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dam-l World Bank backs dam project in Laos

                            Publication: The Nation

                                                           Section: Politics 



World Bank backs dam project in Laos 

The World Bank spoke openly for the first time this week about its strong
commitment to the Nam Theun 2 hydro-electric
dam in Laos and vowed it would not drop the project because of pressure
from the public outside the country. 

Paul Mitchell, the bank's chief of regional operations, said the
US$1.5-billion project was in the pre-appraisal process, during
which financial packages and measures to mitigate the social and
environmental impact were being looked at. Although the
time frame for final approval has not yet been set, he expressed confidence
in the project's potential. 

''If we hadn't thought the project was viable, we would not have gone this
far. [This is an] expression of our interest in the
project,'' he told The Nation on Thursday. 

Mitchell's statement was in contrast to the earlier position made by other
World Bank staff, who appeared reluctant to take a
clear stance on the controversial project. 

The senior officer said that the project was essential for reducing poverty
in Laos as well as protecting remaining forests
around the proposed reservoir area, which would otherwise be degraded by
villagers' activities, he said. 

He said before the project could proceed to the bank's board of executive
directors for approval, price negotiation and
power-purchasing agreements among the Electricity Generating Authority of
Thailand and the Nam Theun 2 Electricity
Consortium (NTEC) and the Lao government would have to be in place. 

However, the economic slump in Thailand has affected the country's demand
for electricity from Laos. The three Thai
companies in the consortium, Phatra Thanakit Plc, Italian Thai and Jasmine
International, have also suffered losses in Thailand's
economic difficulties.The other companies are Transfield Corp of Australia
and Electricite de France. 

Mitchell said: ''As far as I know, they still want to go ahead with [the
dam project].'' 

Under consideration is whether the World Bank will provide the project with
a political-risk guarantee, which is crucial
because potential commercial lenders, including Deutsche Bank of Germany,
Societe Generale of France and Barclays Bank
of the United Kingdom require it before they make loans available to NTEC. 

The 680-megawatt Nam Theun 2 project has come under criticism by
international environmental groups during the past few
years as the project is located on the Nakai Plateau, one of Laos' best
wilderness areas, where a number of new wildlife
species have just been identified. 

The International Rivers Network, a US-based group which supports the
sustainable development of water resources, also
questioned the project's economic benefits. They said the estimates of
project income were based on highly uncertain
assumptions of the availability of water to flow through the dam's turbines. 

Acknowledging the criticism, Mitchell said most of the project's critics
were not NGOs inside Laos, although he also admitted
there were not many NGOs in Laos. The bank's main concern is people on the
ground who will be affected by the project, he
said. 

''Some NGOs are ideologically opposed to any dam. The bank will not drop
the project because of their opposition,'' he said. 

BY NANTIYA TANGWISUTIJIT 

The Nation 


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Aviva Imhof, Mekong Program Coordinator
International Rivers Network
1847 Berkeley Way, Berkeley CA 94703 USA
Tel: + 1 510 848 1155 (ext. 312), Fax: + 1 510 848 1008
Email: aviva@irn.org, Web: http://www.irn.org
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