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dam-l Local NGO adds to pressure on World Bank (fwd)
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From owner-irn-mekong@igc.org Thu Oct 2 22:45:02 1997
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Date: Thu, 2 Oct 1997 18:34:03 -0800
From: patrick@irn.org (Patrick McCully)
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Subject: Local NGO adds to pressure on World Bank
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The Nation (Bangkok)
Wednesday, Sept. 24, 1997
Malee Traisawasdichai
"Local NGO adds to pressure on World Bank"
Non-government organisations have demanded that the World Bank address
fundamental questions regarding the proposed Nam Theun 2 (NT2) dam before
it goes ahead with the next stage of the US $1.5 billion project in central
Laos.
In a letter to bank president James Wolfensohn endorsed by local and
international NGO's Witoon Permpongsacharoen, the director of TERRA, an NGO
which monitors economic development in the Mekong region, questioned the
banks legitimacy as a development institution as it continues to provide
political and technical support for the proposed hydroelectric dam.
NGOs focusing on environmental and rural development have questioned
whether the NT2 dam will truly be the "future source of revenue for the Lao
government" claimed by the bank.
"This strategy is even less valid given Thailand's economic slowdown and
the resulting decline in the demand for new sources of electricity," the
letter stated.
The economic downturn in Thailand has seen the expiration of the power
purchase agreement with the Electricity Generating Authority of Thailand
(EGAT), the only customer of the proposed 900 megawatt NT2 dam.
The cost of generating electricity within Thailand is becoming more
competitive, Witoon said, adding that inflation which has had a severe
impact on the value of the Lao currency, will increase the project's
construction costs. These factors, he contended, call into question the
market competitiveness of the project.
In the past five years, the estimated cost to build NT2 has almost doubled
from US $800 to $1.5 billion while the predicted annual revenue for the
government of Laos has declined by 85 percent, from $250 million to $38
million.
Due to these economic risks, private commercial banks have refused to lend
money to the project. Consequently, the World Bank has created a new
financial instrument called an "enclave guarantee" which is designed to
allow it to insure the investments of private commercial banks lending to
companies.
"We're concerned that the bank is helping the Nam Theun Electric Consortium
transfer risks which they should rightfully bear by themselves to the
people and the government of Laos," Witoon said.
NGOs have also expressed concern about the impact of the dam on the
environment of one of the world's poorest countries, its people and the
Mekong region.
If constructed, NT2 would flood more than 450 square kilometres of forest,
wetland and riverine habitat unique to the Nam Theun river basin. This
area is relied upon by the vast majority of people in the Mekong region for
their livelihood, security, and income.
Even worse, NGOs claim the World Bank's involvement in the project paved
the way for the logging of more than 200 square kilometres of Nakai Plateau
forest before the project was even approved by the bank for appraisal.
Bank staff, they say, have consistently played down this destruction and
have instead promoted the establishment of a conservation forest adjacent
to NT2 as a "benefit".