More Southeast Asian Dam Disasters Likely Unless Funders Ensure Higher Standards

By Roseanne Gerin
laos-mrc-regional-forum-vientiane-sept20-2018.jpg Stakeholders attend the Mekong River Commission’s fifth regional forum on hydropower dam projects in the Lao capital Vientiane, Sept. 20, 2018.

The Lao dam disaster in July that resulted in heavy flooding in two provinces that left at least 40 people dead and displaced 7,000 others has drawn both regional and international attention to the potential dangers of Southeast Asia’s current dam-building spree.

With plans for 11 large dams either proposed or under construction on the mainstream of the lower Mekong River in Laos and Cambodia, and for about 120 dams on Mekong tributaries by 2040, more disasters are likely to occur, experts say.

Some observers of the hydropower boom have expressed concern over whether project funders and donor countries, also known as international development partners, could be doing more to ensure that dam builders and governments adhere to construction and technical standards in order to avert disasters from shoddy or questionable work.

Observers have also raised questions about whether funders and donors could be doing more to ensure that communities affected by dam projects receive enough money and assistance to compensate them for property and livelihoods lost when they are forced to relocate for dam projects.

The developers of the Xe Pian Xe Namnoy hydropower project in Laos blamed monsoon rains for the breaching of an auxiliary dam at the plant, which caused devastating flooding that swept through Champassak and Attapeu provinces in the southern part of the country. Lao government officials, however, blamed the dam collapse on substandard construction and called for the project’s main developer to be held accountable.

The auxiliary dam was part of a larger U.S. $1 billion hydropower project being built by a joint venture comprising main partner SK Engineering and Construction and Korean Western Power Company Ltd. Of South Korea’s, Ratchaburi Electricity Generating Holding Public Company Ltd. of Thailand, and Lao Holding State Enterprise, a state corporation primarily involved with the financing of the energy industry. The project, part of the South Korean government’s official development assistance (ODA) to Laos, was to be fully operational by February 2019.

Hydropower experts say foreign development partners and funders, such as regional export-import banks and other loan institutions, can only do so much as stakeholders in the dam-building process.

To use a computer analogy, while developers and governments are responsible for building the hardware of hydropower projects, donor countries and financial institutions are involved in creating the software — the management and safety processes and regulatory environments that the hydropower dams need to operate effectively.

But ultimately, dam developers and governments must monitor construction activities, while ensuring adherence to technical standards rests with profit-driven developers who have limited legal responsibilities, experts say.

“Responsibility [for monitoring dam projects] lies with governments, but they have limited capacity; thus, monitoring of construction is often left up to the developer, which has limited legal responsibilities and is driven by profit,” Marc Goichot, the lead sustainable hydropower and river basin management expert at the WWF Greater Mekong Programme, wrote in an email.

Developing countries such as Laos, Cambodia, and Myanmar do not have the economic, financial, or manpower means to undertake dam projects themselves. Instead, they must rely on foreign investors to develop hydropower sites.

“Being in the weaker position [puts] countries and the bureaucratic institutions that should be responsible and in charge of sectoral designs … in a very passive position where they are not able to hold the reins on planning processes [and] sectoral planning processes,” said Brian Eyler, director of the Southeast Asia program and an expert on transboundary issues in the Mekong region at the Washington-based Stimson Center.

Investment goals vs. standards

Although there are separate regulations governing hydropower projects in the countries, the relevant domestic laws and regulations tend to be weak, especially in Laos, Cambodia, and Myanmar, where attracting investment is a main task of the government, experts say.

“These countries are attracting investment as a top priority, and if there are high levels of standards that could present obstacles to investment flows, then that investment won’t come in,” Eyler said.

Yet, development banks, donor countries, and NGOs are aware of the governance and capacity constraints on hydropower development in the region, Goichot said.

“They also understand that the region needs to produce more energy for people and economies, including through some hydropower, and that this comes with impacts on the [Mekong] rover and the communities and nature that depend on it,” he said.

