Laos to Delay Mekong Dam After Failing to Convince Neighbors

View Original Source:  http://www.bloomberg.com/news/2011-04-19/laos-seeks-to-gain-neighbors-approval-for-3-8-billion-mekong-river-dam.html

By Daniel Ten Kate – Apr 19, 2011 6:56 AM ET
Bloomberg Markets Magazine
Cambodian children wash their animals in the Mekong River in Kandal province April 19, 2011. Plans for the first dam across the lower Mekong River are putting Laos on a collision course with its neighbours and environmentalists who fear livelihoods, fish species and farmland could be destroyed, potentially sparking a food crisis. The four countries that share the lower stretches of the 4,900 km (3,044 mile) Mekong - Laos, Thailand, Vietnam and Cambodia - met in the Lao capital Vientiane on Tuesday to debate and possibly decide the future of the 1.285-megawatt (MW) dam, the first of 11 planned in the lower Mekong that are expected to generate 8 percent of Southeast Asia's power by 2025. REUTERS/Samrang Pring

Cambodian children wash their animals in the Mekong River

Laos agreed to delay proceeding with a $3.8 billion hydropower dam because of concerns among neighboring Mekong River countries that the project would disrupt fish catches and rice production downstream.

Laos, Cambodia, Vietnam and Thailand will consider the project at another meeting with environment ministers “as they could not come to a common conclusion,” according to a joint statement after representatives met in Vientiane to consider the project. The next meeting will take place “as soon as possible,” Te Navuth, a Cambodian official who chaired today’s meeting, told reporters by phone from the Lao capital.

The Thai-financed Xayaburi hydropower plant is the first of about 10 dams the government plans to build on the mainstream Mekong, which runs from China’s Tibetan plateau through Myanmar, Thailand, Laos, Cambodia and Vietnam. Laos’s government can make a final decision on whether to proceed with the dam at any time.

Failure to build the dam may hinder the efforts of Southeast Asia’s smallest economy to use its resources to boost incomes for its 6 million citizens who comprise Asia’s youngest population. Hydropower and mining projects are set to underpin gross domestic product growth that may reach 7.7 percent this year, the Asian Development Bank said in an April 7 report.

Laos proposed today to end a review of Xayaburi called for under a 1995 agreement between the Mekong countries requiring prior consultations before building hydropower plants on the river. Vietnam recommended that all planned hydropower projects on the Mekong be delayed for 10 years.

Vietnam Opposition

“The deferment should be positively seen as a way to provide much-needed time for riparian governments to carry out comprehensive and more specific quantitative studies on all possible cumulative impacts,” Le Duc Trung, head of the Vietnamese delegation, said in a statement.

Thailand questioned the dam’s sustainability, while Cambodia called for more studies on the project, according to the statement from the Mekong River Commission, an intergovernmental body that hosted the meeting.

“We appreciate all comments, but we will consider to accommodate all concerns,” Viraphonh Viravong, head of the Lao delegation, said in the statement.

The Mekong and its tributaries provide food, water and transportation to about 60 million people in those four countries. U.S. Senator Jim Webb said April 15 that approval of the dam could cause “irreversible” damage and threaten the stability of Southeast Asia.

Thai Construction

Thailand agreed in December to buy 95 percent of the electricity from the plant, which will have a capacity of 1,285 megawatts. Ch. Karnchang Pcl, Thailand’s third-biggest construction company by market value, owns a 57 percent stake in the 115 billion baht ($3.8 billion) project.

Ch. Karnchang shares have fallen 6.3 percent this year, compared with a 5.5 percent gain in Thailand’s benchmark SET Index. The Laos Composite Index, which opened on Jan. 11 with two stocks, has gained 34 percent since then.

PTT Pcl (PTT), Thailand’s biggest energy company, has a 25 percent stake, while Bangkok-based Electricity Generating Pcl (EGCO) owns 12.5 percent, according to company filings. The project is expected to start commercial operations in January 2019, PTT told the Thai stock exchange on March 1.

The Xayaburi plant will help “to secure and to stabilize” Thailand’s energy supply over the long term, Prasert Bunsumpun, president of state-owned PTT, said in the statement.

Giant Catfish

A technical review by the commission released last month found that the dam may lead to the extinction of species like the Mekong giant catfish and “gaps in knowledge” mean the full extent of the downstream impact on fisheries is hard to estimate. The dam “will not materially affect” the quantity and timing of river flows to Cambodia and Vietnam, it said.

China has already built four hydropower dams on the Mekong, completing the first one in 1993 without consulting its downstream neighbors. It plans to build four more as part of efforts to almost double its hydropower capacity to at least 300 gigawatts by 2020.

Laos also plans to sell electricity from dams to Vietnam as an alternative to nuclear power, Daovong Phonekeo, deputy director general of Laos’s Department of Electricity, said by phone yesterday. Vietnam, which faced rolling electricity outages in February, last year announced plans to build as many as 13 nuclear power plants with a capacity of 16,000 megawatts over the next two decades.

“We are trying to benefit not only our country, but also develop a cheap source of electricity for our neighbors,” Daovong said. “Each riparian country has the right to use the Mekong River for its own development.”

To contact the reporter on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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