed," the group's Southeast Asia policy coordinator, Kirk Herbertson, told the BBC. "Construction on the project is continuing now because the wet season has ended, not because the environmental studies are completed."

He said experts agreed it was doubtful that fish passages could work on the Mekong and "on the sediments issue, Laos is also jumping to conclusions".

"Laos is playing roulette with the Mekong, and trying to pass its studies off as legitimate science."


Laos pushes ahead with Mekong dam and risks destroying the region’s lifeblood
WWF 6 Nov 12;

Gland, Switzerland – The Lao government’s determination to plow ahead with construction of the controversial US$3.5-billion Xayaburi hydropower dam in northern Laos puts the mighty Mekong River’s spectacular biodiversity, rich fisheries and livelihoods - vital to nearly 60 million people - in grave danger, warns WWF.

Despite fierce opposition from neighbouring countries, and some concerns raised this week by delegates attending the Asia-Europe Summit (ASEM 9) in the Lao capital, Vientiane, Laos’ Deputy Minister of Energy and Mining, Mr Viraphonh Viravong, announced that Laos will hold a ground-breaking ceremony at the dam site on Wednesday, 7 November. Mr. Viravong also told a group of journalists, “It [Xayaburi dam] has been assessed, it has been discussed the last two years. We have addressed most of the concerns.”

Criticism of the Xayaburi project has been mounting over the past year, with concerns centred on the serious gaps in data and failures to fully account for the impacts of the dam, particularly concerning fisheries and sediment flows.

“Laos appears to be recklessly intent on forging ahead with construction before the agreed impact studies have been completed,” said Dr Li Lifeng, Director of WWF’s Freshwater Programme.

“If the region’s governments fail now to reaffirm their concerns on Xayaburi, they risk resting the future of the Mekong on flawed analysis and gaps in critical data that could have dire consequences for millions of people living in the Mekong River basin.”

In June 2010, Thailand’s electricity utility, EGAT, signed an initial agreement with Ch. Karnchang to purchase over 95 per cent of the Xayaburi dam’s electricity, and at least four Thai banks have expressed their interest in providing loans to the project, despite the acute environmental and social costs, and the uncertainties surrounding the financial return of the project.

“Thailand has a huge stake in the project and should not turn a blind eye to the potentially devastating consequences the project will wreak on their neighbours, and their own people,” added Li. “Thailand must take responsibility and join calls to stop the dam construction and cancel its power purchase agreement until there is regional consensus to build the dam.”

Laos’ actions fly in the face of the decision last December by Cambodia, Laos, Thailand and Vietnam to delay building the dam on the Mekong mainstream pending further studies on the sustainable management of the Mekong River, including impacts from mainstream hydropower development projects. However, no timeline has yet been set for when the further studies will be completed.

A recent review of the dam development identified uncertainties and weaknesses with the proposed fish passes, and confirmed the Xayaburi project will block part of the sediment flow and that important gaps in knowledge concerning the sediment aspects remain.

The Lao government and Ch. Karnchang agreed to spend an additional US$100 million on modifications to the dam design in an attempt to mitigate the adverse impacts, but experts warn this will fail to solve the problems given the remaining gaps in key data and science, and the clear risks associated with using unproven technologies.

“Laos expects its neighbours to trust that the clear risks associated with this project will somehow be resolved while construction moves ahead,” added Li. “In pushing ahead with their Mekong dam experiment, Laos is jeopardizing the sustainability of one of the world’s great river systems, and all future transboundary cooperation.”

As the first dam project to enter the Mekong River Commission’s (MRC) formal consultation process, the Xayaburi project will set an important precedent for 10 other dams proposed for the lower mainstream of the river.

"The Asia-Europe meeting brought together about 50 Asian and European leaders in Laos this week under an umbrella of “Friends for Peace, Partners for Prosperity.” But few voices of concern were raised about a project set to spread instability throughout the region and undermine development goals. The international community must not remain silent on Xayaburi," added Li.

WWF urges Mekong ministers to defer a decision on the dam for 10 years to ensure critical data can be gathered and a decision can be reached using sound science and analysis. WWF advises lower Mekong countries considering hydropower projects to prioritise dams on some Mekong tributaries that are easier to assess and are considered to have a much lower impact and risk.