South China Morning Post
April 24 1999
Controversial Dam Projects May Lose Development Bank Funding
By Greg Torode in Bangkok
The Asian Development Bank is poised to stop funding controversial dam construction in Laos amid fears of poor viability and rampant illegal logging of some of the region's last rainforests.
"Concerns are being raised by several of our member countries at the current situation," a source said.
"The time has come for a major rethink on the way forward . . . I can't see us directly funding a dam in Laos again."
News of bank concerns follows a stinging report by a respected environmental group warning of "fundamental problems" at six projects now under way.
Two projects involving direct bank loans - the US$260 million (HK$2 billion) Nam Thuen-Hinboun and the US$130 million Nam Leuk - were singled out for criticism by the International Rivers Network.
The report warned of "grossly inadequate" compensation to tens of thousands of peasants who have lost food and water supplies at the Nam Thuen site. Illegal loggers, it added, were moving into newly opened up areas around Nam Leuk.
Over-runs at the Nam Leuk site could cost Laos - the poorest country in Southeast Asia - an extra US$20 million even before weak demand for the power it generates is considered.
At another dam site on the Nakai Plateau, more than one million cubic metres of timber has been felled for a project that may never go ahead. The bank and other institutions such as the United Nations Development Programme and the World Bank have long urged Laos' Communist Party rulers to build dams and sell electricity to its giant foreign neighbours to earn vital foreign exchange.
The six projects covered in the report are among 23 deals under consideration that makes Laos the last "El Dorado" for major international hydropower developers.
The collapse of the economy in Thailand - a key consumer - has thrown financial forecasts into further disarray as the Thais seek urgent renegotiations of existing commitments.
Brent Dark, the bank's principal country officer for Laos, said the report was being studied closely ahead of its own forthcoming strategy review. "We are very concerned about how things are developing in Laos in terms of viability, the environment and social standards related to the various projects," he said.
Insisting the policy of Laos exploiting its unique hydropower potential remained sound, he said it was important international institutions "actively engaged" the Lao regime.
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