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DAM-L LS: Analysis of Nam Theun 2 and WCD (fwd)
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Subject: LS: Analysis of Nam Theun 2 and WCD
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The following is the executive summary of a detailed analysis of Nam Theun
2 compliance with World Commission on Dams guidelines. The full analysis
can be downloaded at www.irn.org. The analysis shows that Nam Theun 2 fails
to comply with six of the seven WCD strategic priorities.
An Analysis of Nam Theun 2 Compliance with World Commission on Dams Guidelines
Executive Summary
by Aviva Imhof, International Rivers Network
May 22, 2001
The World Commission on Dams (WCD), an independent body sponsored by the
World Bank and IUCN, released their final report, Dams and Development: A
New Framework for Decision-Making, in London in November 2000. It its
report, the Commission proposes criteria and guidelines for future planning
of energy and water projects. The World Bank has stated that it will use
the report "as a valuable reference to inform its decision-making process
when considering projects that involve dams." It is with this statement in
mind that the following analysis has been prepared.
Nam Theun 2 is the largest and most controversial of all the hydropower
projects planned for Laos. Situated in Khammouane Province in central Lao
PDR, and only 50 km upstream from the already completed Nam Theun-Hinboun
Hydropower Project, the $1.1 billion BOT (Build-Operate-Transfer) scheme is
being developed by three companies in association with the Government of
Laos (GoL). The project is currently stalled awaiting a power purchase
agreement with the Electricity Generating Authority of Thailand (EGAT), a
concession agreement with the government, and a decision from the World
Bank on whether to grant guarantees and other financial assistance to the
project.
In 1995, the Bank was formally approached for assistance from the Nam Theun
Electricity Consortium (NTEC), the consortium formed to develop the
project. Commercial lenders have said that they will not finance the
project without a political risk guarantee from the World Bank. The World
Bank is expected to make a decision in the coming year on whether or not to
grant the guarantee and other assistance to the project.
An analysis of Nam Theun 2's compliance with the WCD's seven strategic
priorities shows that the project fails to comply with six of the seven
strategic priorities outlined in the WCD report. On this basis, it is
recommended that the World Bank refuse guarantees and other assistance for
Nam Theun 2, and immediately work on alternative plans for conserving the
watershed area and ensuring that the 4,500 people living on the Nakai
Plateau have adequate sources of livelihood.
Strategic Priority 1 GAINING PUBLIC ACCEPTANCE
The overall thrust of the WCD's approach is that there needs to be a fair,
informed and transparent decision-making process. For such a process to
exist, there must a well-developed civil society, access to independent
sources of information, and the ability for local people to have informed
input into the process without fear of retribution. Unfortunately, such a
political climate does not exist within Laos. There is no independent media
within Laos, and no independent local NGOs, human rights or environmental
groups. The legal system is at a rudimentary stage of development and there
is no independent judiciary. In such a political climate, it is difficult
to see how a truly open and participatory decision-making process could
take place.
Three main groups of stakeholders are affected by the Nam Theun 2 dam.
According to the WCD, all three groups must give their agreement to the
project. Nearly 5,000 indigenous people living on the Nakai Plateau will be
resettled to make way for the dam and must give their free, prior and
informed consent to the project. Numerous public consultations have
occurred with communities living on the Nakai Plateau. However, the
processes that have taken place thus far cannot be considered to be
compatible with the concept of free, prior and informed consent as defined
by the WCD and international human rights conventions. The decision to
build the dam was made and logging had commenced well before those affected
were involved in any participation processes, affected communities had no
access to independent legal or other professional support, and most of the
consultations were in the context of improving resettlement outcomes,
rather than on whether the project was appropriate or not.
More than 50,000 people living along the Xe Bang Fai will be affected by
increased water flow in the river. Most of these people have not even been
consulted about the project, let alone given their consent or agreement to it.
The Lao population as a whole is affected by the risks assumed by the
government on the project, in terms of debts incurred and the environmental
and social impacts of the project. There has been no meaningful public
participation process or open and informed debate amongst Lao society as a
whole.
