August 2018

Mekong dams: “Battery of Asia” and land grabs for power

While touted as engines of economic growth and for energy security, hydropower dams pursued for profits also result in displacement and destruction of livelihood and environment.
Srekor village in Stung Treng fully submerged by the rising floodwaters of the Lower Sesan 2 Dam (EarthRights International)

The collapse of the Xepian-Xe Nam Noy dam in southern Laos last July 23 left more than 30 people dead, over a hundred missing, and an estimated 6,600 homeless. The tragedy involving the South Korean-built dam brought to public discussion issues of safety, responsibility and accountability in large-scale infrastructure projects. It prompted the government of Laos to immediately suspend the approval of new hydropower projects and to promise the review of existing ones.

This doesn’t mean, that the government has abandoned its hydropower ambition for Laos to become the “Battery of Asia.” Discussions on the more basic concerns involving the affected communities and the role of hydropower dams in sustainable economic development that the government of Laos as well as of the rest of the countries sharing the Mekong River must urgently consider are neglected or ignored.

Hydropower dams have always been touted by governments of underdeveloped countries as engines of economic growth. But the practice of constructing dams in rivers such as the Mekong River, which has been the source of food, drinking water, irrigation, transportation and livelihood for millions of people living along and near its banks and tributaries, has also always been at the expense of those who depend on them for survival. Dams do not only necessitate the physical displacement of communities established on the part of the river where they are to be constructed, but also inevitably result in the socio-economic displacement of those along the river’s path.

Laos’ hydropower ambition

Between 2011 and 2015, foreign investments in Laos were mainly in the country’s energy sector. During this period, around 30 energy projects amounting to more than US$3 billion were approved, most of which involve the construction of hydropower dams.

For the Laos government, hydropower development is the way to create enough capital growth to enable Laos to leave the Least Development Nation status by 2020. It believes that hydropower development will earn the country the necessary foreign exchange revenue through the export of electricity to neighboring countries to fund its development programs and projects. Sixteen large-scale dams have already been constructed all over the country, most of which with funds from foreign investors. With the increasing demand for electricity from China, Cambodia, Thailand, and Vietnam as well as the increasing availability of investments from China, Malaysia, Russia, Thailand and Vietnam, the government is in a rush to build the dams.

One of the most controversial hydropower dam projects in Laos is currently being constructed along the Nam Ou River, an important tributary of the Mekong River and one of the last remaining intact natural ecosystems in the Mekong Region. The project started in 2011, when the Laos government and the Chinese state-owned firm Sinohydro Corporation inked the US$2.8 billion Nam Ou Hydropower Development Masterplan to construct seven cascade dams in the river. Funded by loans from China Development Bank, the dams are China’s biggest hydropower project in Laos and one of Sinohydro’s largest outside of China. Under a build-operate-transfer (BOT) scheme, the Chinese firm will be in charge of operating the seven dams for 29 years, exporting 90% of its generated electricity to Thailand. Sinohydro is one of the world’s biggest dam builders and also the proponent of the controversial Three Gorges Dam.

Damming the Mekong

While the most aggressive in terms of building hydropower dams along the Mekong River, Laos is not the only country affected by the dam-building frenzy in the region.

The last decade saw the unprecedented development of large-scale hydropower dams along the river that not only altered its flow, but also disrupted the entire river’s ecosystem. China, – which refers to the Mekong as Lancang – for instance, has built at least eight dams on the river since the 1990s, and has at least a dozen more planned within its territory. The five other Mekong countries – Cambodia, Laos, Myanmar, Thailand and Vietnam – each has built and is planning to build dams on their part of the river for either their own consumption or revenue generation. According to a 2010 study conducted by the International Centre for Environmental Management (ICEM) and sponsored by the Mekong River Commission (MRC), the dam projects along the river supposedly have the potential to generate US$15 billion in income and create 400,000 jobs.

Construction of Nam Ou 5 dams in Laos (International Rivers)

Construction of Nam Ou 5 dams in Laos (International Rivers)

To “foster cooperation” in managing and utilizing the Mekong River’s natural resources, including its hydropower capacity, and fast track the industrialization and urbanization of the region, the six Mekong countries of China, Cambodia, Laos, Myanmar, Thailand and Vietnam, at the initiative of and with financial support from China, launched the Lancang-Mekong Cooperation framework in 2015. The framework focuses on the development of infrastructure and industrial projects, in line with China’s Belt and Road Initiative (BRI) and the ASEAN Community Vision 2025. The second Lancang-Mekong Cooperation leaders’ meeting held on January 10 this year concluded with the signing of the Five-Year (2018-2022) Plan of Action on Lancang-Mekong Cooperation, which highlights the areas of cooperation between the six Mekong countries, among them, the sub-region’s shared “water resources”.

