CHIANG SAEN, Thailand — Laos is proceeding with ambitious plans to build two hydroelectric dams on the Mekong river, angering its downstream neighbors and environmentalists, who see the projects as a catastrophe in the making.
But Asia is energy hungry. Its appetite is growing, and someone needs to feed it. The Asian Development Bank reckons power demand in the Asia-Pacific will almost double by 2030. For Southeast Asia, a 2013 report by the International Energy Agency forecasts growth of more than 80% by 2035, requiring additional investment of $1.7 trillion.
This is where cash-poor, resource rich Laos comes in. The country proclaimed ambitious plans some years back to turn itself into the “battery of Southeast Asia,” generating hydropower to sell to its electricity-hungry neighbors in Thailand,
It’s in the water
The Laotian plan envisions 72 new dams, although not all will be on the Mekong, which flows from China to southern Vietnam, passing through Laos and Cambodia. The river also borders Thailand and Myanmar. More than a dozen dams are already under construction; twice as many are in advanced planning.
Nam Theun 2, the largest built so far, has an installed capacity of 1,070 megawatts, and is designed to produce 6,000GWH of electricity per year, mainly for sale to Thailand. The dam is on the Nam Theun river, a tributary of the Mekong.
Nam Theun 2, which started selling power in 2010, cost more than $1.3 billion to build and is owned by a consortium that includes EDF, a French power company, the state-owned Electricity Generating Authority of Thailand, and the government of Laos. The World Bank, the ADB and Thailand’s export-import bank provided additional financing.
Private funding from Thailand, China, Vietnam, and Malaysia will help pay for almost all the other projects, assisted by institutions such as Eximbank, the state-owned import-export bank of China, which has emerged as a major participant in Southeast Asian hydropower.
The U.S Energy Information Administration, which monitors energy developments worldwide, says: “Between 2006 and 2011, Chinese investors — such as [Eximbank] and China Development Bank — financed 46% of all hydroelectricity capacity additions in Cambodia, Laos, and Myanmar, and developed previously untapped hydroelectric resources in countries bordering the Mekong and Irrawaddy river basins.” The Irrawaddy is Myanmar’s biggest river.
Environmentalists say too much is being done, too quickly. Many point to the $3.5 billion Xayaburi Dam on the Mekong in Laos. Built by a subsidiary of CH. Karnchang, a Thai construction company, Xayaburi was financed largely by four Thai banks, Bangkok Bank, Kasikorn Bank, the government-owned Krungthai Bank, and Siam Commercial Bank.
The dam, which will have an installed capacity of 1,295MW, is nearly half complete and scheduled to be in service by 2019. EGAT, the Thai electricity authority, will purchase most of the power it produces. But environmentalists say Xayaburi’s impact on the river’s ecosystem will outweigh its benefits, threatening the health of the Mekong Delta — the world’s second-most biologically diverse river system.
The builders have taken steps to mitigate the problems, such as installing equipment allowing fish to pass through. World Wildlife Fund hydrologist Jian-hua Meng said these efforts are speculative at best.
“The effectiveness of such fish passage mechanisms is quite well proven for European or North American rivers,” he said. “But in the Mekong, we don’t have five species to take care of, we have 70, maybe more, and we have no clue for them.”
Ame Trandem, of the nongovernmental organization International Rivers, said fisheries experts estimate at least 43 species of fish are likely to become extinct because of the dam, including the Mekong giant catfish, the world’s largest such fish.
The dam may also trap sediment that would otherwise be carried downstream to Cambodia and Vietnam. Marc Goichot, head of the WWF’s sustainable hydropower and river basin management team in Ho Chi Minh City, said this will worsen the erosion of the Mekong Delta, which is losing land to the sea at a rate of 4 meters a year.
“The Mekong Delta is highly sensitive to changes of sediment delivery to the basin. The impact of Xayaburi will be cumulative, rapid and serious, with socioeconomic as well as other consequences for Cambodia and Vietnam that will be possibly massive,” he said.
Construction work on a smaller dam in Laos, known as Don Sahong, is just getting started. But Cambodia and Vietnam have objected to that project as well. International Rivers’ Trandem claims the dam will completely block the Hou Sahong Channel, an important channel for fish migration.
