World Bank consults on Laos dam

In the first public consultation of its kind, the World Bank (WB) recently held a series of international workshops to discuss the issues surrounding the proposed Nam Theun 2 Hydroelectric Power Project (NT2) in the Mekong river basin.

An international consortium led by Electricité de France will build the plant in cooperation with the Laos government. The developers will finance 30% of the project, provided that international donors such as WB and the Asian Development Bank guarantee commercial loans to finance the remainder of the cost.

They see NT2 as the country's best hope to earn income and reduce poverty. Laos PDR is one of the poorest countries in the world, with an average income of just US$320 a year. The majority of the labour force has little or no education and 40% of children are malnourished. The economy stands to gain about US$2 billion in revenue from electricity generated, 95% of which will be exported to Thailand.

However, the prospect of real and tangible benefits for the people of Laos has not convinced Canada's Energy Probe Research Foundation. Policy director Gráinne Ryder said, "Bank financing for the Nam Theun 2 power deal would ensure that the Thai power market is over-supplied with cheap power, discourage investment in higher-value, lower-cost generating options and sink Electricité de Laos further into debt."

Another contrary voice is the International Rivers Network (IRN) who claim that the project "will displace more than 6000 indigenous people and impact on more than 100,000 villagers who depend on the Xe Bang Fai River for fish, agriculture and other aspects of their livelihood." Alongside permanent damage to the eco-system, IRN also questions "the government's capacity to manage protected areas and utilize project revenues for the benefit of Laos' poorest people".

The Bank claims not to have decided whether to underwrite the US$675 million project, its first massive dam in east Asia for over a decade. However, it clearly is interested in NT2's potential to benefit the Laos people.

The country director, Ian Porter, said in Tokyo, "These workshops are just the latest step in what has been, for the World Bank at least, an unprecedented process of research, consultation and disclosure of information on a single project. The intensity of this effort reflects our strong desire to ensure that the proposed project would deliver real, durable benefits for the people of Laos."


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