Isabelle Whitehead examines the links between private corporations and dam development on the Mekong River. As Indochina makes the transition from a 20th century battlefield to a 21st century marketplace, there are plans to turn the lower Mekong River into a cascade of large dams. China has already embarked on a massive dam-building program on the upper Mekong mainstream; now the lower Mekong states are seeking foreign investment to capitalise on their own hydropower potential. Impoverished, landlocked Laos has signalled its ambition to become “the battery of Southeast Asia” by constructing up to eight large dams across its 1950 kilometre section of the Mekong River. The most imminent and controversial of these schemes is the 1260 MW privately-funded Xayaburi Hydropower Project. Under the Mekong Agreement of 1995, Laos is treaty-bound to consult with Thailand, Cambodia and Vietnam before it proceeds with any mainstream hydropower project. Yet even as official talks on Xayaburi lurch between deadlock and disagreement, the Bangkok Post is reporting that private contractors have already started building a road to the proposed dam site. This raises an important question: when $U.S.3.8 billion of corporate investment is at stake, who really decides on dam proposals? At present, the answer is unclear. In a bilateral meeting on May 7, Lao Prime Minister Thongsing Thammavong informed his Vietnamese counterpart that Xayaburi would be delayed pending a full environmental assessment. By contrast, Thai construction company Ch. Karnchang remains bullishly optimistic about its 57 per cent stake in the project. Speaking at the company’s Annual General Meeting on April 22, CEO Plew Trivisvavet assured shareholders that “we are aiming to sign the power purchase agreement within 30 days”, following which “we will begin construction immediately”.
The Lao government faces a delicate balancing act between its contractual commitments to the Xayaburi project and its diplomatic standing with more powerful downstream neighbours. The Xayaburi Hydropower Project is an example of the friction that can occur between public/private and formal/informal ways of managing international river basins. As the Mekong countries embrace foreign investment and regional economic integration, traditional (state-centric) modes of decision-making can no longer be taken for granted. Banks, construction companies and environmental consultants are starting to accumulate a substantial degree of influence over hydropower projects and other ‘nation-building’ schemes – even in socialist Laos. It is worth considering how and in whose interests this private sector power might be regulated. Can a public-private partnership between the Lao government and a major Thai construction company lead to sustainable development? Should we rely on the principles of corporate social responsibility to safeguard the world’s largest freshwater fishery? Will the wealth created by hydropower ultimately benefit the 60 million inhabitants of the lower Mekong Basin?
By Siren-Com, from Wikicommons (CC BY-SA)
Mekong, Inc.?
At the sovereign level, the Lao government faces a delicate balancing act between its contractual commitments to the Xayaburi project and its diplomatic standing with more powerful downstream neighbours. If Laos elects to honour its Memorandum of Understanding with Ch. Karnchang, its promised stream of hydropower revenue may be overwhelmed by a flood of political pressure from Vietnam, which has been unusually forthright in its opposition to Xayaburi. Beyond the closed corridors of one-party Laos, the Xayaburi proposal is being scrutinised from several different angles. In a notable departure from Southeast Asia’s purported ‘consensus politics’ and the non-confrontational ‘ASEAN Way’, the public and private proponents of the dam are starting to be held accountable – stridently and persistently, from above and from below. Scientists and civil society groups have reserved their strongest criticism for the cursory Environmental Impact Assessment (EIA) prepared by the Thai-based TEAM Consulting Group on behalf of Ch. Karnchang. In a public statement on May 10, the World Wide Fund hydropower specialist Dr Jian-hua Meng condemned the Xayaburi assessment process as being “nowhere near international standards” and “reflect[ing] very poorly on the consultants involved”. These protests appear to have had some informal regulatory impact. In mid-May 2011, the Lao government agreed to commission a new, more comprehensive EIA on Xayaburi, to be funded by Ch. Karnchang. The ASEAN Intergovernmental Commission on Human Rights (AICHR) has also agreed (albeit tentatively) to assess Ch. Karnchang’s compliance with basic human rights and environmental standards. Speaking on April 18, AICHR representative Sripapha Phetmeesri explained that while ASEAN has no direct authority over private companies, investigations can nevertheless be made “through a channel of the AICHR’s corporate social responsibility framework”. Ultimately, the most pragmatic and effective way of regulating Ch. Karnchang may come from within the private sector itself. The Xayaburi project is dependent on secondary loan arrangements with four Thai banks: Kasikornbank, Krung Thai Bank, Siam Commercial Bank and Bangkok Bank. Following recent protests and negative publicity, at least two of these banks appear to be wavering in their commitment to the project. If Xayaburi is declared ‘too risky’ for its lenders’ social and environmental impact guidelines – which is a distinct possibility – the dam proposal may have to be revised, postponed or even abandoned. The future of the Xayaburi Hydropower Project remains uncertain. Yet as the Mekong region stumbles towards a new (hydro)political economy, one thing is becoming very clear: large dams are a high-stakes gamble for profiteers and preservationists alike.
Isabelle Whitehead is in her fourth year of a combined Bachelor of Science and Bachelor of Laws. She is currently completing Honours in Geography. TheSydneyGlobalist | August 2011
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