Is Laos a battery for Thailand?<\/p>\n
By Malee Traisawasdichai<\/p>\n
BANGKOK: "If a country does not have too many options to earn
\nmoney, except exporting electricity, should it not export it?"<\/p>\n
This remark was made by one of the World Bank's senior
\nofficials, concerning the development policy of Laos. It is also
\na common perception among outsiders and Laotian policy makers who
\nview export of electricity as the only viable means to develop
\nthis small landlocked country -- which is blessed with an
\nabundance of untapped rivers and mountains.<\/p>\n
Yet, even if Laos has a series of dam projects to boost its
\nfuture export, the country does not have money to finance its own
\nstake. Guided by the World Bank and the Asian Development Bank
\n(ADB), Laos has no choice but to adopt the "build-operate-and-
\ntransfer" (BOT) system. Under the BOT system, unlike the two
\nexisting dams -- Nam Ngum and Xexet, the new dams, which are
\nabout to emerge in the country will not be owned by Laos.<\/p>\n
The BOT system is simply to get the private sector to invest
\nin building a dam project. The companies then make money by
\nowning and operating the dam for about 25-50 years, and after
\nthat, the rest will be left for the Laos government, represented
\nby the Electricte du Laos (EDL).<\/p>\n
This is particularly crucial when hydro-electricity is the
\nonly major source of income for Laos. It leads to a pressing, but
\nso far unexpected, question: who will really have total power to
\ndecide if the country at one point in time does not want to trade
\nwith the powerful Electricity Generating Authority of Thailand
\n(EGAT)? How much control does the independent country of Laos
\nhave over the foreign companies who will run the operation of the
\ndams?<\/p>\n
The BOT system seems to pave the way for foreign private
\ncompanies to engage in the episode of "colonizing" Laos, after it
\nonce came under the shadow of French imperialism. Logically,
\nthere is no state in the world that would allow foreign companies
\nto take over control of its watersheds and forests through dam
\noperations -- the least to preserve its security and sovereignty.<\/p>\n
Besides, how much money is going to stay in Laos after the
\ncompanies have creamed off peak benefits for a period of 25-50
\nyears? The Laos government can neither foresee the remaining
\ncapacity of the dams by the time the ownership is transferred to
\nLaos. Nor can it predict whether the used dams will still be
\neconomically feasible. It does not even know whether the so-
\ncalled "second hand" dams will be silted up or not, which makes
\nthem no longer a source of revenue, but leaving behind a heavy
\ncost in terms of watershed and habitat destruction for Laos.<\/p>\n
To date, Laos' hydropower policy has automatically paved the
\nway for expanding the logging industry despite Vientiane's log
\nexport ban since 1992. The MOU between Laos' EDL and its
\ncounterpart EGAT apparently has become a license for logging in
\nthe proposed dam sites, regardless whether the dams will actually
\nhe built or not.<\/p>\n
According to Leuane Sombounkhan, vice chairman of Laos'
\nCommittee for Planning and Cooperation, the current logging
\nconcession policy in Laos allows only three Laotian state
\nenterprises to clear the forest at the dam sites in order to make
\nway for the proposed construction of the dams.<\/p>\n
Leuane told The Nation that at Houy Ho dam site alone, up to
\n100,000 cubic meters of logs will be sold to a Thai firm.<\/p>\n
Perhaps the most threatening ecological impact in the
\nforeseeable future is the logging concession in the Nakai Plateau
\nin Central Laos, where the 600-MW Nam Theun 2 Dam will be built.
