Laos Hires Firm Under Probe

The Lao government brings on a consultant under investigation in Finland for its role in a dam project.

xayaburi-map-305 A map showing Xayaburi dam on the Mekong River in Laos.

A firm under investigation by Finland for its role in the controversial Xayaburi Dam project on the Mekong River has been contracted by the Lao government as a technical consultant to supervise construction of the hydropower plant.

Poyry Energy AG, the Swiss subsidiary of the Finnish consulting company Poyry, said Friday that it had received the contract from the Lao government for “reviewing the design and supervising the construction of the project” over its eight-year implementation period.

The move was made two days after Laos officially broke ground on the dam project despite objections by environmental groups which fear it would affect the livelihood of millions of people downstream. 

In 2011, Poyry had acted as a technical consultant to the government, preparing an assessment of the Xayaburi design based on the recommendations of the Mekong River Commission (MRC)—an intergovernmental body including Cambodia, Laos, Thailand, and Vietnam that manages development along the key waterway.

In its final report submitted in August, Poyry found the U.S. $3.8 billion dam project to be "principally in compliance" with the MRC's requirements and suggesting “several specific recommendations to improve the sustainability of the scheme,” but international environmental groups said the study was flawed.

An earlier study by an expert group had recommended a 10-year moratorium on all mainstream Mekong dams due to a need for further research on their potentially catastrophic environmental and socioeconomic impact.

“Through this assignment Poyry is committed to monitor the construction of the hydropower plant and its compliance with the MRC guidelines, including the proposed technical design improvements and additional studies,” Ari Asikainen, president of Poyry’s Energy business group, said in the Friday statement.

“I believe that by first reviewing the project's technical design and now overseeing the project implementation we can actively and positively contribute in careful implementation of the first hydropower project in the lower Mekong River."

Violation probe

The announcement follows a statement from the Finnish government last month confirming that Poyry is under investigation on charges that it may have violated Finland’s “responsible business standards” through its involvement in the dam project.

The investigation was launched based on a complaint filed by a group of 15 nongovernmental organizations from seven countries in June.

According to the complaint, Poyry should have contacted the MRC before establishing the Lao government’s adherence to a 1995 agreement requiring the four Mekong governments to seek agreement before deciding whether to build any dams on the river.

The complaint also accused Poyry of acting contrary to Organization for Economic Co-operation and Development (OECD) Guidelines by providing consulting services to the Lao government, although the company knew that the member countries of the MRC were not in agreement over the dam.

It said Poyry had violated the guidelines’ recommendations on sustainable development, environmental practices, and human rights, and that the company had undermined the Finnish government’s development policies and targets, contributing to a waste of public funding.

The government of Finland had funded a 2010 scientific study, which was led by the MRC, and which found that the Xayaburi and the 10 other dams planned for the Lower Mekong would dramatically impact the river’s fisheries and agriculture, affecting up to 40 million people.

Poyry in July denied all accusations in the complaint filed with the Finnish government.

The Finnish Ministry of Employment and the Economy functions as Finland’s “OECD National Contact Point,” a type of complaint mechanism used in OECD countries to raise corporate responsibility concerns with companies’ activities abroad. The mechanism provides a “mediation and conciliation platform.”

In a statement released on Oct. 16 and signed by Finland’s Minister of Labor Lauri Ihalainen, the Ministry of Employment and the Economy—as the country’s NCP—determined that the complaint against Poyry “is material and substantiated,” adding that it “requires further consideration and it will be examined.”

Construction underway

Last week, the Lao government officially broke ground on the 1,285 megawatt Xayaburi dam, which is being constructed by Thai company Ch. Karnchang. Operators plan to sell the bulk of the power produced by the dam to the Electricity Generating Authority of Thailand.

Cambodia and Vietnam—both downstream neighbors—had earlier cautioned Laos against going ahead with the Mekong River project. But after Laos publicly launched construction, they seemed to have toned down their criticism, instead calling for further study on the dam’s effects on the environment.

Vietnam’s foreign ministry urged Laos to improve the dam’s design while a Cambodian government panel monitoring the Mekong River said it was holding Laos to previous agreements to conduct further study on the project.

Lao officials insist they have addressed Cambodia’s and Vietnam’s objections to the dam, saying revisions to the dam’s design have been implemented to improve the project.

Ame Trandem, the Southeast Asia program director for global conservation group International Rivers, said recently that Poyry was partially to blame for creating regional tension over the dam.

“Laos has rapidly advanced construction on the highly destructive Xayaburi Dam, despite ongoing opposition from Cambodia and Vietnam,” Trandem said.

“Poyry has played a central role in this diplomatic conflict, urging Laos to unilaterally move forward and to build the dam without first studying the project’s transboundary impacts as requested by neighboring countries.”

Reported by RFA’s Lao service. Written in English by Joshua Lipes.


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