Laos to Wait for ‘Positive Signals’ Before Building Mekong Dam

Laos will wait for “positive signals” from its neighbors before it builds the $3.7 billion Thai-financed Xayaburi hydropower plant on the Mekong River, Deputy Prime Minister Thongloun Sisolit said.

“Laos, Vietnam and Cambodia share the common position that any construction activity will take place only if positive signals are given by the experts,” he said in an interview two days ago in Bali, Indonesia, where 18 Asia-Pacific leaders met for a summit. “We will be pleased to listen to the concerns and opinions of all parties.”

Mekong River nations are set to meet on Dec. 7 to decide whether to endorse the project after Laos agreed in April to postpone construction because of environmental concerns. Vietnam earlier recommended a 10-year delay for all hydropower projects on the river, which winds through Myanmar, Thailand and Cambodia from its source in China’s Tibetan plateau.

The dam’s approval may pave the way for seven others that Laos plans to build on the Mekong to expand Southeast Asia’s smallest economy by selling electricity to surrounding countries. About 60 million people along the Mekong depend on the river and its tributaries for food, water and transportation.

“Although the project is situated within our territory, nevertheless the Mekong river is an international river,” Thongloun said. “Therefore, we must respect the opinions and views of those who are using the water resources.”

‘Desperate Bid’

Laos has aimed to convince its neighbors by showing them a report from Switzerland-based Poyry Energy AG, which it hired to review the project after the April postponement. The report found that “any potential long-term trans-boundary impacts on the downstream region would be insignificant” if Laos made recommended design changes such as improving sediment transport and fish-passing facilities, according to a government presentation in September.

The Poyry report is “a desperate bid to gain approval from neighboring countries for the first lower Mekong Mainstream Dam,” International Rivers, a Berkeley, California-based nonprofit group that aims to protect rivers and human rights, said in a Nov. 9 statement. In particular, the review underestimates the impact on fish species and sediment flows that provide nutrients for downstream crops, it said.

The landlocked nation of six million people may have about 38,000 megawatts of installed capacity supply by 2020, about 15 times greater than its domestic needs, according to a Sept. 8 presentation by state-owned Electricite du Laos at a conference in Hanoi. Hydropower and mining projects are set to underpin economic growth that may reach 7.7 percent this year, the Asian Development Bank said in an April 7 report.

PTT

Thailand agreed last year to buy 95 percent of the electricity from the plant, which will have a capacity of 1,285 megawatts. Ch. Karnchang Pcl, Thailand’s third-biggest construction company by market value, owns a 57.5 percent stake in Xayaburi.

PTT Pcl (PTT), Thailand’s biggest energy company, has a 25 percent stake, while Bangkok-based Electricity Generating Pcl owns 12.5 percent, according to company filings. The 115 billion baht ($3.7 billion) project is expected to start commercial operations in January 2019, PTT told the Thai stock exchange on March 1.

To contact the reporters on this story: Daniel Ten Kate in Bali at dtenkate@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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