Laos boosts development prospects with dam hopes

NAKAI PLATEAU, Laos, June 23: For landlocked Laos, 1.25 billion dollar may help buy a ticket out of poverty.

The Nam Theun 2 dam, key to a Lao bid to become the ''battery of the region'', represents the sleepy, communist-ruled country's biggest hope for development that will pull it closer to more prosperous neighbours like Vietnam and Thailand.

Foreign financial institutions which have helped nurse the project over the past 13 years also harbour another hope: that the dam will set a standard for hydro projects in a region hungry for electricity to power its growing economies.

The Nam Theun 2 project, stretching 200 km along the Nakai Plateau 500 km southeast of Vientiane, encompasses one of the biggest efforts to mitigate a dam's expected social and environmental effects ever attempted in Asia.

''If the project is implemented well, that will be a very good signal to responsible foreign investors that this is a country in which one can do good investments, but also ones in which social development concerns are addressed,'' senior World Bank official Ian Porter said.

Foreign officials see the dam as a development project that will not only generate money for Laos which will sell most of the power to Thailand under a long-term agreement but also keep it from developing resources at the expense of its 5.8 million people and forest-flecked, mountainous landscape.

Laos, among Asia's poorest countries, does not intend to stop at Nam Theun 2, which is one-third finished and on track to be completed by 2009.

Government officials say three or four new dams are expected to come on stream in the next 10 years, but foreign diplomats worry that Laos may be tempted to cut corners.

''Nam Theun 2 is one of the most extensively studied projects ever in Laos. They have taken all the precautions that can be taken,'' said a Western diplomat who declined to be identified.

Now ''there will be a flurry of hydropower projects and I'm not sure that all of these will meet with any of the same standards''.

ELECTRIFYING THE ECONOMY

Many hopes ride on Nam Theun 2, which environmental activists say threatens endangered species and village livelihoods.

But Laos has other goals. It is hoping to use the revenue generated by the 6000 GWh capacity dam to halve its poverty levels by 2015, take itself off the UN's list of least developed countries by 2020, and provide electricity to all homes. In the process, it could underpin economic growth estimated by the government to average 7-7.5 per cent from 2006 to 2010.

Laos can expect to earn on average 30 million dollar a year in the first 10 years while it pays back the debts it took on to build the dam, and an average 110 million dollar from 2020 to 2034, says the World Bank, which was invited to join the project in 1996.

But dam officials say that what sets Nam Theun 2 apart from hydro projects elsewhere in Asia are extensive measures the fruit of years of due diligence aimed at softening the social and environmental impact.

''This is unprecedented in the region and reflects our strong concern that the project will deliver real, durable benefits to the people of Lao PDR, starting with the affected communities,'' said Patchamuthu Illangovan, World Bank country manager for Laos.

BEST-LAID PLANS ...

At 120 million dollar, the dam's social and environmental programme accounts for 10 per cent of the total cost, double the amount normally reserved for social and environment concerns, officials estimate.

Central to the programme, which includes livelihood training and building houses with electricity, is an ambitious push to double the monthly incomes of more than 1,000 resettled families to 820 dollar by 2009.

Vegetable vendor Sukongmanee Jakaow, 25, says her income has improved five-fold since she moved three years ago.

''It can't compare with what I was getting in the old place,'' said the newly-wed. ''We weren't sure when we could get to the market to sell anything, because there was no road before.'' Yet uncertainties remain. The project abuts 4,000 sq km of forest sheltering elephants, tigers and a type of rodent discovered recently by scientists at a food market, all of which could be affected, environmentalists say.

The dam could also hurt thousands of people living downstream along the Xe Bangfai river by reducing the quality of their water, leading officials to set aside another 16 million dollar.

Scientists say it may not be enough.

''As so many people live along its banks and along its tributaries, this is the biggest challenge for the project,'' said one river specialist who asked to remain anonymous.

The last uncertainty could be the Lao government itself.

Officials say different conditions will dictate the methods used for future dams, but the international community should trust Laos to take care of its own.

''It all depends on the investors and our regulations. Nam Theun 2 is a reference for us. Now we have experience, new laws, new regulations,'' government spokesman Yong Chanhthalansy said.

''This is our country and they are our people.''

REUTERS