\nThe Nakai Plateau, one of the 18 protected areas declared a
\nsanctuary by the International Union for Nature Conservation
\n(IUCN), is home for the world's important endemic flora and fauna
\nspecies and is one of the remaining fertile forests in Southeast
\nAsia.<\/p>\n
The plateau is believed to be home for the newly-discovered
\nspecies, and largest mammal, Vuguang ox, scientifically known as
\nPseudosyx Ngnetinnensis. The species was first found by the
\nWorldwide Fund for Nature in an adjacent wildlife sanctuary in
\nVietnam two years ago. The Douc Langur or Pyqathrix Nemaeus
\nspecies is also recognized by scientists as an endemic species,
\nfound only in Laos' Nakai Plateau, according to an IUCN official
\nin Vientiane.<\/p>\n
The plateau also harbors the world's last remaining place for
\nthe endangered Fokienia tropical spruce, which grows at an
\naltitude of over 1,000 meters above sea level. The Taiwanese-
\nowned Changlin Lumber has already received sub-concessions
\nthrough the state enterprise's concession to log some of the
\nspruce, the IUCN official said.<\/p>\n
About 48,000 hectares of the Pinus Mekersi species in the
\noverall 350,000-hectare forest in the plateau will have to be
\nclear-cut to make way for the Nam Theun 2 reservoir. This amounts
\nto wood of about 1,500,000 cubic meters or 50-70,000 cubic meters
\nper year for export to Taiwan, said Leuane.<\/p>\n
Environmentalists have warned of the wholesale damage of the
\nNam Theun Basin where altogether four dams have been proposed --
\n210-MW Nam Theun-Hinboun, whose construction has already started,
\nNam Theun 1 and Nam Theun 3, in addition to Nam Theun 2. Yet, a
\ncollective environmental impact assessment of the projects, that
\nshould be done by donors and funding agencies, for the whole
\nbasin has not been heeded.<\/p>\n
While bearing all the social and ecological costs, Laos also
\nhas no control over the price deal with Thailand. EGAT has
\ninsisted that the price of household electricity for Thai
\nconsumers is only up to one baht per kilowatt hour. This is
\nreflected in EGAT's tough negotiations over the price of power
\nwith Laos.<\/p>\n
During the recent state visit by Laos President Nouhak
\nPhoumsavanh, EGAT and EDL have agreed on the price for power
\nexport from Nam Thoen 2 at the modest 4.5 U.S. cents per kilowatt
\nhour, only .2 cent higher than the previous price for the Theun-
\nHinboun Dam, which is 4.3 cents.<\/p>\n
Like it or not, Laos has to accept this given price. EGAT is
\nits sole customer, which can at anytime shut the door with Laos
\nand turn to Myanmar, Vietnam, and possibly Cambodia in the
\nfuture, as they are proving to be promising sources of energy.
\nWhat can Laos do when it has only one single, but abundant
\nelectricity source to earn foreign exchange?<\/p>\n
Clearly EGAT has passed on the cost to Laos. The then deputy
\ngovernor, Somvonk Posayanonda, said EGAT would have to meet the
\ncost of the expenses to build a transmission line to pick up the
\npower from Laos and the cost of estimated 10 percent electricity
\nloss in the system. The question is: why does Laos have to absorb
\nthis cost?<\/p>\n
Yet there has never been a fair deal for Laos in the history
\nof trading in electricity between the two brotherly countries.
\nViraphone Viravong, director of the EDL's project department,
\ntold The Nation, Laos sells electricity at an average of 3.7
\ncents per kilowatt hour from Xexet Dam and 2.9 cents from Nam
\nNgum Dam to Thailand. But Laos buys from Thailand electricity for
\nits border areas at a price which is 20 percent higher.<\/p>\n
Sadly, the support of multilateral banks in building large
\ndams in Laos only serves Thailand, at the expense of Laotian
\npeople. The Mekong Secretariat estimates that Laos' electricity
\ndemand is up to three megawatts a year while that of Thailand is
\n1,000 megawatts.<\/p>\n
The figure points to the fact that Laos has no need for large
\nhydroelectric dams at all. With only a population of four million
\nand the lack of capital and technology, Laos has no comparative
\nadvantage to develop the labor-intensive industry. Therefore,
\nonly small hydropower projects with low investment and simple
\nmaintenance will be enough for Laos.<\/p>\n
The aggressive promotion by multilateral banks in building
\nlarge dams hardly benefits Laos, but also plunges the country
\ninto a debt crisis to serve neighboring Thailand.<\/p>\n
An environmentalist in Vientiane commented: "What the World
\nBank and the ADB are doing is to make Laos a battery for
\nThailand. Laos has no industrial base so the World Bank has no
\ninterest to develop industry in Laos. Laos will simply become a
\nsource for raw materials for Southeast Asia."<\/p>\n
With the World Bank and ADB's guidance, Laos will unavoidably
\ncontinue to embark deeper in the hydropower export policy. The
\nbanks' imposed development model is simply to make sure that
\nthere are no alternatives for the market-oriented approach. Yet,
\nLaos seems to sacrifice much to make itself competitive through
\nthe BOT approach for hydropower policy towards the free market
\neconomy.<\/p>\n
In essence, it is a responsibility of the World Bank and ADB
\nto create a mechanism guaranteeing a fair deal for electricity
\ntrade between the voiceless Laos and powerful EGAT. It is
\ncriminal to set up a system that brings in the private sector to
\nLaos to rake in as much profit as possible and leave the country
\nwith social and environmental hazards.<\/p>\n
-- The Nation<\/p>\n
Window A: Sadly, the support of multilateral banks in building
\nlarge dams in Laos only serves Thailand, at the expense of Laotian
\npeople.<\/p>\n
Window B: Only small hydro-power projects with low investment and
\nsimple maintenance will be enough for Laos.<\/p>",
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