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dam-l LS: WB says no to NT2 until reforms in place



Dear colleagues,

The following is from the World Bank's Development News service.

Sincerely,

Satoru Matsumoto
Mekong Watch Japan

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WORLD BANK SAYS NO BACKING FOR LAOS DAM UNTIL REFORMS IN PLACE.

The World Bank said yesterday it would not give its endorsement to a
billion-dollar dam in Laos until the government commits itself to
significant political and economic reforms, reports AFP.  World Bank Vice
President for East Asia and the Pacific Jean-Michel Severino said the Bank
was waiting for "clear signals" from the Lao government before granting the
political risk guarantee
necessary for the project to go ahead.

"It is important that the government has a good understanding of the
conditions which will make the project technically, economically,
politically, and ecologically sustainable," Severino is quoted as saying. 
"We can't commit ourselves on global risk without acceptable macroeconomic
conditions being in place."

It was hoped that the huge Nam Theun 2 dam in Laos, one of Southeast Asia's
most impoverished nations, would act as a catalyst in modernizing its
traditional agrarian economy which is starved of foreign exchange, the
story notes. But the Bank is concerned about the economic situation in Laos
which is struggling under massive inflation rates estimated at 155 percent
as of mid-last year. "It's clear to us that Laos must deepen its
macroeconomic reforms if it wants to stabilize the situation and create
conditions which make the project sustainable," Severino said.

On the dam's environmental impact, for which the World Bank has set strict
criteria, Severino allowed that "progress has been made on this count but
we are keeping a close eye on the situation."  The institution is
particularly concerned about illegal logging, not only near the dam site
but in the rest of the country as well.

"We still believe in this project, we are still working on it despite the
delay," Severino said.  Development experts say the project is crucial to
Laos, a poor, mountainous and landlocked country whose only sources of
major foreign exchange earnings are forestry and hydropower, the story
notes, adding that the World Bank's insistence on environmental and social
impact standards has been lauded by conservationists who say that hydro
projects elsewhere in the
world have a poor environmental record.

World Bank approval is not the only stumbling block the project has
encountered, the story notes.  Nam Theun 2 has already been held up by a
wrangle over a power purchasing agreement between the developers and their
only potential client, the Electricity Generating Authority of Thailand
(EGAT).