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The massive World Bank-funded "Nam Theun 2" hydroelectric dam project planned for central Laos has just been revived, with the signing of a power purchase agreement with Thailand. The agreement had been stalled for some time, due to recent drastic changes in economic conditions in Thailand. While Thailand's economy now seems to have stabilised, the situation in Laos progressively worsens. In the past year, while the Baht plunged from 25 to over 50, recovering to now less than 40 to the US dollar, the Lao Kip has only declined - from under 1000 to nearly 5000 Kip to the dollar over the same period. Thus, Thailand is able to do major business with a little more confidence, and Laos needs the money more than ever.
The massive Nam Theun 2 project has been the subject of great scrutiny and controversy, with dozens of studies now produced on a whole range of environmental and social impacts. The project has become a symbol of what is going on in many parts of Laos today. It is only one among many major development projects funded by global organisations like the World Bank, aimed at eventually bringing some income to a poverty-stricken country. One catch, of course, is the environmental and social impact of dam construction.
It is argued by some that even though the Nam Theun 2 project will flood a vast area, the existence of the dam will, ironically, provide the best possible hope for conservation of the environment in the area. When the dam is built, the thickly forested hills to the East will, as a result, become a protected watershed area. Some argue that if the dam were not built, no such protection would exist, and the area would eventually suffer exploitation, particularly through logging. (Another conservation irony arises from the fact that many hill areas of southeast Laos are "protected" from exploitation by the huge amount of unexploded ordnance still found there.) However, the dam certainly will have environmentally detrimental impacts in other ways, such as depleting fisheries along the riverways.
A major social issue is relocation of villagers away from areas to be flooded by Nam Theun 2 and other dam projects. The mountainous areas of Laos are populated by ethnic minorities of great diversity. Relocation of villages, especially when it involves putting a number of different ethnolinguistic communities together in new settlements, can have serious social consequences. For example, many of the dozens of different languages spoken in Laos are now at risk of vanishing, and they will be further endangered by Nam Theun 2.
WATCHPOINT: December will see the public announcement of a number of changes and new appointments to be made within various government ministries and organisations.
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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