Hydropower projects in Southeast Asia are closely monitored by the Mekong River Commission (MRC), an intergovernmental organization that works directly with the governments of Cambodia, Laos, Thailand, and Vietnam to jointly manage shared water resources and the sustainable development of the Mekong River.

The MRC oversees technical processes and the review of individual dam projects on the mainstream Mekong, but does not engage in oversight. It also lacks the authority to force members to delay or halt construction of any given dam project, and has little influence in dam planning which is done at the national level. Tributary projects, however, are the responsibilities of governments.

Financial institutions that provide funds for dam construction have their own governing regulations and requirements as to how their funding is used.

Development partners, such as the United States, European Union countries, Australia, and Japan, however, do work with governments in Southeast Asia to improve their regulatory environments that govern the social and environmental impacts of dam-building, Eyler said.

“But this is not to say that the political economy that exists within these countries will not provide opportunities for circumventing those regulations,” he said, citing more nontransparent actors.

“Stakeholders from China or Thailand or within the countries themselves could circumvent that process and still construct a dam that has substandard design aspects and severe impacts on the environment and communities downstream,” he said.

Projects that are financed by The Export-Import Bank of China, for example, have low, nontransparent regulations governing design aspects and environmental or social impacts of dam projects, he said.

Workers build the regulating dam of the Nam Theun 2 hydropower project on the Nakai Plateau in central Laos' Khammouane province, June 28, 2007.
Workers build the regulating dam of the Nam Theun 2 hydropower project on the Nakai Plateau in central Laos' Khammouane province, June 28, 2007.
Credit: AFP
Hard to influence SE Asian dam plans

Development banks, donor countries, and NGOs highlight concerns about dam building and specific projects by issuing joint statements during MRC governance meetings, holding discussions with governments, and giving interviews to the media, experts say.

“But it has proven very difficult to influence the dam development path in Southeast Asia up to now,” Goichot said.

International funders, including the Asian Development Bank (ADB) and the World Bank, promote sustainable hydropower and often use International Hydropower Association protocol, which provides a framework for assessing dam projects against a range of social, environmental, technical and economic criteria, to define and measure sustainability performance, he said.

Each funder has its own governing regulations as well as the laws and regulations of the country in which the project is being built domestic laws and regulations, but experts say there are significant shortcomings.

Though the ADB and World Bank are not involved in any hydropower projects on the Mekong mainstream, they have provided financing to dams projects on tributaries. And in many instances they have come under heavy fire by environmental NGOs that say they fail to address serious concerns about safeguard violations and human rights violations.

The NGOs blasted the ADB for approving funding for the 290-megawatt Nam Ngiep 1 Dam, the 440-megawatt Nam Ngum 3 Dam, the Theun-Hinboun expansion project, and the 670-megawatt Nam Theun 1 Dam — all on tributaries in Laos — urging the bank to not proceed until gaps in safeguard and sustainability compliance had been closed.

Environmental NGOs have likewise taken the World Bank to tasks over projects such as the U.S. $1.3 billion Nam Theun 2 Dam (NT2) in Laos, which the bank funded along with the ADB and other lenders, and the construction of the 136-megawatt Pak Mun Dam on a tributary of the Mekong River in Thailand’s Ubon Ratchathani province.

The Pak Mun Dam was heavily opposed by local communities and international and Thai NGOs, and since its completion in 1994, it continues to have significant detrimental effects, destroying local fisheries leaving communities impoverished, environmental rights groups say.

The World Bank, the Lao government, and development partners have praised the Nam Theun 2 Dam, which became fully operational in 2010, as a successful model for sustainable hydropower, though green groups don’t see it that way.

Proponents of the dam say it generates significant revenue for Laos, while directing part of that income to financing rural community development and environmental protection measures. They also say the project raised the living standards of the roughly 6,300 villagers who lost their farmlands and were forced to relocate.

But earlier this year, environmental NGOs blasted the World Bank for formally transferring responsibilities for managing the dam’s impacts to the Lao government and the Nam Theun 2 Power Company and for a rural livelihoods project funded by France’s development agency.

