Xayaburi Dam Building Pact Signed

Plans move ahead for Laos's controversial hydropower project on the Mekong.
2012-04-17
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xayaburiconstruction-305.jpg
A caterpillar works on the access road to the Xayaburi dam in Laos in an undated photo.
Photo appears courtesy of International Rivers

Updated at 6:45 p.m. EST on 2012-04-25

In a controversial move, a Thai company has signed a nearly $2 billion dollar contract for the construction of a dam on the Mekong River in Laos even though governments in the region have not cleared the project.

Ch. Karnchang informed the Thai stock exchange Tuesday it had signed a 52 billion baht (U.S. $1.7 billion) contract with Xayaburi Power Co. Ltd., a Lao-Thai joint venture, to build the project, Thai media reported.

The Xayaburi hydropower dam would be the first on the mainstream Lower Mekong and environmental groups say it would affect the lives of millions in the region.

The latest contract sets the start date for construction on the dam as March 15, 2012, and says it will be completed in eight years.

In December, Laos had shelved plans for the dam pending further environmental assessments, following a meeting by the Mekong River Commission (MRC),  a regional body of Southeast Asian countries that share the river.

Leaders from Laos, Cambodia, Thailand, and Vietnam agreed further study was needed on the sustainable management and development of the river before the Xayaburi project could continue.

Despite the delay, Lao energy officials have remained committed to the project, which costs a total of U.S. $3.8 billion, Bounthuang Phengthavongsa, director-general of the Energy and Mining Ministry said in January.

“We want to build this dam and we will try hard to do so. Our intention and our hope is that in the end we will be able to build it despite all opposition,” he told RFA.

Laos has planned 70 hydropower projects on its rivers and officials have said it hopes to become “the battery of Asia.”

It is not immediately known whether the Lao government had been officially informed by the companies that signed the contract.

Preliminary construction on the project, including work access roads and a work camp, has picked up in recent months, according to International Rivers, a U.S.-based environmental NGO.

"Laos has not clarified if construction on the Xayaburi Dam will stop while the study takes place. Legally, Laos may not proceed with construction until all four governments have agreed. Practically, allowing construction would undermine the study," the group said.

A large number of workers have been employed for a two-year period to construct access roads and facilities for the project, it said.

High stakes

Critics of the Xayaburi dam, which would provide 95 percent of its electricity to Thailand, say that damming the Mekong threatens to destroy the ecology of the river, disrupt the livelihood of riparian communities, and jeopardize the food security throughout the region.

“The government should take care of the environment too, at the same time as developing the economy,” a resident in the Lao capital Vientiane said.

Mekong dams have faced stiff opposition from environment activists, who say the fate of the Xayaburi project will affect future decisions on the 11 other dams planned on the mainstream part of the Lower Mekong.

"The ecosystem is already changing, and now the dam will be built on the Mekong River. The Xayaburi dam will be the first; of course it will affect the ecosystem the most,” a Thai resident who lives near the Mekong said.

“If the Xayaburi dam can be built, so will 12 others. I think that is a big concern," he said.

The Stimson Center, a U.S.-based think tank, applauded Laos’s postponement of the Xayaburi project last year, saying it was the first time a Mekong country had made a decision about a mainstream dam based on the impact beyond its borders.

The Xayaburi project is the Mekong River Commission’s “biggest test” since its establishment in 1995, the Stimson Center said in a report in March, and warned that dams on the river could have a harmful impact on the entire region.

“The negative impacts on food security, livelihoods, water availability, and water quality have the potential to jeopardize the region’s hard-won peace and stability,” it said.

Reported by RFA's Lao service. Translated by Max Avary. Written in English by Rachel Vandenbrink.