“The Hou Sahong is the only channel [through which]fish are able to migrate up and down stream on a year-round basis. Other channels have obstacles, waterfalls or man-made structures catching fish,” Trandem said.
Peter Hawkins, environmental manager for the Don Sahong project, rejects this assertion. “The Hou Sahong isn’t some magical, special channel which fish immediately identify and travel through,” Hawkins said, adding that he knew of at least two other channels used by migrating fish in the dry season.
Hawkins said the project developer, the Malaysian power and resources group Mega First Corporation, was helping to modify these channels, in addition to building fish passageways around Don Sahong, to allow fish to migrate freely.
“We are constructing, designing and building bypasses; identifying channels which are shallow, and deepening those particular points — key points where the fish are held up,” Hawkins said. “Our strategy is to keep doing that, constructing alternative pathways.”
Laotian officials have been mostly silent about both dams, but insist they have acted responsibly in consulting their neighbors, as agreed under the auspices of the Mekong River Commission, or MRC, an advisory group run by Cambodia, Laos, Thailand and Vietnam to promote “sustainable management of the region’s water and related resources.”
In a commentary late last year in The Nation, an English-language newspaper in Thailand, Viraphonh Viravong, the Laotian deputy minister of energy, accused dam opponents of fear-mongering, and insisted mitigation measures would increase the fish population in the river.
“Environmental activists are once again lashing out at the Lao government and the [MRC] in the hope that hydropower projects on the Mekong will be delayed or canceled,” he wrote. “It seems that what the activists really want is for the MRC to prevent Laos from building dams on the Mekong. Unfortunately this is not something the MRC can do. … The MRC is not a building permits office.”
The activists, he said, “should realize that the Lao government will not be deterred from its commitment to develop clean, renewable hydropower, a source of national pride for the Lao people, and a sustainable, reliable source of electricity for the region.” Laos is planning at least two more dams on the Mekong mainstream.
There has been little criticism of the dam projects in Thailand, which will buy most of the power generated. Other countries, where complaints about Laotian projects are louder, are themselves seeking to generate hydroelectricity. Cambodia, for example, is pressing ahead with a large dam on a tributary of the Mekong.
Environmentalists say the Lower Sesan 2 dam, on the Sesan river, is ill conceived and will likely damage the lower Mekong Delta ecosystem. Dozens more dams are planned by Laos and Cambodia on other waters, and the supply of projects is unlikely to dry up.
As the IEA put it in its 2013 report: “Hydro already plays an important role in power supply, generating 10% of electricity in 2011 [in Southeast Asia]. Considerable untapped potential remains to expand hydro facilities (particularly in … Cambodia, [Laos], Myanmar, Thailand and Vietnam).”
Multilateral investors such as the World Bank and the ADB, however, are steering clear of the Mekong. Chong Chi Nai, director of the ADB’s Southeast Asian energy division, said the bank had no plans to finance hydropower projects on the Mekong, or any other mainstream rivers.
“This is to allow further in-depth studies, to better understand and assess the potential impacts, and to allow for strengthening of management and regulatory processes to address social and environmental safeguards,” he said. However, the ADB is not opposed in principal to hydropower development in Southeast Asia.
“ADB believes that hydropower, when developed in an inclusive and sustainable manner — by adhering to the highest international social and environmental standards, and if the revenues from such projects are used for poverty reduction — can make an important contribution to the low carbon footprint of developing member countries and the respective country’s development,” Chong said.
For Laos, the challenge will be developing the dams in an environmentally sustainable manner. The Xayaburi dam is one of the world’s most modern, expensive, and ambitious dam projects. If mitigation efforts prove successful, there will likely be no shortage of funding for more dams on the Mekong and elsewhere.
If multilateral investors balk, the private sector is happy to become involved, as it did with Xayaburi. There is too much energy potential in the region to ignore — and at least some of the projects can be constructed in ways that will provide a commercial return.
The key is to minimize the impact on the environment. The Xayaburi dam — and to a lesser extent the Don Sahong — will help to show whether that is possible.
MICHAEL SULLIVAN, Contributing writer