Environmental watchdog International Rivers said in June that the World Bank pulled out of the dam’s environmental and social project too early, and that affected communities reported problems related to land, agricultural programs, fisheries, and off-farm and tourism-based livelihoods as well as a lack of transparency about the resettlement implementation period.

The NGO said that the “celebratory tone” of a statement issued by the World Bank in January, announcing the handing over of responsibilities “glosses over major and ongoing misgivings regarding the NT2 project’s persistent failures to reach sustainability targets.”

New funders step in

After the two dam projects, the World Bank withdrew from hydropower in the Mekong region, because the projects took too long and were too risky, according to Jake Brunner, program coordinator for Cambodia at the International Union for Conservation of Nature (IUCN), the only environmental organization with official United Nations observer status.

Plans for the Nam Theun 2 Dam were in the making for more than 16 years, but “long delays and onerous safeguards also dissuaded governments,” he wrote in an email.

“This opened the door to new funders, particularly in the private sector,” Brunner said. “In Laos, this also enabled a planning process that basically involved foreigners cherry-picking the cheapest dams, which was suboptimal in terms of maximum benefits/minimum costs at the river basin and national levels.”

RFA contacted the World Bank and ADB about their roles as stakeholders in dam projects in Southeast Asia, but neither responded.

Four days after the Lao auxiliary dam breach in July, the ADB issued a statement that it was “closely monitoring the situation along with the government and other development partners to assess the impact of the disaster and seek to contribute to the recovery process.”

The ADB has two other projects in the affected areas and said it would ensure that they achieved their goals in the coming months.

“Development partners have become largely powerless when it comes to hydro-development,” Brunner said. “Arguments based on environmental economics showing huge losses regionally from full build-out and appeals to international water law have fallen on deaf ears.”

Nevertheless, experts say that international funders and foreign governments could be doing more to hold Southeast Asian countries and dam developers accountable.

“These are sovereign countries that in our opinion have made some bad decisions when it comes to energy security,” Brunner said.

“Our job is to present an alternative vision that’s well researched and politically acceptable,” he added.

Lao villagers affected by widespread flooding caused by an auxiliary dam collapse at the Xe Pian Xe Namnoy hydropower project look out from the back of a truck as they are transported through a village in Sanamxai, southeastern Laos' Attapeu province, July 28, 2018.
Lao villagers affected by widespread flooding caused by an auxiliary dam collapse at the Xe Pian Xe Namnoy hydropower project look out from the back of a truck as they are transported through a village in Sanamxai, southeastern Laos' Attapeu province, July 28, 2018.
Credit: AFP
Lack of ways to ensure accountability

One major obstacle is a lack of strong mechanisms or laws that can ensure accountability for how projects are planned and developed and hold a company accountable for human rights commitments when projects detrimentally affect people and communities.

“That includes accountability not only from governments, but also from project developers and investors,” Maureen Harris of International Rivers told RFA’s Lao Service at a conference on human rights and dam building in Thailand in September.

She noted that dam investors are usually not from the countries that are building the projects, but from others inside or outside Southeast Asia, such as Thailand, Vietnam, China, and Europe.

“How should these companies and investors be [held] accountable for the human rights impacts of these projects on people?” Harris asked. “Often companies have made human rights commitments in their politics or in the legal frameworks in their home countries, but when they invest overseas, they are not following these obligations or they are not being held accountable for these obligations.”

Cheh Swee Neo-she, secretary of the Human Rights Commission of Malaysia (Suhakam), a human rights NGO, said no one wants to stop development in the region, but that dam building must be done in a sustainable manner without violating cross-border human rights and having severe negative effects on people downstream, fisheries, livelihoods, and homes.

“We have to have a little policing of our companies, of our government,” she told RFA at the same conference in Thailand.

“When they do these things, they don’t actually tell us what they’re doing … and then we find out about it, and the damage has already been done,” she said.

Additional reporting by RFA’s Lao Service.


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