Cambodia’s energy shortage

In Cambodia, energy shortage and the high cost of electricity were the government’s justification for the unprecedented increase in the number of approved hydropower dam projects in the past decade. The country had been relying on supply from Laos, Thailand and Vietnam to meet its electricity demand. In 2015, the imports amounted to around a quarter of the country’s total supply, while Cambodia’s operational hydropower dams contributed 47% to the country’s domestic energy generation. The government of Cambodia sees hydropower projects as important and necessary for energy independence and for economic growth.

One important project for the government is the US$870-million Lower Sesan 2 hydropower dam in the Sesan and Srepok tributaries in Stung Treng province. So far the largest of its kind in Cambodia, it started undergoing tests in 2017 and is expected to be operational by 2018. The project is a 45-year BOT joint venture between the Chinese HydroLancang International Energy Co. Ltd., the Cambodian Royal Group, and the Vietnamese Vietnam Electricity. It is estimated to produce 1.9 billion kilowatt-hour (kWh) of electricity per year to be sold to Electricity of Cambodia, as well as, to generate a tax revenue of about US$30 million per year.

The construction of the Lower Sesan 2 dam has affected 860 families (5,000 people) in Stung Treng’s six villages, many belonging to ethnic communities. By the end of 2017, 88 % of the total affected families have accepted compensation and relocated to the new villages set up by government. Some families, in particular, those from Kbal Romeas and Srepok, however, refused to leave their homes even when their communities were about to be flooded. They refused to accept the the loss of their ancestral land, community forests, and burial and sacred sites, as well as the end of their community life, cultural identity, and traditional beliefs, knowledge and practices.

The Nam Ou cascade dams project in Laos, which is expected to spur economic growth especially in the poverty-stricken provinces of Luang Prabang and Phongsaly, is also expected to negatively affect around 128 villages, including 10,700 people who could be be physically displaced.

When it comes to damming rivers, not only the people living where the dams were erected are negatively affected. In the words of Franco, et al, “(r)arely are the effects of water grabbing confined within the perimeter of a specific project. Instead, they often spill-over, disrupting ecological flows and balances and affecting the lives of people located in a much larger catchment area.”

One example is the case of the US$500-million Don Sahong hydropower dam located in Siphandone in southern Laos, less than two kilometers from the Laos-Cambodia border. The second hydropower dam by Laos on the Mekong River, it is being developed by the Malaysian firm Mega First Corporation Berhad. Several local and international advocacy groups warned that the construction of the dam will block the channel used by around 100 species of fish migrating between Cambodia, Laos and Thailand, thereby threatening the food security and livelihood of fishing communities who rely largely on the river for sources of income.

Do hydropower development projects benefit the people?

Experts have long been saying that the financial losses inflicted by hydropower dams on local economies are being underestimated or ignored by governments. According to a study by Thailand’s Mae Fa Luang University, while dams may yield economic benefits for governments, they incur huge and often irreversible losses in terms of fish catch, agricultural produce, and denuded river system, and thus of livelihoods.

Similarly, as pointed out by the ICEM in its 2010 study: “Mainstream hydropower generation projects would contribute to a growing inequality in the [Lower Mekong Basin] countries. Benefits of hydropower would accrue to electricity consumers using national grids, developers, financiers and host governments, whereas most costs would be borne by poor and vulnerable riparian communities and some economic sectors…In the short to medium term poverty would be made worse…”

On the other hand, a 2008 study by International Rivers found that some large hydropower projects in operation in Laos have increased poverty for tens of thousands of people in the country. The villagers affected and resettled due to the construction of the Houay Ho and Theun-Hinboun dams were not able to restore their income to previous levels in their resettlement areas. Many others have lost important sources of their livelihood such as fisheries, rice fields, and riverbank gardens, and have not been sufficiently compensated for their loss.

The collapse of the Xepian-Xe Nam Noy dam in Laos has reopened discussions regarding the role of hydropower dams in economic growth. While safety, responsibility and accountability are valid concerns, it is important that we also highlight such concerns that impact the livelihoods and way of life of those whose lives are tied to rivers. This is urgent in light of ongoing six-month prior consultation process for the proposed 770-megawatt Pak Lay hydropower dam project, estimated to relocate at least 1,000 families from some 20 villages in Laos, which kicked off on August 8, only a few days after the accident. ###

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