Strategic Priority 2 - COMPREHENSIVE OPTIONS ASSESSMENT
The World Bank has been promoting the dam as an income generator for Laos
since 1986. Yet no comprehensive assessment of alternatives to hydropower
as a means for generating foreign exchange has ever been completed for
Laos. Given the current oversupply of power in Thailand and changes in the
energy market in Thailand, Nam Theun 2 could not be considered the best
option for meeting Thailand's energy demands. It is also difficult to see
how it could be the best option for generating foreign exchange for Laos,
or for protecting the watershed area and the livelihoods of communities
living on the Nakai Plateau. Better and cheaper alternatives for achieving
these objectives have never been assessed.
Strategic Priority 3 ADDRESSING EXISTING DAMS
WCD guidelines stipulate that outstanding issues with existing dams be
rectified before additional dams are built in the same river basin. The Nam
Theun-Hinboun dam, 50 km downstream of the proposed site of the Nam Theun
2, was funded by the Asian Development Bank and completed in 1998.
Theun-Hinboun has had a severe impact on the livelihoods of more than
25,000 people living downstream and upstream of the dam, including decline
in fish catches of between 30-90%, the destruction of vegetable gardens and
dry-season drinking water sources, loss of fish nets and increased
difficulties with transportation. However, despite sustained lobbying by
NGOs and numerous promises from the ADB, adequate compensation has still
not been provided to affected communities.
If the Government of Laos, the ADB and the Theun-Hinboun Power Company
cannot ensure that Lao citizens negatively affected by Theun-Hinboun dam
are adequately compensated for their losses, then it is difficult to see
how the World Bank can ensure that the many thousands more people who will
be affected by Nam Theun 2 will not be worse off as a result of the project.
Strategic Priority 4 SUSTAINING RIVERS AND LIVELIHOODS
The WCD states clearly that there must be good baseline information
gathered over several years before a decision to build the dam has been
taken, and that dams should provide for environmental flow releases to help
maintain downstream ecosystems.
One of the major concerns is the impact of Nam Theun 2 on the fisheries of
the Theun, Mekong and Xe Bang Fai Rivers, which sustain the livelihoods of
more than one million people in central Laos The paucity in data and
research thus far makes it difficult to predict just how serious the
impacts of the project on fisheries, and therefore on communities'
livelihoods, are likely to be. Baseline information and scientific
knowledge of the riverine ecosystem gathered over several years is lacking,
and a cumulative impact assessment has never been completed.
Downstream of the dam, NTEC have guaranteed a minimum release of only 2
cubic meters per second, between one-tenth and one-hundredth of the water
volume naturally available in the Nam Theun. This could not possibly be
considered sufficient to maintain downstream ecosystem integrity as
recommended by the WCD.
Strategic Priority 5 RECOGNISING ENTITLEMENTS AND SHARING BENEFITS
The WCD states that the risks for all people affected by the project should
be assessed prior to the project being approved. The risks for the
thousands of people living along the Xe Bang Fai who are expected to lose
their fisheries and other livelihoods has never been assessed as part of
the project's risk assessment. These "involuntary risk takers" have been
provided no opportunity to participate in decisions affecting their lives.
The WCD also requires that all adversely affected people negotiate formal
and legally enforceable agreements. This has never occurred at Nam Theun 2.
Strategic Priority 6 ENSURING COMPLIANCE
In project preparation, the World Bank has had problems ensuring compliance
from the Lao government on key issues such as logging. Despite World Bank
stipulations to the contrary, the Nakai Plateau has been heavily logged and
logging has occurred in the community forestry areas designated for the
resettled communities. If the World Bank is unable to ensure compliance
with conditionalities imposed prior to project approval, it is difficult to
see how they will be able to ensure compliance once money and guarantees
have been disbursed and the project is under construction.
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Aviva Imhof
Director, Southeast Asia Program
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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