Lost in Transition

Laotian Villagers to be Displaced by Proposed Hydroelectric Project Misinformed, Not Consulted

Posted: 08-Mar-2004; Updated: 10-Feb-2006

In December 2003, representatives of Environmental Defense, Friends of the Earth International, Bank Information Center and Campagna per la riforma della Banca Mondiale, visited the Nam Theun 2 (NT2) project area to gather information following the November 8, 2003 signing of the Power Purchase Agreement between NTPC and the Electricity Generating Authority of Thailand (EGAT). This coalition of American, French and Italian non-governmental organizations (NGOs) is primarily interested in monitoring the project's potential public support from the World Bank, the Asian Development Bank, the European Investment Bank, and export credit agencies (ECAs), such as the French COFACE.

Our visit was facilitated by the Nam Theun 2 Power Company (NTPC) - the project sponsor - and was conducted entirely in the presence of company and/or government officials. Therefore, as expected, the information we received reflected their pro-project perspective. Company and government officials were also present during all of our discussions with villagers. The primary translator was the head of the Government of Lao PDR's (GOL) Resettlement Management Unit.

We held formal and informal meetings with villagers from both the Nakai Plateau (who would be resettled by the project) and from along the Xe Bang Fai River (who would experience impacts from the diversion of large amounts of water into the river). These meetings revealed that villagers have not received accurate, comprehensive, and balanced information from the GOL or from the company regarding NT2, despite nearly 10 years of project preparation. The villagers' expectations for the project, particularly on the Nakai Plateau, are very high, potentially misinformed and unrealistic. However, the NTPC and government officials that were with us did little to correct these misperceptions during our meetings. Moreover, in some cases they seemed to use our presence to indicate to villagers that there is international support for the project's immediate implementation. Whereas we presented ourselves as NGOs with serious questions and concerns about the project, it was not clear if that message was always translated.

We repeatedly heard phrases from villagers such as: "We agree with the government. Give us the project now";  "We have no concerns about the project"; "We've been told that more water means more fish [in the Xe Bang Fai River]"; and "We expect to get many jobs from the project." When government officials or villagers were asked about other dams in Laos or in neighboring Thailand (such as Theun-Hinboun or Pak Mun) which have had well-documented negative impacts on fisheries and communities, only positive assessments or disclaimers about the differences between these dams and NT2 were provided.

Villages on the Nakai Plateau are clearly suffering from the loss of the resource base on which they depend (due to illegal logging in anticipation of the project in the mid-1990s) and from unfulfilled promises of livelihood improvements. The vice chief of Phonesavang village said they have been told since 1996 that they will soon be moved for NT2. As a result, the villagers have stopped maintaining their houses and planting fruit trees. Only after our prodding did the government official explain that it would be at least three years before that village is resettled, even if the project goes ahead as planned.

The company official said that more information would be provided to villagers in the next round of consultations. However, it is difficult to imagine how genuine consultations can be held in this political environment when the NT2 project has always been presented as a top government priority, and even put forward as a fait accompli. To quote the NTPC official, the initial consultation process did not discuss alternatives, but rather began with: "There will be a dam. What are your concerns?"

Detailed information on resettlement and environmental and social mitigation plans for NT2 is still not available to the public. For example, the Social Development Plan, the Xe Bang Fai Strategy, the Fisheries Study, and the Social and Environmental Management Framework and Operational Plan are being reviewed by the World Bank and have not been publicly disclosed. The Concession Agreement is not a public document. Although local "consultations" will reportedly begin sometime around March 2004, it is unclear how documents can and will be made available in an appropriate timeframe, language and format to meet that target. The intent and scope of these consultations is also unclear; we were told that consultations were completed in 1997 and that these meetings would simply be used to publicly disclose project documents.

Visits to the Pilot Resettlement Village and the Theun Douane Experimental Farm on the Nakai Plateau showed impressive models designed to test livelihood options for resettled communities. However, without access to detailed information regarding plans for training and implementation, we questioned the viability of these small-scale pilots as sustainable livelihood systems for thousands of villagers. Additionally, the impacts of NT2 on the Xe Bang Fai River have been only belatedly considered, as the NTPC official acknowledged. The company's assessment of how many villagers along the Xe Bang Fai will be affected by NT2, and its plans to address impacts on fisheries, riverbank gardens, erosion, flooding and other issues, have not yet been scrutinized.

As indicated during our meetings with villagers, there has been no comprehensive and open discussion of the risks and benefits of NT2. Critical environmental, social, financial and economic documents have not been disclosed to the public. Major project issues, such as the Xe Bang Fai impacts, have not been adequately analyzed and addressed. Based on the GOL's track record, serious questions remain regarding the government's capacity and commitment to manage a project like NT2 for poverty reduction, and to ensure compliance with World Bank safeguards. Furthermore, the economic viability of NT2 and the favorability of the project's terms for Laos have not been publicly examined and debated.

We recommend that before public institutions such as the World Bank and the Asian Development Bank consider support for NT2, the following actions should be taken:

• Ensure prompt public disclosure of all key project documents, including the Power Purchase Agreement (PPA) and the Concession Agreement;
• Commission an independent economic analysis of the PPA to evaluate the favorability of terms for Laos, given that NT2 is promoted as a "development" project;
• Evaluate the GOL's capacity and commitment to manage the NT2 project using independently verifiable governance indicators and publicly disclose the results;
• Ensure and independently verify that all affected villagers are given full information - in an appropriate language and format - regarding the benefits and risks of the NT2 project;
• Ensure that indigenous peoples and resettlement plans are developed in compliance with World Bank safeguard policies before initiating project appraisal, and verify compliance of on-going and planned resettlement activities with World Bank standards;
• Work with other donors to provide overdue compensation and poverty reduction measures for villagers on the Nakai Plateau who have lost their forest resource base as a result of project-induced logging; and
• As called for by donors in the World Bank's IDA-13 replenishment agreement, demonstrate how the World Commission on Dams' strategic priorities will be taken into account during the consideration of NT2.

The Report

Trip Report: NGO Visit to the Proposed Nam Theun 2 Hydroelectric Project in Laos [PDF] (598 Kb)     Authors: Shannon Lawrence, Environmental Defense Mishka Zaman, Bank Information Center Jaroslava Colojacomo, Campagna per la riforma della Banca Mondiale (Italy) Sebastien Godinot, Friends of the Earth (France)

View our slideshow, Displacement in Laos. . 

Updates:  

• Past as Prologue: OED Assessment of World Bank Reform Progress in Laos [PDF] (October 2004)
• Civil Society Summary of the World Bank's Technical Workshops on Nam Theun 2 [PDF] - Held in Bangkok, Tokyo, Paris and Washington, DC (October 2004)
• Letter to the World Bank About the Nam Theun 2 Project Economics Interim Summary Report [PDF] - Aviva Imhof, International Rivers Network (USA), Witoon Permpongsacharoen, TERRA (Thailand), and Shannon Lawrence, Environmental Defense (USA) (11/11/04)

Other Links:

• Bank Information Center
• Campagna per la riforma della Banca Mondiale (in Italian)
• Friends of the Earth International
• International Rivers Network's Mekong Basin Campaign Page
• Nam Theun 2 Power Company - Project page
• Article: Divisive Dam Likely to Go Ahead - The Nation (2/04/04)

To learn more about how financing by the World Bank and other international lending institutions can threaten both the environment and population in the developing world, visit our web pages on Multilateral Development Banks and Export Credit Agencies.