To build or not

STLL stinging following a series of
dam-related embarrassments, the
World Bank (WB) has set up an
'International Advisory Group on
Bank Hydropower Projects' (IAG) to
determine if the proposed Nam Theun
2 dam in Laos is too politically hot to
handle.

The Laotian government wants to
build the dam so it can sell some US $250
million worth of electricity to neighbouring Thailand each year - roughly
one-fourth of Laos's gross national
product. The government says it would
use the proceeds to fund health and
education programmes in one of the
world's poorest countries. The dam's
electricity would be a much-needed
source of foreign exchange, observers
note.

But environmental and other
concerned social activists contend
that the project is a disaster waiting to
happen. They argue the dam will cost
more to build and maintain, that it
will produce less profit than its promoters say, and that it will cause the
destruction of unique flora, fauna and
local cultures.

The dam would submerge three
national biodiversity conservation areas
and force the relocation of 21 villages - home to 4,000 to 5,000 indigenous people. Another 7,000 people could be
forced from their homes, so a 3,500-sq
km water catchment and forest preservation area can be set up around what
will be the Nam Theun 2 reservoir, a
senior Bank official said.

The estimates for the likely cost
of Nam Theun 2 are around US $1.2
billion, according to official estimates.
The corporate backers see the WB
as the key to unlocking the commercial
financing needed to break ground.
Although Bank-backed studies
dating back to 1989 endorse the
project as Laos' best option, officials
say the agency remains nervous because
Nam Theun 2 has drawn fire from
the well-organised and highly motivated
anti-dam lobby. The Bank, oft-bitten
by scandals involving dams it
helped build, is shy about this latest
proposal.

The Bank is held by its own history.
Over the years, communities around
the world have issued a litany of
complaints against the WB's dam-
building efforts. The agency itself
admits its handling of dams especially India's Sardar Sarovar - led
to the creation, in 1993, of an independent inspection panel, to which
communities harmed by Bank projects
can complain.

Therefore, in addition to the
economic, environmental, and social
studies routinely required by the Bank,
its new hydropower advisory group is to
visit Laos late next month, and advise
the Bank on its handling of environmental and social issues related to
the project. The IAG will assess the risks
to the WB posed by involvement in
Nam Theun 2. If the IAG approves of the
project, then the project would be
submitted to the Bank's executive board
late this year or early next year, WB
staffers and observers here say.